Pension Reform 2024

The National Insurance Services (NIS), like social security systems worldwide, will be implementing pension reform measures. This year, the NIS will start implementing measures from March 1st, and continue on June 1st.

Factors such as an ageing population, the prolonged pandemic, natural disasters, and socioeconomic issues are all challenges that have prompted the need for change to ensure the long-term sustainability of our national safety net.

The NIS has confronted economic, financial, and demographic challenges, including a defined benefit social security program that posed future financial sustainability concerns. However, strategic management of our portfolio has helped the institution remain resilient through each economic shock and laid the groundwork for social security system reform.

To Improve Financial Sustainability

• INCREASE CONTRIBUTION RATES

  The NIS will gradually increase its contribution rate from 10% – 15% by 2030.
  
  The current rate is 10%; employer 5.5% and employee 4.5%. The first increase will be effective from June 1, 2024, where contribution will move from 10% to 12%.
  
  The change will be shared equally. The timeline for increases and how the contributions will be split between employee and employer are provided below:

• EARLY RETIREMENT PENSION

  Early retirement pensions will now be paid only to persons who are retired and attain at least age 60 but are below the pensionable age. This includes not awarding early-age pensions to those who have not retired.
  
  

• EARLY REDUCTION FACTORS

  There will be an increase in the reduction factors that apply to early retirement pensions from % (0.5%) per month (6% per year) to  % (0.67%) per month (8% per year).
  
  

• WAGE PERIOD

  The NIS will increase the reference wage period used to compute pension, from the five best years to the seven best years of contributions. This means we will use the seven (7) years in which an insured person’s wages were the highest.

To Improve Benefit Adequacy

• INSURABLE WAGES

  There will be an increase in insurable wages from $1,000.00 per week ($4,333.00 per month) to $1,200 per week ($5,200.00 per month) effective June 1, 2024.
  
  

• PENSION INCREASE

  The minimum pension will increase from $70 per week to $80 per week from March 1, 2024.
  
  

• UNEMPLOYMENT BENEFIT

  The NIS will introduce a permanent Unemployment Benefit starting January 2025.

To Improve Coverage

• SELF-EMPLOYED PERSONS

  The NIS will extend social security coverage to include the participation of self-employed persons, including allowing self-employed persons to qualify for Employment Injury Benefits and implementing a new approach for self-employed persons and informal sector workers to easily pay their NIS contributions.

The NIS is determined to craft a reform solution that reflects our Vincentian realities and peculiarities. Through inclusive and people-centred social security services, we are committed to protecting you in uncertain times.