AFTER FORMING Unity Workers Union, I went to the National Insurance Department (NIS) to ensure that we would be operating within the law.
At the same time, I took the opportunity to collect some of the handbooks which explain the benefits that are offered by that department.
I am aware that the method of calculating the NIS contributory pension had been changed recently.
However, I was not aware that the new method would result in persons receiving significantly smaller pensions.
But that was not the shocker: the new method now makes it easier for self-employed persons to cheat the system.
Previously, a pension was calculated based on the total value of the contributions that a person paid over the years.
Now, the pension is calculated based on the annual average of the best five years’ contributions.
As a result, a self-employed person can pay his contributions at the lowest rate for the greater part of his working life, increase his contributions to the maximum for five years prior to retirement and receive the same pension as a person who paid the maximum contributions for his entire working life.
At this point it would be best to explain using actual figures.
Let’s say that there are two self-employed persons contributing to the National Insurance Scheme for 25 years: one paying contributions at the rate of $14.65 per month for 20 years and then at a rate of $627.90 per month for five years; and, the other paying contributions for the entire 25 years at the rate of $627.90.
Both of these persons would receive a pension of $382.50 per week.
Who came up with this madness? Don’t take my word for it, go to the National Insurance Office and collect their Self-Employed Handbook and read Pages 11 and 12.
It is obvious that someone messed up. The new system is not equitable. Government must take another look and probably revert to the old formula.
CASWELL FRANKLYN
