Manning: No decision yet to raise retirement age, NIS payments

AN ageing population has been the biggest challenge to the National Insurance Scheme (NIS), said Minister in the Ministry of Finance Brian Manning, but no decision has been taken on increasing the retirement age as yet.

He was speaking in the Senate on Tuesday in reply to a question for oral answer, posed by Senator Cherrise Seepersad, about the Government’s plan to manage the $20 billion shortfall of the National Insurance Board (NIB).

To offset the shortfall, Manning said the NIB and International Labour Organisation recommendations included increasing NIB rates and the retirement age.

He said the number of retirees in the system was increasing while the number of contributors was decreasing, which created a deficit between benefits and contributions.

The Government was in consultation with the trade unions and other key stakeholders, Manning said, on both recommendations.

He explained that the proposal to increase the retirement age was not new and it has been recommended by NIB to governments in the past that in order to sustain an unreduced pension, the retirement age should be increased gradually to 65 over the period 2025-2060.

The second recommendation was to increase the contribution rate from the current 13.5 per cent to 16.2 per cent.

“The Government is of the view that an increase in the contribution rate should be a last resort.

“On the other hand, the NIB is of the firm view, and supported by scientific analysis, that an increase in the retirement age will increase the level of contributions to the NIS, reduce cost and would also provide workers with the opportunity to earn their full salary, and be engaged in productive activity for a significant longer period.”