FAQs - Contributions

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 What are the changes to the NIS and when will these changes be implemented?

Effective September 5, 2016 NI Contribution rates will be increased from 12% of insurable earnings to 13.2% of insurable earnings whilst the maximum insurable earnings will be increased from $12,000.00 to $13,600.00 per month.

 Why was the decision taken to increase contribution rates?

This increase was recommended by the actuaries who conducted the 9th Actuaria Review as an initial measure to bring the level of benefit expenditure and contribution income back into balance, The percent increase is intended to balance the needs of customers with the long term sustainability of the NI Fund.

 Why was the decision taken to increase the level of Maximum Insurable Earnings (MIE)?

This approach was recommended by the actuaries who conducted the 9th Actuaria Review as an initial measure to bring the leve of benefit expenditure and contribution income back into balance. In the short term, an increase in the MIE Will result in greater contribution income collection. In the long term, the increased MIE will result in greater protection for employees since a greater proportion of their income is insured. The NIBTT will be better able to maintain the level Of benefits into the future.

 How will these Increases affect employees living on constant salaries?

Contributions are linked to salaries received. Persons earning higher salaries wil pay higher contributions up to the maximum insurable earnings. National Insurance contributions are collected based on an earnings class system. Currently there are sixteen contribution c asses or bands. An individual's weekly contribution is determined by the class into which his weekly (or monthly) income falls. Each employee's salary wi be placed accordingly.

 How hard will this increase hit the pockets of employess and employers?

Increases range from $7 per week in class one (i.e. $2.23 per week for employees and $4.47 per week for emoloyers) to $81.90 in class sixteen, (i.e. $27.30 per week for employees and $54.60 for employers). In some cases persons will see a reduction in contributions to the NIBTT at their existing level of income, depending on the earnings class they fall into, based on the new contribution class table. Employees continue to receive 70% tax deductions on all National Insurance contributions. Employers continue to receive 100% tax deductions on all National Insurance contributions paid on behalf of their employees.

 Are there going to be any increases to benefits?

The following benefits rates will be increased as a result Of the change in Maximum Insurable earnings:
1. Retirement
2. Invalidity
3. Survivor's
4. Sickness
5. Maternity Allowance
6. Employment Injury Allowance and related benefits (Disablement pension and death benefit) except disablement grant and medical expenses.

These benefit increases will apply to contingencies that arise on or after September 5, 2016.

 While you speak of the need to increasing the contribution rates and the maximum insurable earnings, what are the disadvantages and who will suffer most?

While it may result in a small loss of disposable income today, the revised contribution rates and earnings classes are intended to promote sustainability of the NIS, and to ensure adequate coverage of employee's earnings. A sustainable NIS means that the NIBTT will be able to continue to pay its current level of benefits, and to make these benefits more socially relevant for generations to came.

 Are the contributions presently adequate to meet benefit demands?

Yes. However, future benefit expenditure is not 100%. Actuarial Reviews will continue to be conducted every 5 years to examine whether the level of contribution and investment income is adequate to meet benefit and administration obligations. It is expected that further increases in contributions will be required.

 Does the employer still contribute twice that paid by the employee?

Yes. Also the employer alone pays class z contributions for unpaid apprentices, persons who are over 65 and still employed and persons in receipt of a retirement benefit and have returned to work.

 What if my employer deducts, but does not remit contributions on my behalf to the Board?

Whether the employer makes the deduction is not even material.  You can visit the nearest NIBTT Service Centre and fill out the complaint form. The information provided would be kept under confidence and an investigation launched. Should our investigations reflect that he has failed to pay contributions due to the Board, he commits an offence. This offence carries a penalty of $4000 and 6 months imprisonment. The employer will now have to pay the outstanding contributions as well as the penalty.

 What if I pay my contributions late?

Where payment is not made by the 15th of the month following the month for which contributions are due a penalty of 25% of the sum due will be charged to the employer.

 If I am over age 60, but not yet 65, receiving a pension and (re)employed, do I have to pay contributions?

No. áAs of March 01, 2004, once you are over 60 years, receiving a retirement pension and have been re-employed on or after March 01, 2004,then your employer pays a contribution in class z for you.

 What happens to the contributions paid during this period?

Person/employer who have overpaid contributions may apply in writing for a refund of contributions overpaid. The prescribed application form (NI 79) is used to apply for refunds. á

 Can I pay in advance?

Yes you can. If however there is an increase in contribution rates, then the employer will have to remit the shortfall.

 If I overpay contributions, will I get a refund?

Yes, once an application is received in writing on the prescribed form (NI 79).

 If I employ temporary persons, do I have to deduct and pay contributions?

Yes. You must register them and pay contribution. It is now an offence to provide incomplete or inaccurate information of registration - the fine is $500. For registering himself or his employee(s) late, the employer is subject to another fine of $5000. á

 Will self employed persons be required to contribute to the system now?

No. The system still does not yet cover the self employed.

 Under what conditions will I be able to pay voluntary contributions?

If an insured person is no longer engaged in insurable employment, and wishes to maintain his contributions record during periods of unemployment he may apply within 18 months of the date of cessation of insurable employment for a certificate of Voluntary Insurance. The insured must be between the ages of 16 and 60. This does not include self employed persons.

 How do my old contributions relate to the new contribution and benefit structure?

All contributions made before March 01, 2004 have been re-valued. See the Contribution and Benefit Tables for further information.

 If I work for 2 hours at $80 per week, are contributions payable?

If you were employed or eligible to be registered in such employment as at February 29, 2004 and continued to be employed by the same employer on or after March 01, 2004. áIn such a case, contributions are payable in Class 1. However, if you were not employed or eligible to be registered before March 01 2004, then earnings under $100.00 per week would not be insurable and contributions would not be required.

 Where a wife is employed by her husband, can National Insurance be paid on her behalf?

With effect from May 3, 1999 a wife working for her husband must be registered with the National Insurance System and contributions must be remitted to the system on her behalf.

 Can I submit my employees’ data on diskette every month?

Yes, in the format prescribed by the Board. See Employee Contributions on Electronic Media or contact 625 – 2177 Ext: 407/408 for more information.

 When do the interest and penalty be effective from? á

A penalty of 25% of the sum due is applied from the 16th of the month following the month of which contributions were due. Interest rate of 15% per annum is applied to the outstanding sum.

 Does the board have any power of garnishment?

Yes. This power will be used to recover unpaid contributions and any penalties or interest imposed.

 Will government and state departments be subjected to interest and penalty impositions?

Yes. The act binds the state.

 Can the Board waive the penalty charge for late payment of contributions?

No. The penalty cannot be waived for any reason if the payment is late. The legislation gives no such power or discretion to the Board.