GRENADA-FINANCE-Grenadians to pay increase in NIS contributions from February 1

ST. GEORGE’S, Grenada, CMC – Grenadians now have to pay a 12 percent contribution towards the National Insurance Scheme (NIS).

Last week, NIS director Dorsett Cromwell wrote to employers outlining the reasons and justification for the one percent increase initially announced by Prime Minister and Finance Minister Dickon Mitchell when he presented the 2023 budget statement in December.

“The 12 Actuarial Review made the recommendation that the National Insurance Board institute a permanently funded unemployment benefit with a contribution rate increase of 1% in 2023 to be shared equally by the employer and the employee,” said the letter, noting that the recommendation was accepted by the National Insurance Board and approved by Cabinet on January 16.

Section 22 of the National Insurance law mandates the conduct of actuarial reviews on the National Insurance Fund every three years.

“In light of the above, the Board anticipates that this recommendation will come into effect in February 2023, and therefore, the contribution rate will increase by one percent from 11 to 12 percent shared equally between employers and employees,” according to the letter.

It said that employees’ rate will now be 5.5 percent while employers’ rate will be 6.5 percent.

The new rates go into effect from February 1, according to a special publication of the official Gazette signed by the Minister Responsible for Social Security, Phillip Telesford.

Last December, Prime Minister said a permanent unemployment benefit would be established with the NIS, saying, “this program will provide cash transfer to workers who are rendered unemployed in the event of a natural disaster, pandemic, or other such shocks.”

He said the current NIS is an essential pillar in the social protection architecture and that his administration will take some tough decisions to ensure citizens are guaranteed a pension when they can no longer work.

“In the current construct, the NIS will be bankrupt in the next 10-12 years…. Therefore, we will implement the following recommendations of the Actuary next year: (i) Increase the pensionable age on a phased basis from 60 to 65, starting with a move to 61 by January 2024. (ii) Gradually increase the contribution rate for employers and employees from 11 to 16 cent by 2031, starting with an increase in 2023 to 6.5 percent and 5.5 percent, a 0.5% increase for employers and employees, respectively,” he said.

He said the government would also amend the NIS Act and strengthen the existing system to include protection for children of deceased insured who are disadvantaged due to the negligence of a parent and the inclusion of survivors’ and maternity benefits for persons who are in common law relationships.