In the final quarter of 2023, South Africa issued guidance on the new two-pot retirement system, Peru launched a new holiday starting in 2024, Singapore doubled its paid paternity leave, and Costa Rica reformed its pension program.
Canada Requires Additional Contributions to Pension Plan
Effective January 1, 2024, the Canadian government began collecting a second round of contributions from employers and employees covered under the Canada Pension Plan (CPP). Under the second CPP (CPP2), employers and employees will each contribute 4% of covered earnings above the first earnings ceiling, capped at CAD 68,500, and up to the second earnings ceiling, capped at CAD 73,200.
Costa Rica Reforms Pension System
Several changes to Costa Rica’s Disability, Old-Age, and Death pension program (Invalidez, Vejez y Muerte, or IVM) took effect on January 11, 2024. The changes include increasing the base salary for pension calculations from 240 months (20 years) of contribution to 300 months (25 years) of contributions. Early retirement age for women is increasing from 59 years, 11 months with 450 monthly contributions to 63 years with a minimum of 405 monthly contributions. Men will no longer be allowed to take early retirement. These reforms are an attempt to alleviate extreme poverty.
Peru Launches New National Holiday
Peru has declared a new national holiday to honor Peruvian Air Force heroes. The country will celebrate Peruvian Air Force Day annually on July 23, beginning in 2024. Peruvian Air Force Day will be a paid holiday for Peruvian employees when it falls on a weekday.
Asia Pacific (APAC)
Beijing, China, Increases Outpatient Annual Reimbursement Limit
Beijing, China, has increased the city’s annual reimbursement limit for outpatient medical expenses from CNY 4,000 to CNY 5,000. Employees who participate in social medical insurance and have a signed family doctor service agreement will no longer face restrictions on transfer treatments. With this change, employees can access medical treatment at any eligible healthcare facility, and the social medical insurance will cover the expenses.
Singapore Increases Provident Fund Contributions
Effective January 1, 2024, contributions to Singapore’s Central Provident Fund increased by 1.5% for employees ages 50 to 55. The changes are intended to boost retirement savings for middle-income earners.
Singapore Doubles Paternity Leave, Infant Care Leave
Effective January 1, 2024, Singapore doubled the length of its paid paternity leave from two weeks to four weeks. Under the Children Development Co-Savings Act (CDCA), employees receive reimbursements of SGP 2,500 per week for the birth or adoption of a child or children. Although paid leave has increased, it is up to the employer to grant the additional two weeks until the government mandates four-week paternity leave.
Singapore also doubled unpaid infant care from six to 12 days. Employees who have completed three months of continuous service are eligible for unpaid infant care each year, regardless of the number of children in their family.
Taiwan Increases Meal Allowance Limits
Taiwan has increased its tax-exempt meal allowance limit from NTD 2,400 to NTD 3,000 per month, per employee. The changes went into effect on January 16, 2024.
Europe, Middle East, Africa (EMEA)
Egypt Rolls Out Pension Program for Citizens Living Abroad
The Egyptian government has rolled out a new pension program for Egyptians living abroad. “Tomorrow’s Pension” is administered by the state-owned Misr Life Insurance in cooperation with the National Bank of Egypt. Participation is voluntary. Employees must contribute at least USD 500 to purchase pension coverage. The guaranteed dollar-denominated benefit for pension is calculated based on the age at which employees make their contributions and their chosen retirement age. The benefit can be paid in monthly installments over 10 or 15 years or as a lump sum. If an employee becomes disabled or dies before reaching the selected retirement age, the guaranteed dollar-denominated benefit will be transferred immediately to the employee or their dependent(s). The program went into effect in August 2023.
South Africa to Implement Two-Pot Retirement System
The South African government has launched a two-pot system for occupational retirement contributions. Starting March 1, 2024, all employee retirement fund contributions will be split into two pots. One-third of retirement contributions will go to the ”Savings Pot,” with funds accessible before retirement, and the remaining two-thirds will go to the “Retirement Pot,” which holds the funds until retirement or death.
All contributions made until February 29, 2024, will be kept in a separate third pot called the “Vested Pot.” Ten percent of the employee’s vested pot, up to a maximum of SAR 25,000, will be transferred to their savings pot on March 1, 2024.
- Savings Pot: Beginning March 1, 2024, one-third of employees’ retirement contributions will be directed to this fund. Employees must have a minimum balance of SAR 2,000 before any withdrawal; the fund allows for one withdrawal per year. If an employee leaves the employer before retirement, they can either stay invested in their current fund, transfer to another registered retirement fund, or take the benefit in taxable cash, provided they haven’t made a withdrawal within that year.
- Retirement Pot: Beginning March 1, 2024, two-thirds of employees’ retirement contributions will be directed to this fund. Employees can transfer benefits from other funds into this pot but cannot take funds out of it. Employees can only access Retirement Pot funds at retirement, at which point they must buy an annuity with the full benefit. The only circumstances under which an employee can receive Retirement Pot funds in cash is when the combined amount from both pots totals less than SAR 247,500. If leaving the employer before retirement, the employee can either stay invested in their current fund or transfer to another registered retirement fund. If the employee dies, dependents will get the amount from both pots as an annuity, lump sum, or a combination of the two.
The South African government is implementing the two-pot retirement system to enhance overall retirement savings and alleviate financial hardships faced by employees.
UAE Issues Rules for New Members
The United Arab Emirates (UAE) has issued social security rules for new private-sector employees. For the General Pension Social Security Authority (GPSSA) retirement system, the contribution rate is 12.5% for employers that make less than AED 20,000 per month and 15% for employers earning more. Employees contribute 11% of their salary. The maximum monthly covered pay is AED 70,000. Retirement benefits will begin at age 55 with eligible contributions. The rule requires employers to enroll eligible employees for GPSSA within one month of their hire date. When an employee is terminated, employers must provide notice within 15 calendar days after the employee’s last working day.
Related Blog Posts
Get practical steps you can take as a leader to help improve or even save your employees’ lives.