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NIB MAY INCREASE EVERY TWO YEARS: Laroda doesn't confirm size of rise . . . but says it's small price to pay

Wed, Jun 21st 2023, 09:07 AM
Finance Politics Tribune Stories

MYLES Laroda said the government is considering increasing National Insurance Board's contribution rate every two years for "a period of time" to stabilise the fund, noting next year's rate increase will be shared equally between employees and employers.

He did not say what the contribution rate will increase to. However, he discussed what would happen if the rate increased by 1.5 per cent.
#“If the rate is 1.5 per cent, the employer’s portion rises from 5.9 per cent to 6.65 per cent, and the employee’s portion rises from 3.9 per cent to 4.65 per cent,” said Mr Laroda, the state minister responsible for NIB in the Office of the Prime Minister. He spoke during his contribution to the Budget debate in the House of Assembly last night.
#“In the first year, paying the minimum weekly range of $260 will increase the employer’s portion from $15.34 to $17.29. Employer’s contributions on the minimum weekly wage will increase $10.14 to $12.09. For both the employer and the employee, this represents a difference of $1.95 per week.
#“For those salaries on the minimum wage of $1,127.67, employers and employees will pay a difference of $8.45 per month. This is less than the cost of a meal at any one of our local restaurants. This is a small price to pay to secure our pensions for the future.”
#“Employers’ weekly payment on the ceiling of $740 per week will increase from $43.66 to $49.21. Employees’ contribution payments on the ceiling of $740 per week will increase from $28.86 to $34.41. For both the employer and employee, this represents a difference of $5.55 per week. For monthly salary on the ceiling of $3,207, employers and employees will pay a difference of $24.05.”
#Mr Laroda noted that, according to the latest actuarial report, the NIB fund could be depleted by 2028.
#The actuarial report considered the lowering fertility rate, women having fewer children, and the growing life expectancy.
#“Today, we have approximately four contributors for each pensioner. By 2078, it is projected that we will have 1.4 contributors for each pensioner, a sharp decline,” he said.
#“Over the last ten years, the average number of pensioners being paid every month has increased by over 35 per cent. This is driving the increase in benefit expenses, coupled with the fact that each year the average benefit for recipient increases as first-time pensioners are being paid higher benefits than in the prior years.”
#Mr Laroda noted NIB is projected to lose $97m this year.

He did not say what the contribution rate will increase to. However, he discussed what would happen if the rate increased by 1.5 per cent.

“If the rate is 1.5 per cent, the employer’s portion rises from 5.9 per cent to 6.65 per cent, and the employee’s portion rises from 3.9 per cent to 4.65 per cent,” said Mr Laroda, the state minister responsible for NIB in the Office of the Prime Minister. He spoke during his contribution to the Budget debate in the House of Assembly last night.

“In the first year, paying the minimum weekly range of $260 will increase the employer’s portion from $15.34 to $17.29. Employer’s contributions on the minimum weekly wage will increase $10.14 to $12.09. For both the employer and the employee, this represents a difference of $1.95 per week.

“For those salaries on the minimum wage of $1,127.67, employers and employees will pay a difference of $8.45 per month. This is less than the cost of a meal at any one of our local restaurants. This is a small price to pay to secure our pensions for the future.”

“Employers’ weekly payment on the ceiling of $740 per week will increase from $43.66 to $49.21. Employees’ contribution payments on the ceiling of $740 per week will increase from $28.86 to $34.41. For both the employer and employee, this represents a difference of $5.55 per week. For monthly salary on the ceiling of $3,207, employers and employees will pay a difference of $24.05.”

Mr Laroda noted that, according to the latest actuarial report, the NIB fund could be depleted by 2028.

The actuarial report considered the lowering fertility rate, women having fewer children, and the growing life expectancy.

“Today, we have approximately four contributors for each pensioner. By 2078, it is projected that we will have 1.4 contributors for each pensioner, a sharp decline,” he said.

“Over the last ten years, the average number of pensioners being paid every month has increased by over 35 per cent. This is driving the increase in benefit expenses, coupled with the fact that each year the average benefit for recipient increases as first-time pensioners are being paid higher benefits than in the prior years.”

Mr Laroda noted NIB is projected to lose $97m this year.

 

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