Employees in Cambodia’s private sector can now reap the rewards of the Kingdom’s first pension scheme, after an announcement from the Ministry of Labour and Vocational Training.

According to the Prakas or notice, which was signed by Minister Ith Sam Heng and Finance Minister Aun Pornmoniroth on June 28, government authorities under the Ministries of Economy and Finance, Labour and Vocational Training and National Security Fund (NSSF) should oversee implementation of the inter-ministerial notice from the date of the signature.

A sub-decree detailing the scheme also applies to those who have two jobs or more, adding that pension contributions are a joint responsibility between employers and employees.

For the first five years, contributions must be calculated as 4 percent of the employee's salary, in which the employer pays 2 percent, the decree says.

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The decree adds that contributions must be 8 percent of employees’ salary after five years of work. After 10 years, the rate of contributions must increase by 2.75 percent of the total salary.

If an employee receives a salary in foreign currency, the pension contribution must be calculated in riels using monthly National Bank of Cambodia exchange rates.

Employers must pay the pension contributions monthly to an NSSF account or a partner bank on the 15th of each month, at the latest. The contributions can also be paid annually where employers have the capability to do so, the decree adds.

Those receiving pensions must have their businesses registered with the NSSF, be at least 60-years-old and have paid 12 months of contributions, the decree said.

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Am Sam Ath, director of Cambodian League for the Promotion and Defence of Human Rights (Licadho), said on Monday that he welcomed the implementation of the pension scheme for the private sector and he would further study other clauses.

“Unionists and workers have been long advocating for the pension scheme and with this law coming out, they are happy. As a civil society group, we think it's good to have pension but we will further study,” Sam Ath said, adding the studies will be about the age set at 60-years-old for retirement, the loss of capability to work before 60, and the 2 percent sharing of contributions.

For employees losing work and then having to find other work, the pension will continue to be calculated, Sam Ath said. However, it is not clear for those who can’t find another job.