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Companies required to register with the national social security fund (NSSF)
On 11 July, a government meeting issued a reminder to companies that are not yet registered with the National Social Security Fund to do so quickly as pension contributions will start to be deducted from wages from October.
The meeting marked the launch of a three-month campaign to highlight the benefits and progress that can be made under the NSSF scheme, but above all to remind both businesses and the general public of their social security obligations.
The implementation of the NSSF pension schemes
Social security law in Cambodia is relatively new and therefore still evolving. The NSSF has already established an occupational injury insurance scheme, a health insurance scheme and an unemployment scheme for employees in Cambodia.
A sub-decree issued in March 2021, established a pension scheme for all persons covered by Cambodian labour law. This pension scheme is now being implemented.
This new pension scheme therefore complements the country’s overall social security system and is primarily intended to provide protection for ageing and retiring workers.
This is an important step for the country’s workers and a promise of relief for the many households that have no choice but to care for their retired relatives without sufficient savings to meet their needs.
How are the contributions structured?
According to the sub-decree on the implementation of the pension schemes, the contribution rates will be spread over three phases. The first phase is planned for five years with a contribution rate of 4% of the contributing salary, half paid by the employer and half by the employee.
This rate is expected to rise to 8% in the second phase, while the third phase will see an increase in contributions of 2.75% of contributory earnings.
As mentioned above, these contributions will start to be deducted from salaries from October for more than 10,000 already registered entities, hence the government’s call for unregistered companies to comply as soon as possible.
It is important to note that failure to comply with the registration requirements may result in fines and other penalties.
In conclusion
A healthy and protective work environment is a key element of an economy’s competitiveness. Cambodia’s ambition to become a middle-income country by 2030 must necessarily include an improved social security system and the implementation of this pension scheme is timely.
However, this means that a number of companies need to register with the NSSF as soon as possible.
To find out more about the social security system in Cambodia, why not book a consultation with one of our experts. Additionally, you can take a look at our accounting and secretary services for Cambodia here.
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