Ministry of Labour says NIS is Viable and Sustainable
June 8, 2009The Full Story
The Ministry of Labour and Social Security is advising members of the public that the National Insurance Scheme (NIS) is a viable and sustainable social security programme, capable of delivering meaningful benefits to contributors on their retirement.
In recent years, there has been a shortfall between payout in NIS benefits and collection from contributions. This is due primarily to the regular increases granted in benefits without corresponding adjustments in contributions. Since 1996 benefits have been increased six times, moving from a full flat rate of $300 per week to the current flat rate of $2,000. The wage-related component of the pension benefit has also increased significantly, and a maximum weekly pension of $3,500 is now payable.
The shortfall between contribution and payment is met from the income derived from the investment of the accumulated National Insurance Fund (NIF). The value of assets of the NIF at April 30, 2009 was $53.7 billion.
For the financial year 2008/2009, the average rate of return for the Fund was 10%. The total investment income of the NIF for the same period was $6 billion. However, despite the shortfall between contribution and pay out, there was a surplus of $3 billion.
There is also a recently completed five-year actuaries report of the Scheme, which details future obligations of the NIS and its ability to continue to pay meaningful benefits. There is also a proposal to revise the contribution structure to ensure that the NIS remains viable, in light of the increasing demands for pay-outs arising from the ageing population and the growing number of persons who will become eligible for pension benefits.
The Ministry remains proactive in the management of the scheme, placing emphasis on non-compliant employers. The NIS ACT is being revised to provide stiffer fines and penalties for non-compliance.
The Minister of Labour and Social Security, Hon. Pearnel Charles, is urging Jamaicans to take full advantage of the NIS, which contains generous provisions as a retirement plan.