The Jamaican government recently increased benefit levels and the contribution ceiling for the country's public pay-as-you-go system, the National Insurance Scheme (NIS). At the same time, those groups of workers that pay flat-rate contributions (such as the self-employed) also pay more each week. The NIS covers old-age, survivors, and disability insurance; cash sickness and maternity; and health care for pensioners and work-injury programs. Since the ceiling on NIS contributions was last raised in October 2003, the value of earnings has eroded because of an accumulated inflation rate of 115 percent.
On July 1st, 2010, retirement benefits were increased by 20 percent, and other benefits (such as disability and death benefits, work injury, and a variety of grants) increased by 11.0–33.5 percent. To help maintain the value of the National Insurance Fund (NIF) and to ensure that benefits and contributions are more closely linked, on August 2, the ceiling on contributions was doubled and is now J$1 million (US$11,503). Private-sector employees and employers each continue to contribute 2.5 percent of wages, while the flat-rate contributions for self-employed and domestic workers rose from J$20 (US$0.23) to J$50 (US$ 0.58) per week. Self-employed workers who earn more than J$20,800 (US$239) per year also pay up to 5 percent of covered earnings. In addition, members of Parliament and the Jamaican Defence Force now pay the same contribution rate as private-sector employees. Previously, they paid the same flat rate as domestic workers.
Currently, the NIF is paying more in benefits than it collects from contributions. As of May 31, 2010, the NIF's net asset value was J$62.3 billion (US$716.6 million). However, according to actuarial projections, the fund could become insolvent in 20 years if no changes are made to the system. The percent of the population aged 60 or older is expected to rise from about 11 percent today to about 14.5 percent by 2025, and the number of pensioners could almost double from 2015 through 2035. Another actuarial review of the NIS will be completed this year to provide the government with recommended changes needed to maintain the sustainability of the fund.
Article with courtesy of Social Security Online
Sources: Social Security Programs Throughout the World: The Americas, 2009; "Cabinet to Receive Submission on Measures to Increase NIF Contribution," Jamaica Parliament, June 24, 2009; "Budget Debate Presentation," Hon. Bruce Golding MP Prime Minister, April 20, 2010; "Strong NIS Reforms—Women to Stay on the Job Longer: Employee Contributions to Double," The Jamaica Gleaner, April 23, 2010; "New NIS Rates Effective August 2," Jamaica Information Service, July 2, 2010; "House Approves Increases in NIS Benefits," Jamaica Information Service, July 16, 2010.