TRAINING COURSE ON SOCIAL PROTECTION & FORMALIZATION TRINIDAD AND TOBAGO MARCH 15, 2017 INTRODUCTION INTRODUCTION INTRODUCTION INTRODUCTION
INTRODUCTION INTRODUCTION INTRODUCTION INTRODUCTION Design of the NIS • Assistance from the ILO in the 1960’s • Social Security Minimum Standards (ILO, Convention 102, 1952) • Legislation passed in 1965 • NIS established April 4, 1966 • First-tier social security system INTRODUCTION The National Insurance Scheme (NIS) is a compulsory, contributory system of social security which offers some financial protection to contributors and their families against loss of income arising from injury on the job, incapacity, retirement and/or death through a range of benefits.
BENEFITS BENEFITS BENEFITS BENEFITS Employment Maternity Injury Allowance Benefits Special Invalidity Child Orphan BENEFITS BENEFITS BENEFITS BENEFITS Widow’s Widower’s Health Retirement Insurance Special Anniversary
BENEFITS BENEFITS BENEFITS BENEFITS Dependent Sugar Spouse Workers Allowance Funeral Grant THE NIS ……. Social Protection Floor • Nationally defined set of basic social security guarantees which secure protection aimed at preventing or alleviating poverty, vulnerability and social exclusion. (ILO) • Social Protection Strategy of Jamaica
JAMAICA � Population – 2.7 million � Male 49.5% � Female 50.5% (Statistical Institute of Jamaica) ADMINISTRATION ADMINISTRATION ADMINISTRATION ADMINISTRATION
ADMINISTRATION ADMINISTRATION ADMINISTRATION ADMINISTRATION � National Insurance Scheme � Operational unit of the Ministry of Labour and Social Security ○ Thirteen Parish Offices and two Head Offices � Activities of NIS � Five specialized units at the Head Office ○ Over 300 members of staff � National Insurance Fund � Invests the contributions CONTRIBUTIONS CONTRIBUTIONS CONTRIBUTIONS CONTRIBUTIONS
CONTRIBUTIONS CONTRIBUTIONS CONTRIBUTIONS CONTRIBUTIONS � Insurable wage ceiling � Ja$1.5 million � Contribution rate � 5% ○ 4% - NIS ○ 1% - National Health Fund CONTRIBUTIONS CONTRIBUTIONS CONTRIBUTIONS CONTRIBUTIONS � Maximum contribution � 5% of insurable wage ceiling ○ $75,000 per annum; $6,250.00 per month; $1,562.50 per week � Salaried and self-employed � Minimum contribution � $100.00 per week ○ Domestic workers ○ Voluntary contributors
PARTICIPATION � Individuals � 18 – 70 years Exclusions: ○ Involved in income earning activity Life-time Non-Income ○ Register Earners � Businesses (independent contribution � Register based benefits) � 50% of contributions of employees � Self employed persons FUNDS FLOW FUNDS FLOW FUNDS FLOW FUNDS FLOW � Contributions paid to Tax Administration Jamaica � Benefits are paid by the NIS directly to pensioners or their Agents � Cheques � Bank accounts
COVERAGE COVERAGE � Labour Force (2015) � 1,325,200 � Employed Labour Force � 1,146,600 � Number of contributors to NIS � 413,745 (2006) � 379,080 (2010) � 469,352 (2015)
PENSION COVERAGE � Labour Force � 22% � Employed Labour Force 40% � 13% are public sector workers (Pension Coverage in Jamaica Survey 2013) PENSION COVERAGE � NIS � Labour Force ○ 29.3% � Employed Labour Force ○ 33.5% (Pension Coverage in Jamaica Survey 2013)
PENSION COVERAGE � Higher among females � 48% - Women � 42% - Men � Highest among younger workers � 20 – 24 ○ 43% � 25 – 44 years ○ 44% � 35 – 44 years ○ 26% � 45 years and older ○ 30% (Pension Coverage in Jamaica Survey 2013) PENSION COVERAGE � Increases progressively with the level of education � Tertiary ○ 89% � Secondary ○ 44% (Pension Coverage in Jamaica Survey 2013)
NIS Participation by Education Level 300,000 44% 250,000 Number of Workers 200,000 89% 150,000 100,000 19% 11% 50,000 6% 0 No education/ Complete primary Incomplete secondary Complete secondary Complete college incomplete primary Highest Level of Education Attained NIS Contributor Non-Contributor Uncertain PENSION COVERAGE � Highest in Urban Areas � Kingston Metropolitan Area 54% � Other Urban Areas 44% � Rural � 27% (Pension Coverage in Jamaica Survey 2013)
NIS Participation by Location 400,000 350,000 300,000 250,000 54% Number of Workers 27% 200,000 NIS Contributor Non-Contributor Uncertain 44% 150,000 100,000 50,000 0 kma urban rural Location PENSION COVERAGE � Participation increases progressively with income � Income of at least $1.5 million ○ 83% � Less than $250,000.00 ○ 22% (Pension Coverage in Jamaica Survey 2013)
Income Distribution of NIS Participants relative to the Employed Labour Force 2500 2000 NIS participants Employed labour force Number of Respondents 1500 22% 1000 49% 77% 81% 35% 83% 500 0 <250 250-500 500-750 750-1000 1000-1500 >1500 Annual Income ($000) PENSION COVERAGE � Salaried workers � 62% � Self employed � represent 40% of labour force ○ 5%
PENSION COVERAGE � Participation is higher among larger businesses � 2-4 employees - 11% � 5-9 employees - 42% � 10-49 persons - 89% � 50 and more employees - 90% � Informal Sector � 11% Informal Sector � The Statistical Institute of Jamaica (STATIN) measures the informal sector as comprising: � ‘Own-account’ workers and employers who own informal enterprises � Employees working in enterprises with nine or less persons � Unpaid family members who contribute to the enterprise � All employees in jobs where no NIS contribution is deducted from their pay. � Research – expanded on categories in definition � includes domestic workers and agricultural sector
COVERAGE BY OCCUPATION � The group with the largest coverage � Clerks NIS Participation by Occupation (Non-Government) 200,000 180,000 160,000 140,000 Number of workers 120,000 100,000 80,000 60,000 40,000 20,000 0 Skilled Agricultural Service, Shop and Craft and Related and Fishery Elementary Market Sales Professionals, Trades Workers Workers Plant and Machine Occupations Clerks Workers Senior Officials Operators and and Technicians Assemblers Occupation Classification NIS Contributor Non-Contributor Uncertain
COVERAGE BY INDUSTRY � Agriculture, Hunting, Forestry & Fishing 5% � Wholesale & Retail 30% � Construction 10% � Domestic Workers 3% NIS Participation by Industry 250,000 200,000 Number of Workers 150,000 100,000 50,000 0 Industry Classification NIS Contributor Non-Contributor Uncertain
NIS Retirement Pensioners NIS Retirement Pensioners NIS Retirement Pensioners NIS Retirement Pensioners Total NIS pensioners 72,324 NIS pensioners as percentage of the population: 65 years and over 31.6 Males 65 years and over 31.5 Females 60 years and over 24.9 60-69 years old 14.8 70-79 years old 33.3 80 years and over 31.1 Percent of total NIS pensioners disaggregated by: NIS pensioners Gender Female 55.8 Male 44.2 Age group 60-69 30.1 70-79 44.0 PENSIONERS (January 2017) PENSIONERS (January 2017) PENSIONERS (January 2017) PENSIONERS (January 2017) PENSION TYPE LOCAL OVERSEAS TOTAL Retirement 78,431 6,380 84,811 Widows/Widowers 19,573 1,193 20,766 Invalidity 6,779 110 6,889 Employment Injury 1,302 20 1,322 Disablement Orphans 39 39 Special Child 9 9 Special Anniversary 5 5 Sugar Workers 12 12 TOTAL 106,150 7,703 113,853
CHANGE IN COVERAGE 2013 Research 2015 � Labour Force � Labour Force � 29.3% � 35% � Employed Labour � Employed Labour Force Force � 33.5% � 41% DIFFICULT TO COVER GROUP DIFFICULT TO COVER GROUP DIFFICULT TO COVER GROUP DIFFICULT TO COVER GROUP � Self employed
INCENTIVES INCENTIVES INCENTIVES INCENTIVES � Minimum contribution rate � Domestic Workers � Transport Operators � Initiative of Tax Administration Jamaica � Reduction in rates BARRIERS
LEGAL & ADMINISTRATIVE LEGAL & ADMINISTRATIVE LEGAL & ADMINISTRATIVE LEGAL & ADMINISTRATIVE BARRIERS BARRIERS BARRIERS BARRIERS � Old legislation � Loopholes � Punitive sanctions � Administrative � Enforcement EXTENDING EXTENDING EXTENDING EXTENDING COVERAGE COVERAGE COVERAGE COVERAGE
EXTENDING COVERAGE: EXTENDING COVERAGE: EXTENDING COVERAGE: EXTENDING COVERAGE: INITIATIVES INITIATIVES INITIATIVES INITIATIVES � Employer Survey � Goal ○ Improve compliance � Registered and unregistered businesses � Update records � Target � Amalgamation of statutory deductions and information sharing � Payments, submission of one return - NIS, Tax, NHT, Heart Trust NTA (training) � Information technology � Public Education (small scale) EXTENDING COVERAGE: EXTENDING COVERAGE: EXTENDING COVERAGE: EXTENDING COVERAGE: INITIATIVES INITIATIVES INITIATIVES INITIATIVES � Standards � Training � Revision of registration and benefit application forms � Tax Registration Number � Valid form of identification
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