The government has announced that it will launch a new National Pension Scheme (SPK) in 2023 to replace the existing Employees' Trust Fund (TAP) and Supplemental Contributory Pension (SCP) Scheme, with some grandfathering for older members. Changes include eliminating the earnings cap on employer and employee contributions, extending participation to informal workers and the self-employed, adding increased flexibility on the withdrawal of funds and introducing a lifetime annuity payout. There will be no change to the basic flat-rate social security retirement benefit, which is provided under Brunei’s universal Old Age and Disability Pension Act.
The SPK will be made up of a retirement account funded by employers and a member account funded by employees. TAP/SCP members under age 50 as of the SPK launch date will be automatically enrolled; those age 50 to 59 will have the option to join.
The existing pension system is not considered to provide an adequate level of income replacement in retirement for members, due in part to the low earnings ceiling on SCP contributions and the fixed-term payout of SCP benefits. This is despite the fact that Brunei does not levy a personal income tax, so benefits are received tax-free. Around 25% of companies surveyed in Brunei offer supplemental retirement benefits, some of which are coordinated with TAP. Employers in Brunei may want to review their current benefit offers in light of the new pension system as further details are announced.