Beginning July 1, increases to the National Insurance Board (NIB) insurable wage ceiling will come into effect along with increases to benefits paid for long-term benefits and assistance, the board announced last week.
This increase of the wage ceiling on which contributions are paid would only affect higher paid workers whose earnings currently exceed $670 per week or $2,903 per month, therefore allowing workers in that bracket to insure more of their income.
“In addition to increases in pensions and grants, the wage ceiling on which contributions are paid into National Insurance will be increased, in keeping with the mandate of the national insurance program to maintain relative parity between the worker’s wages and his short-term or long-term benefits payable when wages are suspended or reduced (depending on the benefit),” NIB stated in a release.
“Only higher paid workers – persons whose earnings currently exceed $670 per week/$2,903 per month – will be affected; the increased ceiling will allow them to insure more of their income and as a consequence, receive better benefits.”
The biennial increases started in 2014 – when the increase was $20 – from $600 to $620, translating to an increase per week for the employee of $0.78 or $40.56 per year; and for the employer of $1.18 per week or $61.36 per year. The increases in 2016 by $30 and in 2018 by $20 have been similarly small, NIB stated.
The increase in the insurable wage ceiling comes along with an increase in long-term benefits and assistance – i.e. retirement benefit, survivors benefit, invalidity benefit, old age non-contributory pension, survivors assistance and invalidity assistance.
“The objective of the adjustment to pensions, slated to occur every two years, is to ensure that pensions retain their value year after year by compensating for losses, as quantified by the cumulative rate of inflation in the country over the two-year period of review. The July 2020 adjustments will be reflective of the combined rate of inflation in 2018 and 2019, as advised by the Department of Statistics,” NIB pointed out.
“Note, in this regard, that not all pensioners will get the same percentage of increases because not all pensions suffered the same loss of value. Pensions awarded in 2019, for example, will have only suffered inflationary losses for that year. Consequently, pensions in payment for less than two years will get incrementally smaller increases.”