Dr. Nigel Clarke
Citing fears the National Insurance Scheme (NIS), which pays out pensions, could run out of money in another 19 years, the government has announced that Jamaicans will have to make increased NIS contributions come April 1.
Making the announcement in the House of Representatives Tuesday afternoon, Finance Minister Dr. Nigel Clarke said the rate would move from five per cent to 5.5 per cent on April 1, 2019. The increase is to be shared equally by the employer and employees at 0.25 per cent each.
Additionally, the minister announced that the contribution rate will further increase from 5.5 per cent to six per cent, effective April 1, 2020.
Dr. Clarke explained that an actuarial study in 2016 revealed that without an increase in contributions, the National Insurance Fund would have a negative cash flow by 2029.
He said this is because outflows from the fund have been outstripping inflows for the last 10 years.
"The actual report further calculated that 2037 (i.e. in 19 years), the NIS would be completely depleted if we do nothing, it would go to zero," he revealed.
Dr. Clarke also announced that the wage ceiling for calculating pension contributions is also to be raised.
In the meantime, the Finance Minister has set up a commission to review the National Insurance Fund's investment framework.
It is to be chaired by former head of treasury at Sagicor Financial Corporation, Rohan Miller.
The members have been drawn from the financial sector, trade unions and the community of retired persons.