The National Insurance Scheme (NIS) needs operational improvement, changes to the overall structure and improved economic performance.
These were a few of the suggestions touted by the NIS’ Actuary Derek Osborne, yesterday, during a press conference at the NIS headquarters, Frank Walcott Building, Culloden Road, St. Michael.
The Actuary, noting the importance of reform to the NIS, stressed: “The NIS needs more contributors which will occur with economic growth, increasing birth rates or attracting persons with skills to Barbados. Increasing the number of self-employed persons and informal sector workers contributing to the NIS is essential.”
He noted that there were several options available to the department similar to reforms made in 2004 that could be adjusted. He said this could be achieved by Increasing the pensionable age from 67, to anywhere between 68 and 72.
“Any increase would be phased. Increase the first age at which Old Age pensions are payable, anywhere from 62 to 65. The maximum pension payable is now 60 percent and can be reached after approximately 36 years. The number of years required to reach 60 percent can be increased to 40 or 45 years of contributions. The maximum pension replacement rate can be reduced to 50 percent from 55 percent,” the Actuary stated.
While emphasizing that, “under no circumstance will there be a reduction in the minimum pension rate, now at $243 per week”, he noted any changes to the benefits would not happen immediately but in a phased approach.
Mr. Osborne continued: “After 55 years of existence, all benefits will be reviewed making sure each benefit works effectively for those for whom they are intended to benefit.”
The Actuary also suggested that there be payments of a reduced invalidity benefit if someone returns to work for lower earnings, reduction of the maximum unemployment benefit period from six months to four months and a redesign of the Severance Payment Scheme to ensure relevance with current realities. The need for self-employed and informal sector workers from the current one in every eight to one in every two self-employed persons.
He pointed out that improving employer compliance is critical and the NIS must go after employers in a more determined way. “Efforts to identify and deal with employers who have outstanding contributions, make deductions from wages but do not pay them to the NIS, and do not deduct and do not contribute to the NIS, will be introduced.
“Work closely with the Barbados Revenue Authority to increase compliance. Use the powers under the NIS Act to enforce contribution collections on a more consistent basis and go after what it was owed,” he recommended.
Reminding those present that nothing had been decided and these were only options that were available, Mr. Osborne said: “The NIS is not in trouble today, there is no issue paying benefits at this time. It’s only [a] forecast for 13, 14 years down the road. And so we have some time to at least get to have discussions and find a plan that is consistent with Bajan priorities, of what do you really believe is good for the long term of the system in terms of the benefits offered, and how much you are willing to pay for those benefits.”
He continued: “If we take four or five years, then the measures are going to have to be more difficult. If it’s done starting maybe January next year or even June next year…these things take time. So it’s time to consult. It’s time to come up with a set of proposals. It’s time for government to agree on them. It will require amendments to NIS regulations, possibly the Act and so it won’t be in the next few months. It will probably be within a year, hopefully in terms of actual changes taking place.”
The NIS’ mission is to provide timely social security services through the efficient collection and management of funds by a highly motivated, caring and reliable, customer-oriented staff.