Within one year, over 26,000 people have dropped out of the National Insurance Board’s (NIB) database, further jeopardising its ability to make payments.
According to data provided by the NIB, on June 30, 2017, there were 479,036 people in the database paying national insurance contributions monthly.
By June 30, this year that number had shrunk to 452,234 people —a total of 26,802 people less.
Those figures, however, do not account for the either 4,700 Petrotrin employees retrenched weeks ago or the 554 TSTT employees sent home within the last month.
National insurance is a compulsory deduction from the salary of workers over the age of 16 and covers all who are employed and registered.
Registration is compulsory, and employers who fail to pay benefits for their employees can be fined. According to the NIB website, “Employed persons who earn $200 or more per week must be registered and are required to be contributors to the National Insurance System. These persons can claim a wide variety of benefits.”
The website outlines 23 benefits in seven categories that are meant to “alleviate the economic burdens of old age, disability, sickness, incapacity and death by providing income replacement against temporary or permanent loss of earning.”
In response to questions sent by the Sunday Guardian, NIB’s executive director, Niala Persad-Poliah revealed that the Petrotrin retrenchment alone would see the NIB lose over $8 million a month.
“The recent retrenchments at Petrotrin will have an impact on the NIBTT as it will account for contribution income losses in excess of $8 million monthly. However, the two newly formed companies, Heritage Petroleum Company Ltd and Paria Fuel Trading Co Ltd are both registered, and contribution remittances are expected upon their commencement of operations,” she wrote.
Both companies are still in the process of hiring, and they are expected to account for a total of 1,000 employees when fully operational.
For the 554 TSTT employees, the NIB will lose over $1.5 million in monthly contributions.
On November 17, 2017, Persad-Poliah, told a Joint Select Committee (JSC) meeting in Parliament, that the NIB fund needed a $50 billion cash injection so it could make payments in the coming years.
Back then, Persad-Poliah said the fund stood at $25 billion.
As of June 30, this year, Persad-Poliah said the fund stands at almost $28 billion.
“Based on the audited financials as at 30 June 2018, the total fund stood at $27,827,327,000. It should be noted, however, that although the fund has increased, this is in the short-term and only due to the prudent management by the NIBTT. If benefit expenditure continues to exceed contribution income, as is projected, the fund will decrease, and this is emphasised in the 9th and 10th Actuarial Reviews.
“The sustainability of the Fund remains NIBTT’s paramount concern. Fiscal prudence continues to be exercised in all decisions. However, we look forward to partnering for much-needed reform measures.”
But Persad-Poliah said since the NIB does not pay unemployment benefits, the recent retrenchments are not expected to impact the existing fund.
“The NIBTT does not provide unemployment benefits to workers; therefore, there is no anticipated payout in respect of such claims for persons recently retrenched. The recently retrenched workers may claim benefits in accordance with the National Insurance Act, just as any other insured person. It should be noted that persons who are not salaried employees will not qualify for short-term benefits.”
But with an ageing population, the NIB fund continues to be jeopardy.
Persad-Poliah said one way the NIB can recover from the expected losses due to retrenchment is to continue to hunt down errant employers who are not paying their employees’ benefits.
“While the recent retrenchments will not result in additional payouts by the NIBTT, it is to be noted, however, that our benefit expenditure will continue to exceed our contribution income due to the ageing population phenomenon that is being experienced globally. Registration of new employers is an ongoing activity for the NIBTT and, as some employers go out of business, new businesses also emerge. NIBTT will, therefore, focus our efforts on compliance.”
She said in the last financial year, the NIB was able to recover $437 million in income arrears alone.
“Employers who are essentially breaking the law by their non-payment of NIB contributions on behalf of their employees will be our focus going forward to ensure that they comply with their obligations, not only to their staff but to the country as well. In the last financial year, the NIBTT was able to recover $437 million in respect of contribution income in arrears. This compliance effort will be intensified in the future.”