The Increase in the NIS contribution rate will take effect from June 1st 2024.
According to the Finance Ministry, the raise will be gradual, from 10% to 15% with the planned schedule of contribution rate increases included in the regulations.
June 1st 2024 will present a 12% increase; January 1st 2025 (13%); January 1st 2026 (16%) and January 1st 2027 (15%)
In the case of employed persons, this increased contribution rate will be split evenly between the employer and employee.
“From an OECS perspective, our NIS’ current contribution rate of 10 percent is one of the lowest in the region, similar to St. Lucia and Anguilla. However, the Saint Lucian and Anguillan rates were at 10 percent since 1979 and 1982, respectively, while our NIS’ contribution rate of did not reach 10 percent until 2014, three decades later. As such, Saint Lucia and Anguilla were able to build up greater reserves before their respective funds matured. The other OECS countries, such as Grenada, Antigua, Dominica, and Montserrat, have recently passed legislation to increase contribution rates to 16%, 16%, 15.5% and 15%, respectively,” said Minister Gonsalves.
The ULP lead Government said SVG needs to adjust its contribution rate to meet the growing social security costs occasioned mainly by demographic risks, adding that the change the current age pension to a retirement pension. This includes not awarding early-age pensions – to those who have not retired or still earn more than 50% of the wage ceiling.
“Early-age pensions would, therefore, only be paid upon retirement or to the elderly with lower incomes rather than to everyone who claims before the pensionable age. Transitioning to a retirement pension is practiced in Barbados, Bahamas, Grenada, St. Lucia and Trinidad. There are no early retirement pensions in some countries, such as Anguilla, BVI and Montserrat.”
“Applying a reduction factor is typical in the private and public pension sectors. Typically, this reduction factor ranges from 6% to 9%. As indicated, in the Saint Vincent and the Grenadines context, the early-age pension has been a significant driver of pension costs in the past few years and has significantly tempered the cost savings from the 2014 adjustment in the retirement age. Increase the reference wage period used to compute pension from the five best years to the seven best years of contributions,” Gonsalves stated.
To improve benefit adequacy the Government will proceed to increase insurable wages from $1,000 per week ($4,333 per month) to $1,200 per week ($51,996.96 per annum), effective 1 April 2024.
This increase will ensure that the NIS remains relevant to higher-income workers in Saint Vincent and the Grenadines.
Increase in the minimum pension from $70 per week to $80 per week, will take effect from March 1st 2024. This increase, according to the Government will protect the most vulnerable category of pensioners who have witnessed a disproportionate reduction in the real value of pension due to recent inflationary pressures.
