I have consistently advised persons to come in to Social Security and obtain their contribution statement. It should be done at least once a year every year. Treat it as your birthday card from us to you! So today, on my birthday, I went for mine. Here is what it told me.

First, it said "Contribution Statement for the period …". This reminds of the time that I started working and or contributing to the Fund, and takes me through all the times that I worked and contributed. Some full years had 53 contributions and some had 52 and one had 44. They explained that the 52 and 53 had to do with the number of Mondays in the year and I sent them looking for my other 8 or 9 contributions for the short year. They found them.

The next thing the statement informed me of is my 6 figure, unique Social Security number. No arguments from me there.

Then they told me that I live in a place I never heard of. Typographical error at the time that I was registered, but if I didn't correct it, that is where they would have sent my notice for retirement in the next year when I reach 62. I might never have received my pension. O Lord!

Next it told me all who I worked for and whether they were fair to me in paying up my dues plus theirs regularly. And then it reminded me of the paltry sum that they were paying me for all that donkey work that I did, and how much was removed in deductions. One thing I noticed - I didn't see any evidence of the three weeks that I was out sick and couldn't work. I seem to have been credited with contributions. So, being honest - some say stupid - I told them about it. They explained that even though I was sick, they still give me contribution credit for the sick time. Really? How nice!

When I went through the sheets, I was also able to get an idea of what my three best years of the last 15 looked like. I have to go ask the boss for a raise to see if I can improve my prospects!

And then, on page 4 - I have been working a long time - it told me how many contributions I have in total. This is important because it determines what percentage of the applicable insured wages I would collect when it is time to collect. Remember that these are most useful in counts of 50 in order to make an impact on your pension rights.

For the first 500 contributions, you earn 30%. For every 50 contributions thereafter up to 1,000, you earn 2 percent per 50 for an additional 20% on your pension and for every 50 contributions after 1000, and up to 1,750, you earn an additional 1% for another 10% on your pension. Grand total for pension is 60% and you require a minimum working period of 33 1 years in order to achieve this.

If you have already collected your statement, then I can discuss the pension formula and how it works. First, your annual wage is considered and the best three of the last 15 are taken to get an average. To determine your best three, the staff looks at whether you received short term benefits and how much and whether that benefit, converted to a month's wage would be better than normal.

If it is, that is the one that is used. Then the total of the three years is divided by 3 (not by 15) to determine the average. Then the earned credit is applied to obtain an annual figure. This annual amount is then divided by 12 to determine your monthly pension. Then it is pro-rated for the month in which your birthday falls so that you receive the appropriate amount.

For example, if your best three years of earnings were $24,000.00, $24,500.00 and $36,785.00 (remember overtime is included in your wages), then the total is $85,285.00 and your average annual salary is $28,428.33. If your contribution credit is 718, you earn 38% of this (30% for the first 500 contributions and 218 divided by 50 -throw away the remainder: as long as there is a remainder it does not count- multiplied by 2). Therefore, your annual pension will be $10,802.77 and your monthly cheque, preferably deposited to your bank account, will be $900.23. If your birthday falls on the 16th of the month, then for your birthmonth, you will receive payment for the remaining days (14 days if it is a 30 day month; 15 days for a 31 day month). Therefore, you will get either $420.11 or $435.60. [Go ahead, back-check it!]. This is the most generous way of calculating pensions.

So far we have explained the contribution statement, and showed how old age pensions are calculated. I hope that those of you who do not have a contribution statement come into Social Security and request one. If you do and realize that you do not have enough contributions credit (500) for a pension, don't panic, you may qualify for either an Age Grant or an Elderly Entrant Refund, EER. If you are overseas, we may be able to send it electronically.

An Age Grant is paid to an insured person who has between 50 and 499 contributions, and again it is calculated in units of 50. But this time, it is an average weekly wage that is calculated by finding the value of the contributions and dividing it by the number of contributions. Then a factor of 6 is applied and the resulting figure is again multiplied by the number of units of 50 contributions.

Let us de-mystify this with an example. Suppose all your contributions added up to $56,337.50, but you had only worked for 440 weeks (about 8_ years), the average weekly amount would be $56,337.50 divided by 440, or $128.04. The age credits would be decided by dividing the 440 contributions by 50 to get a factor of 8 (throw away the remainder). So the grant paid would be $128.04 multiplied by 8, and 6 times this amount would be paid. The grantee would then receive $6,145.92.

I looked at those 35 persons who qualified for age grants in the last quarter of 2008, and saw two persons who I will call Moses who saw the promise land but didn't cross over. One fell 2 weeks short of qualifying for a pension and the other fell 8 weeks short; not because God prevented it, but because Moses simply did not know. It is for people like Moses that I write: because if Moses had known and taken advantage of our Voluntary Payment option, they would have been better off today.

For those persons who paid in up to 49 contributions, a different set of circumstances apply. These persons qualify for Elderly Entrant Refund. If a person has 26 or less contributions, then, he/she gets back 50% of the contribution made. For persons with 27 - 49 contributions, they receive 72.73% of the contributions. Essentially, therefore, Elderly Entrant Refund is for persons who have only contributed for 1 year or less.
Let's put this EER system another way. If you only paid for a half year, you get back what you paid in and none of your employers' money. With almost a year of contributions (50), you get back your money and almost half of what your employer paid in.

But there is an important exception to be made for Age Grants and Elderly Entrant Refunds. They may only become relevant if the person cannot claim coverage under the Reciprocal Agreements. This is the agreement that allows CARICOM (and Canadian) nationals to combine all the contributions that exist within all the participating countries and petition for a pension in his home country or in the country of his residence.

Some people argue that it is a waste of time to force people who are close to 62 to pay into Social Security when we all know that they cannot achieve enough contributions to obtain neither an Age Grant nor an Age Pension. Others argue that the age grant is unfair and that qualifiers should get a pension instead of a grant. Maybe; but they forget that these persons will qualify for short term benefits like maternity (yes, maternity), sickness, maybe employment injury, and death payment. And at the end of all this, they still get back money! There is truly something for everybody in Social Security! All you have to do is to do the right thing which is to register and pay.

Some countries, especially those with tiered pensions, use career averages to determine the average annual wage. Other territories use other combinations such as the best 5 of the last 20 years. The question that is facing us in St. Kitts-Nevis is not whether we can continue with the old system - because we cannot; but how much change of the old system will be best for us. That is the point of debate!
Please save these articles and refer to them from time to time. They will assist you in retirement planning and increase your financial capability.