By Kimberly Cummins
The estimated 24 000 self-employed people who do not contribute to the National Insurance Scheme (NIS) will be offered incentives to do so, including coverage for on-the-job injuries for the very first time.
Other benefits on the table include scrapping late fees and allowing them to pay contributions at any time during a given year.
These were some of the “innovations” that NIS consultant actuary Derek Osborne revealed during a Zoom discussion on the provisions of the NIS Revitalisation Plan on Wednesday night, hosted by the Barbados Association of Retired Persons (BARP) in collaboration with the NIS, and also attended by deputy chairman of the NIS Rawdon Adams and NIS director Kim Tudor.
Adams said that by increasing the participation of the self-employed in NIS, not only would there be an increase in contributions to the NIS Fund but protection of social insurance would be spread further.
Osborne agreed, adding that it was fundamental to simplify the process so that more self-employed people are motivated to participate.
As a result, going forward, there will be several changes.
Osborne disclosed that for the first ever in Barbados, self-employed individuals will be offered benefits for injuries on the job without increased contributions.
However, he said, unemployment benefits are not yet on the table.
“We don’t think we’re ready yet to provide unemployment benefits to people who are self-employed. It’s difficult to assess,” he said.
“There’s one country in the region who just started and so we’ll see how that goes for the next few years before that comes up as an option. But certainly, this innovation is to enhance self-employed coverage so that more and more of the self-employed persons as they get older, are going to have that secure income coming in for the rest of their lives.”
Additionally, there will be no more requirement for self-employed contributors to fill out a form, there will be no due date for NIS payments and, therefore, no penalties for being late. These individuals will be able to submit contributions for the year any day during that year.
“They can know what their target is for the year because they may earn, say, $4 000 a month on average, they multiply by 17.1 per cent which is a combined rate for NIS and four different levies and they have a target in mind for the year. And then they can pay all of that on January 2, when the doors open at the NIS, or they can go online in their pyjamas and pay on January 1 if they have the money, or they can pay all on December 31, once it is paid for during the year that payment is good for that particular year,” Osborne explained.
“This is not to help the Fund sustain longer; this is to help more elderly Barbadians have that secure income in old age, because if they register and they contribute long enough, they’ll qualify for that secure pension until they die.”
In addition to the recent news that NIS was granted permission by the Central Bank of Barbados to acquire US$40 million (BDS$80 million) to invest internationally, to boost its portfolio diversification in overseas markets, Adams said another initiative introduced to help remedy the NIS’ money woes is an automatic adjustment stabiliser. He explained that this would put in place a requirement for timely action to be taken if the NIS starts to go off course.
“The idea here is that if the National Insurance Fund starts to decline to a point where it can no longer pay for between two and three years’ benefits, and . . . if we get to the point where we see the Fund is no longer worth at least two years’ benefits expenditure, then that triggers and the Government then has to step in and do something to keep it above that threshold,” Adams said.
“If we see that the Fund is going to drop below this threshold, what we call a critical threshold, then the Government may have to make a special contribution to bump it back up. So, all in all, this mechanism is designed to eliminate delay in taking action but also to backstop the overall financing of the system. It is something that hasn’t been put in place here before,” Adams revealed.
The discussions on revitalising the NIS following the announcement last month by Minister of Labour, Social Security and the Third Sector Colin that changes would be made to the age at which Barbadians are eligible for a full NIS pension and the number of contributions required to attain that eligibility, as part of reforms to prevent the depletion of the Fund.
The proposal is for the pensionable age to move from the current 67 years to 67 ½ years in 2028, and then to 68 years in 2034.
The age at which people become eligible to receive a reduced pension would also be adjusted from 60 years to 61 years in 2025, 62 years in 2028, and 63 years in 2031.
There will also be an increase in the number of contributions required to become eligible for pension, from 500 weeks (approximately 10 years) to 750 weeks (approximately 15 years).
(KC)
