Gail Alexander
An amnesty on penalties and interest on outstanding National Insurance (NIS) contributions for the period July to December will also allow errant employers to register with the National Insurance Board (NIB).
And the entire package is estimated to earn NIB $161 million in the first year and $792 million over the next 10 years.
Finance Minister Colm Imbert spoke about the plan in piloting the National Insurance Amendment Bill 2020 in the Lower House on Wednesday. It was passed and must now be debated in the Senate.
The bill allows for waiver of interest/penalties on NIS payments over July 1 to December 31, 2022 and is geared to increase the registration of employers and NIS contributions.
It applies to employers existing prior to June 30, 2022 and those registering in the July to December waiver period. Provisions also increase penalties for submitting false information.
The amnesty is also to provide contribution income to increase the NIB Fund’s value, since “as Max Senhouse says ‘the NIB needs the money’,” Imbert added, citing a $1 billion deficit between NIS contributions and benefits.
On the 2022 amnesty, Imbert noted a previous 2012 amnesty where 2,310 employers made outstanding NIS payments and which brought in an additional $36.8million in outstanding contributions.
He said NIB’s data estimated that at June 2017, only 84 per cent of employers were registered with NIB and 4,000 employers are currently not registered.
Imbert said NIB estimated the potential for contributions lost due to unregistered employers was around $906 million for the year 2017.
However, the projected incomes from the upcoming 2022 amnesty– $161 million in the first year and $792 million in the next 10–are based on NIB actuarial projections.
He added these were “extremely conservative” figures, since it’s assumed only about 10 per cent of the employers may respond.
Despite returns the amnesty may bring, Imbert expected NIB will be very vigilant over the coming period regarding fraud risk by unscrupulous companies or persons falsely seeking retirement grant.
NIB has been active in addressing errant employers with 17,553 audits done in recent years. Other monitoring also resulted in collection of $1.3 billion in arrears on contributions over 2019-2021.
He said five years ago, experts estimated the NIS fund would be depleted by 2035 due to the shortfall between contributions and benefits– but things have changed and the fund is now doing very well. It increased a year ago and assets earned sufficient income to make up the $1 billion difference. Currently, he said contributions total $4.5 billion and benefits around $5.5 billion. (GA)