A
alexk
Guest
An increase in employees’ National Insurance contribution from 13.2 per cent to 15.6 per cent is among long-term reforms recommended in a 2015 actuarial review, according to National Insurance Board (NIB) Executive Director Niala Persad-Poliah. She said the NIB is working closely with the Ministry of Finance to implement those reforms which amidst concerns that at the current rate national insurance funds could be completely depleted by 2030.
The Ninth Actuarial Review of the National Insurance System, published in June 2015 and covering a three-year period up to June 30, 2013, projected that from 2019-2020 assets will rapidly decrease and funds could be completely depleted by 2029-2030 if contributions or benefits are not modified.
The actuaries said urgent action is needed to update the system and ensure it is relevant to the income security needs of the country. They projected that the number of people of pensionable age will grow to more 400,000 by 2063—up from the current figure of 200,000.
Among the recommendations is an increase in the retirement age to 65, as well as an increase in employee contributions.
Persad-Poliah explained: “The Ninth Actuarial Review made both short-term and long-term recommendations. Two short-term measures, implemented, in 2016, were meant to stymie the impact of the aging population on the sustainability of the fund—an increase in the contribution rate from 12.0 per cent to 13.2 per cent and an increase in the maximum insurable earnings from $12,000 to $13,600.”
She added that gradually increasing the retirement age to 65, while still allowing the option of retiring at 60 with a reduced benefit, will require stakeholder engagement and public consultations.
“The NIB is committed to generating and participating in national discussion on the challenges of the ageing population so that the public understands the reasons for the recommended changes,” she said.
The NIB has embarked on ICT transformation which involves designing, procuring and implementing an end-to-end enterprise-wide solution. Persad-Poliah said this will improve the efficiency and effectiveness of service delivery for internal and external stakeholders.
IMPROVEMENTS AT THE NIB
Recently adopted strategies aimed at enhancing service delivery and customer satisfaction include:
• An arrangement with the Ministry of Legal Affairs to provide information on the death of recipients of the retirement benefit has eliminated the need for claimants to produce life certificates every six months. The exceptions are non-nationals who reside abroad.
• Claimants can request contribution statements online.
• Online access for employers to register their businesses within a day and remit contributions to the NIB on behalf of employees.
• Registration of new employees has been reduced to five days.
• Digitisation of contribution records has improved the turnaround time for processing of claims
• Greater emphasis on ‘pension ready’ activities gives pre-emptive support to claimants who are about to retire
• Acquisition of new hardware and software has improved data access and processes.
WHAT THE ACTUARIES RECOMMEND
• Gradually increase the retirement age to 65 over the period 2025 to 2060
• Increase the contribution rate to 22.8 per cent by 2061
• Introduced a mechanism to automatically adjust minimum pension, he earned pension and the contribution rates.