by Linda Straker
- Actuarial reviews of National Insurance Fund mandated by law every 3 years
- Extraordinary Gazette with new rates published on Monday, 30 January 2023
- Earnings from increase will establish permanent unemployment benefit
Government has gazetted the order requiring employers, employees, and registered self-employed people to pay an increased contribution rate on salaries. The earnings from that increase will go towards establishing a permanent unemployment benefit.
On 27 January 2023, Dorsett Cromwell, Director of the National Insurance Scheme (NIS), sent a letter to all employers explaining to them the reason and/or justification for the 1% increase that will push the rate to 12%. The increase was initially announced by Prime Minister and Finance Minister Dickon Mitchell when he presented the 2023 budget statement.
“The 12 Actuarial Review made the recommendation that the National Insurance Board institute a permanent funded unemployment benefit with a contribution rate increase of 1% in 2023 to be shared equally by the employer and the employee,” said the letter which explained that the recommendation was accepted by the National Insurance Board and approved by the cabinet on 16 January 2023.
Section 22 of the National Insurance law mandates conducting actuarial reviews of the National Insurance Fund every 3 years.
“In light of the above, the Board anticipates that this recommendation will come into effect in the month of February 2023 and therefore the contribution rate will increase rate will increase by 1%, from 11% to 12% shared equally between employers and employees,” said the letter which pointed out that employees’ rate will now be 5.5% while employers’ rate will be 6.5%
The Government Printery published an Extraordinary Gazette on Monday, 30 January 2023 signed by Phillip Telesford, Minister Responsible for Social Security, with the new rates which will go into effect as of Wednesday, 1 February 2023.
While presenting the 2023 budget statement on 5 December 2022, Prime Minister Mitchell said that NIS will establish a permanent unemployment programme. “This programme will provide cash transfer to workers who are rendered unemployed in the event of a natural disaster, pandemic, or other such shocks,” he said.
He also said that the current National Insurance Scheme is an important pillar in the social protection architecture in this country and his administration will take some tough decisions that will ensure citizens are guaranteed a pension when they are no longer able to work.
“In the current construct, the NIS will be bankrupt in the next 10-12 years… Therefore, we will implement the following recommendations of the Actuary next year: (i) Increase the pensionable age on a phased basis from 60 to 65, starting with a move to 61 by January 2024. (ii) Gradually increase the contribution rate for employers and employees from its current level of 11% to 16% by 2031, starting with an increase in 2023 to 6.5% and 5.5%, a 0.5% increase for employers and employees, respectively,” he said.
He also disclosed that Government will amend the NIS Act and strengthen the existing system to include protection for children of deceased insured who are disadvantaged due to the negligence of a parent, and the inclusion of survivors’ and maternity benefits for individuals who are in common law relationships.