1. Introduction: Stipulations Governing Period of Service and Retirement Age
The comprehensive framework for employees of private organizations regarding the “Period of Service and Retirement Age” is mainly outlined in Part Four of Proclamation No. 1268/2022. This is done specifically through the explicit provisions contained within Articles 16, 17, and 18. This chapter undertakes a meticulous exposition of these aforementioned articles, providing a detailed analysis of the criteria governing the commencement, computation, and ultimate determination of an employee’s pensionable service, alongside the prescriptive age for superannuation within the private organizational sphere in Ethiopia.
2. Commencement of Period of Service (Article 16)
The period of service for pension entitlement for an employee of a private organization starts on the date of their initial employment. At that time, they become formally part of the prescribed pension scheme. Furthermore, service previously rendered by an employee of a private organization to public offices will be duly counted. This is provided such public offices were themselves covered by an existing pension scheme. The counting starts from the effective date on which pension contributions began in respect of that service. The administrative authority must manage the transfer of the employee’s personal records. These records must move from the Public Servants Pension Scheme to the Private Organizations Employees’ Pension Scheme. This action needs to be completed within one month of the triggering event. The rules for transferring pension contributions between the Public Servants Pension Fund and the Private Sector Employees’ Pension Fund will be determined later. These rules will focus on the accurate counting of service. They will be based on detailed Directives issued by the National Bank.
3. Calculation of Period of Service (Article 17)
The computation of the period of service shall be undertaken with scrupulous precision. It will be calculated in complete years, months, and days. All services rendered within a private organization covered by the Pension Scheme are included. They are mandatorily encompassed within the aggregate period of service. Furthermore, specific periods, as enumerated hereunder, shall also be duly counted as qualifying service for any employee:
- Any period of service during which employment was demonstrably interrupted, yet salary payments remained uninterruptedly effected.
- Any period of service expended in any public body by an individual serving as a duly elected member of a public or labor union.
- Any period of service undertaken, pursuant to an official governmental decision, within an international organization.
For the latter two aforementioned categories of service (i.e., service as elected members or in international organizations), these periods shall be duly recognized and counted solely contingent upon the employee’s direct payment of the requisite contributions, encompassing both the employee’s and the employer’s share, or by ensuring that the employer effects such payments on their behalf.
It is explicitly stipulated that service rendered by naturalized Ethiopian citizens in any private organization covered by the pension scheme prior to their formal naturalization shall not be counted for pension purposes. This provision is enacted without prejudice to the binding terms of any international agreement to which Ethiopia is a signatory party.
If an employee, who previously received a retirement or invalidity gratuity, is re-employed by a private organization under the scheme, their previous service period will be added to their new service period. This is possible if the previously paid gratuity is fully reimbursed. Similarly, if an individual receives a reimbursement of pension contribution, their former period of service will be counted. The individual must be re-employed by a private organization covered by the scheme before reaching the prescribed retirement age. This occurs if the reimbursed contribution is fully repaid along with accrued interest. The interest is calculated at the prevailing bank deposit interest rate.
The Council of Ministers may resolve to adjust periods of service in hazardous occupations. This decision is based on comprehensive studies and recommendations from the Administration. Service in risky jobs might be counted up to twice the actual duration worked.
4. Retirement Age (Article 18)
The prescriptive age for the superannuation of an employee shall be sixty (60) years, this determination being based solely upon the date of birth as originally registered at the time of their initial employment. Any subsequent evidence adduced for the purpose of altering or modifying the pre-registered age or date of birth (as initially recorded during registration or subsequent notifications of change) shall not be accepted for the purpose of pension calculation or retirement age determination.
Notwithstanding the general retirement age, the Council of Ministers, acting upon studies commissioned and submitted by the Administration, may definitively determine a higher age of superannuation (i.e., exceeding 60 years) for specific professions that are deemed to merit special consideration. Conversely, the Council of Ministers may act upon comprehensive studies from the Administration to resolve a retirement age under 60 years. This applies to employees of private organizations engaged in hazardous employments or occupations involving risks to health and life.