Disclaimer: The views and opinions expressed by the author(s) do not represent the official position of Barbados TODAY.
by John Goddard
One of the most revolutionary achievements of the Errol Barrow-led administration was the introduction of the National Insurance Scheme. As its slogan goes, “it is more than a contribution; it is a lifeline.”
It is difficult to imagine what retirees would do without it.
However, the time has come for it to be re-organised. First, it may sound harsh, but the Scheme operates like a Ponzi scheme, depending on the contributions of new members to pay those who have spent their working
lives contributing.
National Insurance funds should be invested to make sure that there is always money to pay pensioners.
If this is done well, there would be less fear of the Fund being depleted.
To further safeguard the NIS, the body should be delinked from the control of any Cabinet minister. No government should be at liberty to dip into the Scheme’s reserves to fund government projects.
At present, there is a maximum insurable threshold for National Insurance and this works well if you have one job.
However, for those, like some teachers, who have
part-time employment, the part-time employer is mandated to deduct money for the scheme, notwithstanding the fact that the employee is at his/her maximum. And National Insurance does not refund the payee unless a claim is made.
Many persons have suffered in this way.
The question to be asked is where is that extra money going to? Is it just additional cash for NIS? Once made aware, the NIS should instruct the part-time employer not to make NIS deductions from the worker.
All Barbadians over the age of 67 should be entitled to old age pension.
This would mean that non-contributory pensioners would be eligible for one pension whereas contributory pensioners would receive a non-contributory pension as well as the pension based on his/her contributions.
No Barbadian elderly person should be pauperised because they were not in a position to make contributions to the scheme.
With regard to pensioners and taxation, it is my view that the non-taxable allowance which has remained at $40,000.00 annually since the mid 1980’s should be increased to at least $60,000.00, to be gradually moved to $75,000.00.
This would allow pensioners to have greater disposable income at a time when they need it most to cover living expenses and illness which, of course, occurs more often in old age.
The elderly would be less dependent on state owned health services because they would be in a better position to meet the costs of private care. And, it is not that pensioners are being given a free ride since they will still contribute to the government coffers through VAT.
The National Insurance Scheme has been in existence for three-quarters of a century. Apart from periodic increases in the maximum insurable earnings and increases in the pensionable age, little has changed. Genuine pension reform and re-organisation of the Scheme are necessary.
John Goddard, retired but always an educator.
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