Home' Trinidad and Tobago Guardian : May 21st 2015 Contents MAY 2015 • WEEK THREE www.guardian.co.tt BUSINESS GUARDIAN
COMMENTARY | BG3
Chief editor-business: ANTHONY WILSON
Editing and design: NATASHA SAIDWAN
Fax: (868) 623-2050 (Editorial)
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22-24 St Vincent Street,
PO Box 122.
The sidebar in last Thursday s BG View informing
above-average income earners that they can qualify
for a higher national insurance (NIB) pension than
the $3,000 minimum payment that 98 per cent of
recipients get sparked a flurry of enquiries to the
NIB and the Business Guardian.
The information that already 1,607 people receive an NIB pension
that is more than the $3,000 minimum would have startled many
readers, as would the news that the highest monthly pension pay-
ment currently being made by the NIB was $3,636.55.
Across the country, after reading the article, hundreds of retired
middle managers, senior executives, senior teachers, public servants,
doctors and others---and many people approaching retirement---
asked themselves and their colleagues this question: Am I entitled
to a higher NIB pension than I am receiving?
Unofficial reports indicate that the NIB received 48 queries by
noon Monday based on the information in the column that it is
possible for someone to qualify for an NIB pension that is more
than the minimum of $3,000 a month if you have made more
than 750 contributions, which works out to be about 14-and-a-
half years above a certain salary level.
The NIB says that every additional 25 contributions beyond the
750 minimum provides the worker (or the pensioner) with an
increment that potentially increases the amount of the NIB pension
that the worker, or pensioner, is entitled to receive.
That means that if you are a teacher who made 1,700 contri-
butions over the course of your working life---which is 950 more
than the minimum contribution necessary to qualify for the $3,000
minimum pension---you are entitled to 38 increments.
But not everyone who makes NIB contributions over the course
of their working life is entitled to the higher pension.
At present, the NIB has 16 contribution classes, starting from
Class I, which is income between $780 and $1,299 a month, and
progressing through to Class XVI (16), which is monthly earnings
of $12,000 and above.
This means that a 50-year-old, senior teacher who has already
worked 28 years and whose monthly income is more than $12,000
would be entitled to an NIB pension of $4,404.36 when that
person retires in ten years, according to a calculation by the NIB.
And that figure is based on current contribution rates and assumes
no change in the rate of contribution or the minimum values
payable over the next ten years.
NIB was requested to provide an expanded explanation on
Tuesday, but had not responded up to press time.
In order to provide more insight on this issue, please read the
transcript of the April 30 interview with the NIB s executive
director, Niala Persad-Poliah and Jennilynn Howe-Dopwell, cor-
porate communications manager, from which last week s infor-
mation was taken:
Q: One of the most frequent complaints about the
national insurance system is that it is inherently unfair to
people earning more than T&T s median income who have
already worked for more than 15 years (gone past the 750
contributions necessary to qualify for the $3,000 minimum
What you are saying is that someone like me has to con-
tinue contributing to the national insurance fund for another
ten years, having already contributed enough to qualify for
Is that not unfair?
A: Unfair to whom?
Q: Unfair to people like me.
A: I would say no. As I am sure you would be aware, it takes
a minimum of 750 contributions to qualify for a retirement pension.
That is an average of 14-and-a half years of your working life,
if you were to make 52 contributions a year.
So like you, I am sure you would have gone past the 750 con-
tributions. But there is value in continuing to pay and the value
is that you continue to be protected by the fund.
Secondly, the more contributions you amass at the end of your
working life, the higher your retirement pension can be. Right
now, the minimum pension is $3,000. That, of course, is a top-
up for most people.
Take, for example, someone who has worked for 15 years, who
would have just made it over the 750 contributions. What is first
done is that the pension is calculated as an earned pension, based
on the class that the person would have contributed in.
Most people would not have automatically qualified for the
In your case, you may have qualified for the $3,000 minimum,
but for every 25 contributions beyond that is going to give you
an increment and the pension would go above the $3,000.
Q: Why it is unfair for people like me is that if I contribute
to a private pension, the more I contribute the higher the
benefit at the end of my working life. But it seems to me
that the more I contribute to the national insurance system,
as things stand now, the cap is $3,000.
A: Let me correct that. The minimum pension is $3,000.
If you qualify for more than $3,000, we will pay you more than
$3,000 and right now there are more than 1,600 people who are
earning more than $3,000.
Q: But you need to tell people that! That s the best-
kept secret in Trinidad and Tobago.
A: That s the point we are trying to make. While you would
have qualified for the $3,000, the more you put into the system
is the higher the likelihood that you will get more out of it. That s
because every 25 contributions above the 750, gives you an increment
above the $3,000.
Q: But that s a very-well-kept secret!
A: Just to clarify some more because sometimes there is a
little bit of confusion about the way that works. We need calculate
your pension based on your contributions. So similar to private
annuity, we calculate based on the value and length of time you
have contributed to this fund.
We work out your pension based on your 14-and-a-half years
or 750 contributions. Following that, any contribution above that...
so if you worked for 30 years, you will have 15-and-a-half years
of contributions in excess of the 750 contributions. We group
them into batches of 25 and add it as an increment onto what
is called your base pension.
Most people do not earn (qualify for) $3,000. We cannot pay
anyone less than $3,000 but if you qualify for more than $3,000,
we will pay you that value.
The increments do not automatically move you over $3,000.
We have to add your increments on to your earned pension. In
assessing the earned pension, we use the increments, but not
everyone qualifies for more than $3,000.
Q: If the increments are batched in 25-week bundles,
that is half a year, someone working for 30 years is entitled
to 31 increments. Assuming you earn above $12,000 a
month, that would mean how much more than $3,000
pension a month?
A: We would have to look at the contributions made over the
years. For most people, that changes. The value of the contributions
change (as their incomes increase and the percentage of the income
....As you said, and I agree, it is a well-kept secret that we need
to share with the public. That s because many people have come
to us saying that I have already made 750 contributions, can I get
a refund. Or they say, can I stop paying contributions.
Q: The other thing about paying more than $3,000 to
high-income contributors is that the value of $3,600 in
ten years is going to be less than the value today because
of the impact of inflation. If what you are telling me is that
in ten years someone like me can look forward to enhanced
pension from the NIB of $3,600, if the rate of inflation in
T&T is eight per cent, that $3,600 in ten years would be
worth much less than $3,600 now.
A: But that assumes that there would be no change to our
benefit payments at all and we do not anticipate that. We anticipate
that there will be some change to our benefits and our actuarial
reviews would have made certain projections.
One of the things that we are looking at is converting the present
earning class system to the career average earning index system,
which is going to benefit people like you.
At this point, we have the 16 classes and workers pay according
to the classes.
One of the things that the actuarial review is looking at, and
this is being considered, is converting the earning class system
into a career average system. The average salary of someone earning
above the median income would be averaged.
Do you qualify for a
higher NIB pension?
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