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NIB Press Release On Report of 8th Actuarial Review of the National Insurance Fund

9/4/2009 12:00:00 AM

The National Insurance Board

Press Release


On Report of 8th Actuarial Review of the National Insurance Fund
September 4, 2009



On September 2, 2009, Prime Minister the Right Honourable Hubert Ingraham, tabled in the House of Assembly the report of the 8th Actuarial Review of the National Insurance Fund, which was completed and formally presented to Government in 2008. The Report, which covers a review period from January 2002 to December 2006, gives a comprehensive assessment of the current and future finances of the National Insurance Fund, and reviews the state of the country’s primary social security system from a social standpoint, assessing the adequacy and relevance of the level of benefits now offered. The Review, like all others prior to it, makes recommendations designed to strengthen both the social and financial aspects of the Fund to ensure that National Insurance is able to meet its obligations well into the future. It takes a historical look at past trends and experiences as well as makes financial forecasts for the future. Demographic and financial projections up to 2066 have been presented.

As in previous actuarial reports, the overriding message of the 8th Review is that the National Insurance Fund is sound; however, specific changes must be made to the social security programme to keep it viable for the long-term. For example, it warns that the current contribution rate of 8.8% is not sufficient to sustain the current benefit promise indefinitely. It also warns that benefits paid by National Insurance will begin to lose relevance if insurable wages do not keep relative pace with actual income and if other changes are not made. It says these and other challenges, if they are not addressed, could mean a depletion of the National Insurance Fund by the year 2029 to 2035.

But even before the 8th Review was tabled, NIB had started on making specific changes aimed at increasing revenue and controlling the growth of expenditure. These administrative initiatives and measures are already addressing deficiencies, strategically positioning the Board for the future, and bringing about operational efficiency and value creation.

For example, NIB now has a special Compliance Unit that is keenly focused on improving compliance efficiencies. Already, this Unit is meeting with success as evidenced by the fact that contribution collection is very strong despite the current sluggish economic conditions. There has also been an increase in the prosecuting of delinquent employers and self-employed persons. Currently, NIB averages some 100 cases per month and, as prosecution is a last resort, we negotiate settlement in a significant number of cases monthly.

As for changes in the provisions of the National Insurance Act, 26 specific amendments have already been recommended and approved by the Minister responsible for National Insurance. Among the recommendations are:

• Increase the ceiling on insurable wages to $600 from the current $400 per week.

• Increase the number of contributions required to qualify for Retirement Benefit from 150 to 500 weeks. 

• Change the method used to calculate Retirement/Invalidity Benefit to one that uses wages over the best 5 rather than 3 years, thus ensuring a better relationship between contributions made and pensions received.

• Change the wage ceiling for pensionable civil servants to that of all other contributors.

• Include in insurable wages gratuities and tips that are paid as part of regular wages for workers in the hospitality sector,.

• Remove the limit on earnings for someone in receipt of Retirement Benefit

• Introduce triennial automatic indexation of pensions and grants with adjustments linked to price increases.

• Provide for the payment of both Retirement/Invalidity benefit and Survivors benefit where an insured may be otherwise entitled to both.

• Introduce a Survivors Grant equivalent to 1 year’s pension, payable to widowed spouses who do not qualify for a Survivors pension either because of their age or lack of dependants.

• For Sickness and Maternity benefit, require that the person must have been employed on the day of or prior to onset of illness and reduce the waiting days for Unemployment benefit to 3 days.

• Extend coverage for all benefits, except Unemployment Benefit, to all self-employed persons and adjust the contribution rate for all self-employed persons to 8.8%.

• Allow Invalidity Assistance to be payable from age 1.

• Establish stricter means test for Assistances.

NIB’s Management accepts the Actuarial Recommendations, consequently, our strategies are all geared towards making the organization and the social security programme more efficient, relevant and sustainable. We are focused on long-term reduction of operating costs, and the further and continuous improvement of our collection efficiency.
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