NIS banking on high-profile contact to increase compliance
The filing of returns for NIS contributions has been a chronic problem over the years among some employers, and even government bodies, but now the state pension agency is trying another tactic to drive compliance.
The parent ministry of the National Insurance Scheme (NIS) has taken to writing to them.
NIS Director Portia Magnus told the Financial Gleaner that the agency has been able to reduce outstanding liabilities from employers by bringing them under the watchful eye of the permanent secretary of the Ministry of Labour & Social Security.
The correspondence with delinquents saying we know who you are, so please pay up has so far borne fruit in at least one instance.
The NIS is a compulsory social security scheme which requires contributions from persons 18-65 years who are employed.
“The support from top management, which included the involvement of our permanent secretary in communicating with employers with the largest liabilities, resulted in most of the arrears being paid by one such employer,” Magnus said.
The unit has also deployed new software, which will help it in tracking payments and funds owed more accurately. Right now, the arrears are merely estimated.
Magnus said the agency does not know the entirety of the arrears, nor could it provide a breakdown of which sectors are most inclined not to pay.
The NIS spotlight on individual employers is an added tool to the company’s compliance arsenal. It’s meant to complement “regular compliance meetings and support provided by the Compliance Unit to parish offices”. NIS is also planning to take more employers to court to force payment.
For fiscal year 2018-19, NIS had set target collections for delinquencies at $850 million, down from $1.4 billion targeted in the previous year.
The current target is under review, but Magnus is not saying whether the reset is expected to be higher or lower collections.
She notes that it is an annual exercise for NIS targets to be assessed based on current realities, and revised.
The NIS, which is 52 years old this year, provides minimum guaranteed benefits to over 113,000 beneficiaries locally and overseas. Those benefits are funded from NIS contributions, which averages about $14 billion annually, according to the labour ministry.
NIS contributions are invested by subsidiary agency National Insurance Fund to drive up the value of the pool. But the most recent assessments of the contribution pool has shown worrying signs the viability of the system is at risk.
It’s within that context that the NIS is trying to devise creative means to go after payments that have been held back by employers.
“To support the thrust to improve compliance, more emphasis will be placed on training; the continued involvement of top management in communicating with the employers with the largest arrears; conducting research; and the completion and deployment of the Compliance Module of the new software used by the National Insurance Division,” Magnus said.