BCCEC says rate increase necessary but regrettable action not taken sooner

NASSAU, BAHAMAS- The Bahamas Chamber of Commerce and Employers Confederation (BCCEC) has expressed concern that the increase in the National Insurance contribution rate announced in Parliament on  Thursday will possibly increase the cost of doing business in the country, noting that it was regrettable that action was not taken earlier to prevent such sharp increases.

Still, the BCCEC said in a statement that it recognized that such action was required to ensure the fund's sustainability. 

Immigration Minister Alfred Sears who has ministerial responsibility for National Insurance noted that NIB is "plagued with the challenges of a decline in compliance, benefit expenditure outweighing contribution income, reductions in investment income, high administrative costs, women having fewer children, and individuals living longer."

 This he noted means that the burden on the current workforce is becoming larger and unsustainable. 

"NIB's income comes from the contributions paid by employers and employees, as well as the returns on its investments. NIB's expenditure consists of the benefits paid to the beneficiaries, as well as the administrative and operational costs. Without major reforms, the system risks collapsing under its own weight, leaving future generations without adequate coverage," said Sears, noting that  NIB reform is not a matter of choice but a matter of necessity.

Effective the first Monday of July 2024, the contribution rate for NIB will be increased by 1.5 percent to be shared equally between the employer and the employee, and thereafter a 1.5 percent 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. 

In response to the announcement, the BCCEC said in a statement, "The Bahamas Chamber of Commerce and Employers Confederation has noted the projected increase in the National Insurance rate as indicated by The Minister with responsibility for National Insurance in The House of Assembly today.  We are concerned that this will possibly increase the cost of doing business in the country but recognize that it is required to ensure the survival of the fund, which so many Bahamians depend on."

It added, "Regrettably, action was not taken earlier to prevent such sharp increases since the potential financial deficit of the fund has been discussed in the past. We urge the government and NIB to explore all other means that may be employed to ensure the viability of the fund. We are also hopeful that increased economic activity can cause the projected rate to be reduced sooner than the current timeline suggests. We will be engaging our members in the coming days to obtain their reaction to the increase."

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