NIS deductions to increase in April

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NIS deductions to increase in April

Wednesday, December 12, 2018

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KINGSTON, Jamaica — The Government has announced that Jamaicans are to begin contributing more to the National Insurance Scheme (NIS).

Finance Minister Dr Nigel Clarke yesterday told Parliament that the contributions will move from five per cent of an employee's salary to 5.5 per cent as of April 1, 2019, while the deductions will see a further increase to six per cent by April 1, 2020.

The increase is to be shared equally between employer and employees, with each absorbing 0.25 per cent.

Clarke cited an actuarial study in 2016, which revealed that the National Insurance Fund would have a negative cash flow by 2029 if the contributions were not increased, and by 2037, would be completely depleted.

He explained that this is due to the fund paying out more than the amount being generated.

In 2016, the NIS paid out pensions to 100,000 individuals, resulting in outflows of $14.87 billion, while inflows only amounted to $12.8 billion, the minister revealed.

Meanwhile, Clarke also announced that Cabinet has approved an increase in the NIS insurable wage ceilingfor the calculation of pension contributions.

The figure, which has not been increased since 2013, will movefrom $1.5 million to $3 million in January 2021, andfrom $3 million to $5 million in 2022.

"This is an inevitable move to ensure that the fund stays sustainable and viable," the minister said.

-- Keleshia Powell

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