By JADE RUSSELL

Tribune Staff Reporter

jrussell@tribunemedia.net

NATIONAL Insurance contribution rates will increase by 1.5 per cent on July 1 and rise by that amount every two years for the next 20 years, Immigration and National Insurance Board Minister Alfred Sears said yesterday. However, last night, the Office of the Prime Minister said only the rise for July 1 this year was confirmed - with no decision yet taken on future years. 

The rate would be equally split between employers and workers and also apply to self-employed and voluntarily insured people.

Mr Sears said the increase is needed to prevent the fund from collapsing, noting there has been just one increase since the fund was established in 1974.

 Mr Sears noted that, according to NIB’s 11th Actuarial Report by the International Labour Organization (ILO), the fund would become insolvent by 2028 absent action. 

 “We can no longer delay or ignore this issue, as it affects our present and future welfare,” Mr Sears said. “We have a collective responsibility to protect and preserve the National Insurance Board.”

 “This gradual increase in the rate of contribution will enable NIB to continue providing its vital services and benefits to our citizens and workers. It is projected that from 2030 onwards, NIB will begin to experience a surplus when the total income will exceed the projected expenditure. It will help us maintain the sustainability and effectiveness of NIB, ensuring that it remains a reliable support system for everyone in our beloved nation.”

 However, in a statement last night, the Office of the Prime Minister said: “An Actuarial Review of NIB recommended increasing the contribution rate not just this year but every two years, for years to come. Those recommendations were repeated today by Minister Sears. These continued rate increases would be required in a worst-case scenario. A decision has yet to be made beyond the initial 1.5 percent announced to commence on July 1, 2024.

 “As we move forward with comprehensive reforms, policy-makers will continuously evaluate the efficiencies gained, and consider the best path to delivering sustainability. 

 “We advised last year that a rate increase would be implemented this July, in order to provide advance notice. We are aware of the burdens of the high cost of living, made worse by a global inflation crisis, and policy decisions will continue to reflect consideration of what is in the best interests of the Bahamian people.”

 Mr Sears noted that The Bahamas offers more benefits than other countries in the region except Barbados. He added that pre-COVID, The Bahamas was the only CARICOM country, other than Barbados, to offer unemployment benefits.

 “I assure you that every effort has been made to ensure that this increase is reasonable and proportionate,” he said. “The phased approach will allow for adjustments to be made gradually, giving each person time to plan and prepare accordingly.”

 Mr Sears said the increases would be manageable for minimum wage workers. He said in the first year, among those paying the minimum weekly wage of $260, the employers’ portion would increase from $15.34 to $17.29, and the employees’ contribution would increase from $10.14 to $12.09.

 He noted this represents a difference of $1.95 each week for the employer and employee. For monthly salaries at a minimum wage of $1,127, employers and employees will pay a difference of $8.45 each month.

 Mr Sears said the increased contribution rates will be accompanied by a comprehensive “programme of reform of NIB” and legislative amendments to the National Insurance Act to strengthen its financial sustainability.

 Later yesterday, Free National Movement Leader Michael Pintard said people must now determine what they must do to access benefits even though “their spending power is not dramatically reduced”.

 “Do we then, for example, bump up what they were making so that they can continue to benefit from NIB without it having to come out of their salaries? That’s a very real consideration. That’s the first thing that went in my head first,” he said.