Pension Reform

“Let’s reform for greater security!”

NIS EMBARKS ON PARAMETRIC REFORM, EFFECTIVE JANUARY 1, 2014

NIS is celebrating 27 years of existence. This signifies that we are a maturing plan. It is therefore essential for us to assess our current pension system and make necessary changes so that we can continue to fulfill our mission to adequately provide social security for the citizens of Saint Vincent and the Grenadines. So let’s reform for greater security!

 

WHAT IS PARAMETRIC REFORM?

Parametric reform involves changing one or more of the parameters of the pension system. Parameters include contribution rate, pensionable age, rate of benefits etc.

 

WHY DO WE NEED TO REFORM?

We need to reform in order to ensure SAFETY:

  • Security of benefits
  • Adequacy  of benefits
  • Financial sustainability
  • Efficiency
  • Transparency
  • Yield

 

PARAMETRIC CHANGES TO THE NIS SYSTEM:

1. PENSION INCREASES

Pensions will be increased as follows:

YEAR OF PENSION AWARD RATE OF INCREASE
1 Jan 2010 to 31 Dec 2010 1.5%
1 Jan 2009 to 31 Dec 2009 3.0%
31 Dec 2008 and before 4.5%

 

2. GRANT INCREASES

 

CLAIM TYPE PREVIOUS AMOUNT PARAMETRIC INCREASE
MATERNITY GRANT $630 $660
FUNERAL GRANT $4,330 $4,525
EMPLOYMENT INJURY FUNERAL GRANT $4,330 $4,525
NON-CONTRIBUTARY FUNERAL GRANT $2,165 $2,262.50
3. ENHANCEMENT OF SURVIVORS’ BENEFIT

The age entitlement for a Survivors’ benefit for a child will increase from 16 to 18 years, and  continuing until 21 if in full time education.

4. CONTRIBUTION RATE

The contribution rate will be increased from 8% to 10% from January 1, 2014

  • Employers will pay 5.5%
  • Employees will pay 4.5%
  • Self-employed will pay 9.5%
  • Voluntary contributors will pay 8.84%

 

5. NORMAL PENSION ABLE AGE

(age to receive your NIS pension)

The normal pension age will be gradually increased from 60 to 65, over a 15 year period as follows:

  • Present to 31 Dec 2015         60
  • 1 Jan 2016 to 31 Dec 2018      61
  • 1 Jan 2019 to 31 Dec 2021      62
  • 1 Jan 2022 to 31 Dec 2024      63
  • 1 Jan 2025 to 31 Dec 2027      64
  • 1 Jan 2028 and onwards         65

 

YEAR OF BIRTH PENSIONABLE AGE
1955 and before 60
1956-1957 61
1958-1959 62
1960-1961 63
1962-1963 64
1964 and after 65

 

6.EARLY PENSION AGE

An individual may receive his/her pension as early as 60. The pension would be reduced by 6% for each year you retire before normal pensionable age.

7. WEEKS REQUIRED FOR FULL PENSION ELIGIBILITY

The minimum required weeks of contribution will be gradually  increased from 500 weeks ( 10 years) to 750 weeks ( 15 years) as follows:

  • Present to 31 Dec 2015        500
  • 1 Jan 2016 to 31 Dec 2018     550
  • 1 Jan 2019 to 31 Dec 2021     600
  • 1 Jan 2022 to 31 Dec 2024     650
  • 1 Jan 2025 to 31 Dec 2027     700
  • 1 Jan 2028 and onwards        750

 

8. REFERENCE WAGES

(wages  used to calculate pension)

The reference earnings will be adjusted from the “best 3 year” average in the last 15 years to the “best 5 years” of earnings in the system.

 

9. ACCRUAL RATE

(rate of pension entitlement for each year of service)

The rates for full pension payment will still range between 30% and 60%. The following adjustment, however, will be made:

  • A rate of 30% for the minimum qualifying contribution weeks plus 1.0% for every 50 contribution weeks over the minimum qualifying conditions, up to a maximum of 60%