Dolsingh: NIS increase will be a burden

In his 2013 budget presentation earlier this month, Finance Minister Larry Howai proposed an increase in maximum insurable earnings under the National Insurance Scheme (NIS)—a compulsory contributory system in existence for the last 40 years. The contribution rate of 11.4 per cent is expected to increase to 11.7 per cent next year and then to 12 per cent in 2014 with subsequent increases until 2010.

At present, the ceiling is $8,300 and the highest monthly contribution is $218.31. By 2020, the ceiling will be $22,000. The retirement pension is now $3,000 but with the proposed increases over the next eight years, Howai did not say whether it will increase.

National insurance consultant Hubert Dolsingh is not in agreement with the increase in rates and said he believed it will be a burden on the insured population and employers who pay two thirds of the contribution rates. He also said NIS should not be politicised and should not be an item in a national budget.

Dolsingh said the progression in increases could result in rates as high as $500 a week by 2020. He said, “If at $8,300 you are paying $218.31, by 2020 that will be two and a half times the amount.” He spoke in an interview on Thursday at his office on Victoria Square in Port-of-Spain.

Dolsingh suggested that the payment of contributions should be changed since if the current method remained, it will be difficult for employers and employees to maintain the compulsory form of insurance. He felt that the National Insurance Board (NIB) was moving towards building a revenue bank rather than looking at the socio-economic status of the population.

He said, “It is my belief that there should be no increase at this current time. I find it will be a burden on the insured population and the employers. “They first must show the employee what is the benefit to be derived.” With the exception of pension, Howai announced that all other NIS benefit payments would be increased by 50 per cent. Sickness, maternity allowance, invalidity, survivors and employment injury will be increased by 25 per cent in 2013 and 20 per cent in 2014.

He said minimum survivor’s benefits of spouses, children, dependant parents and orphan children of a deceased contributor or a NIS pensioner would be increased to $600 for spouse, child, dependant parent and $1,200 for orphans. Dolsingh said this was long overdue. Another area of contention is the 750 contributions or more which qualifies a person for the retirement pension.

He said, “The system is 40 years old and the maximum pension payable is $3,000. “It is payable for persons who have worked 15 years but what about people who have worked for 40 years. “Does that make sense? “You work for 15 years and you’re getting the same benefit as the person who paid for 40 years.”

He said there were provisions in the National Insurance (benefits) Regulations for the payment of increments and read Regulation 16 which states: “An insured person who, on attaining retirement age, has made a minimum of 750 contributions shall be paid a retirement benefit.

“The rate of pension payable to an insured person who qualifies for pension and has made more than 750 contributions shall be increased over the basic pension rate for every 25 of such additional contributions.” Dolsingh asked, ‘“Why is it that people who have qualified and have paid contributions from the inception of the system on April 10, 1972, to date and have paid 2,116 contributions are denied the increments?”

He called for Howai and the Government to provide clarity over the new proposals since he said most employees were unaware of their benefits. He said Howai should not have said anything about NIS in his budget because a budget was based on revenue from taxes.

“NIS is a separate entity, so when a minister stands up and says the pension is $3,000, that is not a political decision, it is an actuarial decision based on the contributions of employers and employees and it should not be an item in a budget. “Why do they politicise NIS when it is a contributory system where money is deducted from your pay?

“NIS is not taxes,” he said. The NIB celebrates its 40th anniversary this year and while Dolsingh said its progress was acceptable, he felt there was a low level of service. “It hurts me to see that people have lost millions of dollars because of the low service,” he said. Among some of his recommendations to Howai in a letter dated July 2 were:
• The establishment of a Complaints’ Authority Board;
• Regulation to provide a time limit for the determination of claim for benefits;
• Regulation to provide insured people with a statement of contributions from April 10, 1972, to June 20, 2012, and thereafter, an annual statement in accordance with the contribution year;
• Repeal Regulation 15A under the National Insurance (Contributions) Regulations where the board has the authority to disallow the payments of benefits even where contributions are paid.