YOU ARE TO PAY MORE FOR NIS IN 2010

By Hubert B. Dolsingh, H.B.M (Gold)

May 26, 2009

The rates of National Insurance contributions will be increased from January 2010 but the current rates of benefits shall remain the same. Do you know that NIB in two annual financial reports presented to Parliament, stated that the rates of contribution of 2005 could have been maintained for the next 40 years? Then why the increases by 120%.

It is expected that Self-Employed which is estimated to be over 110,000 persons, may be covered under the System by July 2010. This promise was to have taken effect since 1973. My understanding is that those persons would have to pay the full 100% of the rates of contribution but would not receive the same benefits.

The National Insurance System is just over 37 years old and I have estimated that NIB collects over $2.4m per business hour and spends over $470,000 per business day to administer the Scheme. Their assets are over $20 billion and at the end of 2011 it shall cross $25 billion.

Do you know that all of the revenue from contributions paid to NIB by both Employers and employees since the inception of the System on April 10, 1972 over 37 years; not a single cent has been used to pay benefits? This is so, because the net income from the investment of the contribution revenue to date exceeds the total payment of benefits.

NIB is not a Bank. It is a compulsory social programme to provide every employee and their families with some form of financial assistance in times of Sickness, Maternity, Employment Injury, prolonged illness, death and retirement. Therefore, I have concluded that either the rates of contributions are too high or the rates of benefits are too low or that insured persons and their families are not aware of their rights and benefits under the System.

NIB is contemplating several changes to the System. It is my view from reading a few of their annual financial reports, that the following changes would be recommended:-

1. To remove the method of calculating the rates of contribution and replace it with a fixed percentage of your actual pay.

2. To increase the minimum of 750 contribution to qualify for a retirement pension to 1,000 instead.

3. To merge all public pensions scheme and pay only one pension.

4. To move up the minimum retirement age from 60 to 65. This means that each person retiring at age 60 would have to wait for a further five years, that means, a loss of at least $120,000.

5. Rates of contribution to be increased again from January 2012.

I can go on and on but I will wait on NIB to publicly deny my forecast so far. I would tell you a million times, go to the nearest NIB’s service centre and apply for a statement of your contribution account. I am quite certain that you would find several errors. I can guide you on how to correct the errors.

Several persons on reaching their retirement age are now discovering that their employers have not been paying their contributions. Many know that their employers are not paying NIS for them but feared losing their jobs if they were to inform NIB. NIB knowing this being a common practice among employers especially those who employ domestics has obtained parliamentary approval from January 7, 2008 to prevent those of you who are aware that your employer does not pay NIS from receiving your benefit.

Let me quote the following law from the NATIONAL INSURANCE (Contribution) (Amendment) Regulations, 2008 , Regulation 10 and be so guided.

“Where the Board (NIB) is satisfied that the insured person did consent to (an agreement to a course of action) or connive at ( to shut one’s eyes to a thing that one dislikes but cannot help) or by any negligence ( lack of proper care in doing something) on his (her) part, cause the late payment or failure to pay contribution, then that contribution or purported period of employment shall be disregarded in determining the insured person’s benefit.”

Let me repeat what the above law means to me. An employed person goes to NIB to file for a retirement benefit, tells the officer that he or she is aware that no NIS was paid for him but could not complain before to NIB because of fear of losing his job. This is all the evidence that NIB requires to deny you your benefit. On the other hand, if you told NIB that you believed that your employer was paying NIS you then have a good chance of receiving your benefit. While NIB would deny you from your benefit, they would go after your employer for the outstanding contributions.

Before you file your application for your retirement benefit you should first obtain a statement of your contribution account from NIB. If you have at least 750 recorded then you can proceed to file your application. At all times, you must obtain an acknowledged copy of your application and any document so produced to NIB. Better yet, have a competent person advise you before filing any type of claim for benefit.

1. Do you know that if you are the recipient of a retirement grant, upon your death your spouse and children under age 19 years are not entitled to receive survivor’s benefit?

2. Do you know that if you are receiving an NIS retirement pension you can go back to work and NIB cannot stop your pension?

3. Do you know that while you are receiving a pension you are covered for employment injury benefit?

4. Do you know that you can receive three pensions at the same time,
(1) Retirement Pension, (2) Disablement Pension and (3) Survivor’s pension.?

5. Do you know that you can pay one contribution in the lowest class ($16.80) and upon your retirement you can get $2,000 as a retirement grant?

6. Do you know that you cannot challenge any decision given by NIB related to your claim for benefits if it was made more than twelve months?

7. Do you know that if you are employed by more than one employer in the same contribution week each employer has to pay NIS but only one contribution would be credited to your account?

If I can be of any help in explaining any issue that I may have failed to expand enough, please let me know. I shall be grateful to you for any suggestions you may want to share with me for improving this Column.

You can obtain free consultation on any matter related to NIS from Mr. Ramnath Ramcharitar, a competent NIS Consultant. He was the Registrar for over twenty years at the National Insurance Appeals Tribunal. Contact him at 10 Victoria Square East, Port of Spain or telephone him at 623 7952, 653 7149 or 672 7077.

Kindly share your NIS concerns with me.