Eustace calls on Government, NIS to explain recent changes

More public awareness is needed because of the recent changes in employee and employer contributions to the National Insurance Services (NIS) and the agency’s payouts, says Leader of the Opposition Arnhim Eustace.{{more}}

As of January 1, 2014, NIS contribution will rise two percentage points to 10 per cent and employers and employees will share the contribution equally, Prime Minister Dr Ralph Gonsalves announced in the Budget Address last week.

He further announced increases in some NIS benefits and a gradual increase of the retirement age to 65, up from 60.

Eustace said on “New Times” on Nice Radio yesterday that the government and the NIS should embark on a public relations project to educate the public about the changes.

“Is not everybody will grasp these things. You need to explain. Some people might be hearing about this for the first time,” Eustace said.

He noted that it was announced that people aged 58 or older as at December 31, 2013 will be allowed to retire at 60.

“But what about those 56, 57? Those may have to wait a longer period of time until they reach 61,” he said.

“The younger you are, the longer you will have to wait; there is no provision here for anyone under 58,” he said.

“This is not a criticism. I want people to understand what the implications are for them. People have to look at these things and I believe that it is very important that the government and NIS should launch a public relations campaign to explain these things to the public,” Eustace said.

The changes will take more money from people’s pockets and people would become eligible for pension later in life, and it was important for people to understand what was going on, Eustace said.

“I have been saying for a long time that the contribution age and the amount will go up. I have been saying so for a while, but here it is now, the contribution rate gone up and the number of weeks eligible for pension is going up over time by 250 weeks,” Eustace said.

Increases necessary – PM

The prime minister said the change in the retirement age will begin in January 2016, when it will be increased to 61 years.

By 2018, the retirement age will have increased to 65 years, Gonsalves said.

“Persons who are aged 58 and older as at December 2013 would retire at age 60 and therefore would not be impacted by this change,” Gonsalves said.

He explained that this increase was necessary in order to reflect the increasing life expectancy and as a result, pension payments will be delayed and paid out for a shorter period of time.

The change is expected to lessen the financial burden on working populations, to ensure sufficient funds will be available to the NIS to pay out the increasing number of old age pension benefits.

Gonsalves also announced that there would be a gradual increase in the number of years required for pension eligibility — moving to 750 week, up from the current 500 weeks.

This change will be implemented over 12 years, beginning January 2016, when the required weeks will be increased to 550 weeks, increasing thereafter until 2028.

However, the minimum number of contributions will remain at 500 weeks for the time being, Gonsalves said.

He spoke of a proposed change in the rate of pension entitlement for each year’s service. Under the current system, he explained, a pensioner would receive a pension of 30 per cent for the first 500 weeks of contribution and 1 percent for each 50 weeks of contribution in excess of 500 weeks.

“Under the proposed system, persons would receive 30 per cent for the first 750 weeks of contribution and 1.2 percent for each 50 weeks of contribution in excess of the first 750 weeks of contribution,” Gonsalves said.

Other reforms outlined include changing the reference wages used to calculate pension from three of the last 15 years to the best five years ever. (DD)