By FAY SIMMONS

Tribune Business Reporter

jsimmons@tribunemedia.net

ALFRED Sears, Minister of Immigration and National Insurance announced that NIB rates will increase by 1.5 percent effective July 1.

During his contribution to the midyear budget debate in Parliament yesterday, Mr Sears explained that the increase will be split equally between employees and employers with additional 1.5percent increases to occur every two years until July 2044. This will provide for a 15 percent increase over 20 years.

Mr Sears said that the increase is ‘a matter of necessity’. NIB will be increased by 1.5%, to be shared equally between the employer and the employee, and thereafter a 1.5% increase Every Two Years from July 1, 2024 to July 1, 2044. Similarly, the same increase will be applied to self-employed persons and voluntarily insured persons. This gradual increase in the rate of contribution will enable NIB to continue providing its vital services and benefits to our citizens and workers”.

Mr Sears cited a NIB actuarial report that projected that the fund would become insolvent by 2028 if an increase on contribution rates was not implemented.

He said that NIBs current annual income does not cover its expenses, notably to maintain its long-term pension benefit distributions.

He said: “The Actuarial Report recommended that an increase in the contribution rate for the Pension Branch and the actuarial valuation clearly establishes that an increase in contribution is necessary to make the Fund sustainable.

“The 11th Actuarial Review of NIB highlights the importance of implementing reforms to ensure the long-term sustainability of NIB. The Review recommended that a significant increase in the contribution rate is required to pay the full benefits in 2028.”

Mr Sears said that the increase is ‘reasonable and proportionate’ and the phased implementation will allow businesses and employees to plan ahead.

He explained that the rate increase will present a $1.95 increase for minimum wage workers earning $260 weekly.

He said : “I understand that any increase in contributions can cause concern among citizens. However, I assure you that every effort has been made to ensure that this increase is reasonable and proportionate. The phased approach will allow for adjustments to be made gradually, giving each person time to plan and prepare accordingly.

“For example, care was taken to ensure that the impact on minimum wage earners was reasonable. In the first year, if paying on the minimum weekly wage of $260.00, the employers’ portion will increase from $15.34 to $17.29. Employees’ contribution payments on the minimum weekly wage will increase from $10.14 to $12.09. For both the employer and employee, this represents a difference of $1.95 each week. For monthly salaries on the minimum wage of $1,127.00, employers and employees will pay a difference of $8.45 each month.”

He said that NIB will begin to see a surplus from 2030 onwards and the rate increase will be joined with a reformation of the agency including amendments to the regulations to ‘strengthen financial sustainability and account- ability’ and improvements in customer relations and human resources.

He said: “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.

“The increase in the contribution rate will be accompanied by a comprehensive programme of reform of NIB, including legislative amendments to the National Insurance Act, the National Insurance (Chronic Diseases

Prescription Drug Fund) Act, the National Insurance (Benefit and Assistance) (Amendment) Regulations, and the National Insurance (Contributions)(Amendment) Regulations to strengthen financial sustainability and accountability.

“Other reforms will include a global and internal recruitment of qualified Bahamian professionals into the executive management of NIB to execute a transformational improvement in its digital and IT infrastructure, better customer relations, more efficient and effective Human Resource management, reduce administrative costs and improve the investment strategy to produce a better rate of return. We will ensure that NIB better serves beneficiaries to access their benefits and receive timely assistance. The reform measures will not only enhance efficiency but also offer greater accessibility and transparency for all.