Retirement planning is crucial for government employees, especially those who rely on a retirement pension to support them after they retire. However, calculating a retirement pension can be a complex and daunting task. In this article, we will explore the importance of retirement planning for government employees and delve into the intricacies of calculating retirement pensions.
Here are five steps you can follow to calculate your pension:
Step 1: Determine the length of your service. This includes the number of years you have worked for the government.
Step 2: Calculate your average pensionable salary by adding the salaries of your three highest-paid years and dividing them by three.
For example: if your three highest-paid years were 2019, 2020, and 2021, and your salaries for those years were 900,000 IQD, 950,000 IQD, and 1,000,000 IQD, respectively, your average pensionable salary would be (900,000 + 950,000 + 1,000,000) ÷3 = 950,000 IQD.
Step 3: Determine the Percentage for Your Pension, which is calculated based on the length of your service. The percentage is 2.5% of your average pensionable salary for each year of your service.
For example 950,000 x 2.5% = 23,750 (pension for one year of service)
Step 4: Calculate Your Pension by multiplying your average pensionable salary by the percentage of your pension for each year of your service.
For example: if your average pensionable salary is 950,000 IQD and you have worked for 23 years, your pension calculation would be as follows:
- 950,000 x 2.5% = 23,750 (pension for one year of service)
- 23,750 x 23 = 546,250 (total pension for 23 years of service)
Note: The Iraqi government has set a minimum pension amount of 400,000 Iraqi dinars to ensure a decent standard of living for pensioners. According to the Iraqi Unified Retirement Law No. (9) of 2014.
Example Calculation: let's say an employee has worked for 25 years with a monthly salary of 950,000 IQD. To calculate their pension, they would follow these steps:
- Determine the length of their service: 25 years.
- Determine their average pensionable salary: (900,000 + 950,000 + 1,000,000) ÷3 = 950,000 IQD.
- Determine the percentage for their pension: 2.5% x 25 = 62.5%.
- Calculate their pension: 950,000 x 62.5% = 593,750 IQD.
- Check the minimum pension amount: 593,750 IQD is above the minimum amount of 400,000 IQD, so no adjustment is necessary.
here's another example calculation for a retirement pension with a monthly salary of 600,000 IQD and 23 years of service:
- Determine the length of service: 23 years.
- Determine their average pensionable salary lets assume its 600,000 IQD.
- Determine the percentage for their pension: The percentage for a 23-year service would be 2.5% x 23 = 57.5%.
- Calculate their pension: To calculate the pension, we multiply the average pensionable salary by the pension percentage. In this case, it would be 600,000 x 57.5% = 345,000 IQD.
- Check the minimum pension amount: 345,000 IQD is less than the minimum amount, so it would be adjusted to meet the minimum requirement, and the employee might receive a pension of 400,000 IQD per month or more, based on the decision made by the retirement department.
if you want more information about retirement under Iraqi law, click here to read our article.
Retirement under Iraqi Law
The Iraqi Unified Retirement Law.
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