Sudan’s old age pension system plays a crucial role in ensuring that retirees enjoy financial stability after decades of work. As a complex network of reforms, institutions, and policies, the system is designed to meet the diverse needs of public servants, private-sector workers, self-employed individuals, and Sudanese citizens working abroad. This blog post takes a look at the structure and evolution of Sudan’s pension landscape, helping readers understand the mechanisms behind Sudan’s pension calculations and the ongoing reforms aimed at enhancing coverage and sustainability.

Sudan’s Pension Structure

Sudan’s social security system is built on national legislation that provides financial protection against various social risks—including old age, disability, survivors’ benefits, and work-related injuries. Two main institutions manage the pension system:

• The Public Service Pension Fund (PSPF): A legacy fund established before major reforms that provides defined-benefit pensions primarily for public sector employees and long-serving civil servants.
• The National Social Insurance Fund (NSIF): Established more recently, NSIF manages pensions for both public and private sector employees under a contributory social insurance model.

The Ministry of Social Development, alongside specialized agencies like the NSIF and PSPF, ensures that pension benefits are administered efficiently, helping both employees and employers meet their legal and social responsibilities.

Sector-Specific Administration

Different employment sectors are administered through tailored schemes:

• Private Sector and Civil Service: These employees are covered under the NSIF system. Contributions are shared between employers and employees, with the majority of funding coming from employers. This setup supports pension benefits, injury compensation, and maternity leave.
• Military and Police: Due to the unique risks associated with their service, members of the armed forces and police operate under separate pension schemes. Administered by the Ministry of Defense and the Ministry of Interior, these schemes often offer more generous benefits.
• Legacy Public Servants: Employees who joined government service before pension reforms remain under the PSPF. Although the PSPF continues to serve its members, its role is diminishing as reforms gradually shift coverage to the NSIF system.

Historical Evolution and Ongoing Reforms

The Legacy PSPF

The PSPF was designed as a defined-benefit scheme, where pensions are calculated based on the final salary and the number of years of service. Over time, however, the sustainability of this model has come under pressure due to changing demographics and economic challenges. With limited new contributions and increasing retiree obligations, the PSPF has faced significant financial strain.

Modernization through NSIF

In response to these challenges, Sudan initiated broad reforms in 2016, giving rise to the National Social Insurance Fund (NSIF). These reforms aimed to unify fragmented pension schemes under one contributory model. The NSIF is designed to improve financial sustainability by including both public and private sector workers in its coverage. As new contributors join the NSIF, legacy schemes like the PSPF are gradually being phased out.

Embracing Digital Transformation

Digitalization has become a key focus of pension reform. Efforts include merging overlapping institutions, updating actuarial models, and transitioning to digital record-keeping. These initiatives are not only modernizing the system but also ensuring that benefits are accurately calculated and transparently administered. This transformation is essential in a country where a significant portion of the workforce operates in the informal sector.

Contribution Structure: How It Works

One of the strengths of Sudan’s pension system lies in its structured contribution framework. Both mandatory and voluntary contributions are used to fund the pension benefits, ensuring that different employment groups are appropriately covered.

Breakdown by Employment Type

Employment Group	Employee Contribution	Employer Contribution	Minimum Salary Cap	Maximum Salary Cap
Public-sector employees	8%	17%	SDG 12,000	No maximum
Private-sector employees	8%	17%	SDG 12,000	No maximum
Self-employed persons	25%	N/A	SDG 15,000	SDG 20,000
Sudanese citizens working abroad	23%	N/A	SDG 12,000	No maximum

 

Public and private-sector employees participate through mandatory contributions, while self-employed individuals and citizens working abroad join on a voluntary basis. The higher contribution rate for voluntary participants reflects the absence of an employer share, ensuring that all contributors receive equitable retirement benefits.

Eligibility and Benefit Calculations

Accessing pension benefits in Sudan requires meeting specific age and contribution requirements. Here’s how the system distinguishes between full and early retirement:

Standard Old-Age Pension

• Eligibility: A minimum contribution period of 20 years is required.
• Retirement Age: The standard age is set at 65 years, even though pensioners can start retiring at 60 already without any early retirement reduction.
• Calculation: The pension is computed at a rate of 2% for every 12 months of contribution. This results in a benefit that ranges between 40% and 83.33% of the reference earnings (R.E.).

Early Retirement Options

Sudanese workers have the option to retire before the standard age, though this comes with a reduction in benefits:

• Retirement between 50 and 54: Results in a 15% reduction in the pension.

For those who have contributed for less than 20 years, the system does not offer monthly pension payments. Instead, a lump-sum payment is provided.

Key Definitions:

• Reference Earnings (R.E.): This figure typically represents the average of the worker’s earnings over the 3 final years of employment.
• Contribution Period: The duration of contributions directly impacts the pension amount, making long-term participation critical for achieving full benefits.

Case Studies: Pension Calculation Scenarios

To better illustrate the pension calculations, consider the following example of a worker with 25 years of service and reference earnings of SDG 50,000.

Full Retirement at Age 65

• Calculation:

Pension Percentage=2%×25=50%

• Monthly Benefit:

50%×50,000= SDG25,000

At age 65, with no reduction applied, the worker receives SDG 25,000 per month.

Early Retirement Scenarios

Retirement at Age 53 (15% Reduction)

Calculation:

25,000 × (1−0.15 ) = 25,000 × 0.85 = SDG 21,250

Retirement at Age 57 (10% Reduction)

Calculation:

25,000 × (1−0.10) = 25,000×0.90 = SDG22,500

Digital Transformation: How Interact SSAS can assist with digital transformation..

While social security administrations around the world look for the best ways forward with their digitization plans, Interact SSAS is an important platform which is designed to automate and streamline pension administration while adhering to country-specific policies.

Key Features of Interact SSAS

Policy-Driven Framework:

The system is built around a country and policy-based model. Administrators can define and modify social security policies easily to reflect changes in law or practice.  Interact SSAS supports all of Sudan’s policies described above out-of-the-box with simple configuration of the various available parameters, without any need for source-code customization, as described below:

Employee Groups:

Since Sudan distinguishes between public sector employees, private sector employees, self-employed individuals and Sudanese working abroad, this can be supported easily with the definition of different Employee Groups for each category in Interact SSAS.  This enables the system to treat all key processes different depending on Employee Group.  For example, registration may be different for Sudanese living overseas or for the self-employed, contributions filing & calculations may differ for each Employee Group and the system can also easily distinguish between the groups in all of its reporting, and possibly GL entries.

Contributions:

The different contribution rates that apply to the different categories of workers in Sudan (defined as Employee Groups in Interact SSAS) can be defined within the setup of Contribution Policies.

Reforms and Policy Changes:

Social security reform in Sudan, as in any other country, will mean changes in policies over time, which typically affect contribution rates, but also benefit calculations, benefit entitlement and eligibility rules and much more.  It is critical therefore that Sudan’s systems are equipped with Policy Versioning capability.  Interact SSAS’s Policy Versioning keeps track of any changes in policy and tracks a start and end date for each policy and its policy version.  As a result, transactions which fall in a different period when another policy was still in effect, can be handled under the policy rules of that period.  An additional benefit of Interact SSAS is that it displays the rules that are being applied for any key calculation, therefore the user can see which policy version, and therefore which rules, were applied to obtain a certain result.

Benefit Class, Policy and Entitlement Policy: Old Age Pension

In Interact SSAS, you first create Benefit Classes where you include any parameter which will determine eligibility and entitlement calculation of a particular benefit.  In the case of our example of Sudan’s Old Age Pensions, these parameters would include:

• “Number of Contributions” (e.g. 20 years of contributions to be eligible for pension),
• “Minimum Age” (e.g. 65 years to be eligible for pension),
• “Average Insurable Earnings” (e.g. Reference Earning used for calculation of pension)
• “Contribution Blocks” (e.g. 12 months of Contributions)
• “Early Pension Reduction” (e.g. 10% reduction for anyone between ages 55 to 59)

Once these and other parameters are chosen for the Benefit Class, the user can define the Benefit Policy and Benefit Entitlement Policy.  In the Benefit Entitlement Policy, the user can use the earlier selected parameters for eligibility and entitlement calculation for the system to determine eligibility and calculate the amount to which the pensioner is entitled based on the formula defined in the Rate Table.

Lump Sum / Grant Policy:

Interact SSAS supports out-of-the-box the ability to provide one-off, lump-sum or grant payments for individuals who may not qualify for a recurring pension payment because they did not make the minimum number of contributions, as is the case in Sudan with those who contributed for less than 20 years.

Early Pension Reduction & Deferred Pension Increase:

Interact SSAS supports automatic reduction of a pension entitlement based on early retirement rules or automatic increase of delayed/deferred retirement pensioners.  The parameters for this can be included in the Benefit Class Rate Table definition and can then be configured at the Benefit Entitlement Policy level.

Self-Service Portal:

Employees have access to a personal portal where they can view employment history, check contribution records, submit pension claims, and upload necessary documentation. This transparency reduces administrative delays and enhances user confidence.  If they notice any missing or incorrect data, they can proactively alert the social security and gather supporting documents and upload them so that the social security administration has the time to review and update the records.  When an employee files for a pension, they can verify the information the social security has on file for them and they will be sure that way that the process will be based on the correct underlying data.  The application form itself is a very simple step, where most of the data is already pre-populated and the applicant only needs to submit the form to indicate which payment frequency (biweekly vs monthly) and payment method (cheque or bank deposit) they desire for the disbursement of the pension.

Automated Workflow:

Interact SSAS automates the end-to-end pension claim process:

• Submission and Review: Employees submit their claim online, and designated social security administrators review and verify the data.
• Approval and Audit: An integrated approval workflow ensures claims are audited rigorously before final processing.
• Financial Integration: The system generates files for electronic transfers (Electronic Bank Files), GL postings, and check payments, making the entire disbursement process efficient and accurate.
• Accurate Benefit Calculation and Trial Steps:
  Interact SSAS applies predefined parameters such as reduction factors and contribution periods, as well as other factors to calculate benefits accurately. This not only minimizes errors but also provides a clear audit trail for future reviews.  All parameters are available out-of-the-box and do not require the involvement of programmers to configure the rules.  Changes in policies in the future will be maintained in a separate table with a new policy version number so they can be applied for the effective periods for which they should apply.  The calculation outcome will be shown in the Trial Process to give the user the opportunity to review the amounts calculated by the system before finalizing the benefit claim payment.

Data Migration:

As Sudan’s reforms lead to the consolidation and merging of different Funds, the data from the original funds will have needed to be migrated to the newly created funds.  Interact SSAS is designed to support complex data migrations, with tools to validate the data that is being migrated, flag dangling records and missing data and reject records which do not comply with mandatory checks.  This gives the organization the opportunity to cleanse their data and ensure that any new organizations is working with accurate historical data for the contributions, earnings, credits and employment history of their pensioners and other social security recipients.

How SSAS Enhances Efficiency

By automating repetitive tasks and ensuring strict compliance with predefined rules, Interact SSAS reduces the administrative burden on both employees and administrators. The system’s digital nature helps in:

• Error Reduction: Automated calculations and data validations ensure that pension amounts are computed accurately.
• Transparency: The entire workflow is visible to stakeholders, reducing the risk of fraud and mismanagement.
• Flexibility: As reforms continue, Interact SSAS can be easily updated to accommodate new policies or regulatory changes.

Conclusion

Sudan’s old age pension system is undergoing a significant transformation, driven by the need to provide financial security for a diverse and evolving workforce. By integrating both mandatory and voluntary contribution models, the system aims to ensure that workers—whether in the public sector, private sector, or informal economy—can receive a fair and sustainable pension. The shift from legacy schemes like the PSPF to a more unified NSIF framework represents a major step toward modernization.

Solutions such as Interact SSAS have the potential to support this transformation by offering digital tools that streamline pension administration, enhance the accuracy of calculations, and improve overall transparency and accountability. As Sudan continues to strengthen its social security infrastructure, adopting advanced technologies can play a crucial role in ensuring that every retiree enjoys a stable and secure financial future.

By understanding the intricacies of Sudan’s pension system—from contribution structures and eligibility criteria to the possibilities offered by digital workflows—stakeholders can better navigate the balance between historical legacy and forward-thinking reform. This balance is vital for adapting to demographic changes and economic challenges while preserving the trust of the nation’s workforce.