Useful benefits of NIS that you should know

OranHall, Contributor

The National Insurance Scheme (NIS) is a compulsory, funded social security scheme. It offers financial protection to contributors and their families against loss of income arising from injury on the job, incapacity, retirement and the death of the insured. It thus has a valuable place in personal financial planning, particularly for lower income persons.

It covers employed persons, the self-employed and voluntary contributors. Employed persons contribute on the basis of their earnings up to a ceiling of J$1.5 million per annum.

Employees contribute 2.5 per cent of income. This is matched by the employer so the total contribution is the equivalent of 5 per cent of income and includes a contribution to the National Health Fund, which is equivalent to 1 per cent of income shared equally by employer and employee. Domestic workers pay J$50 per week, the same as their employers, to the NIS by attaching stamps to a stamp card.

Self-employed persons pay 5 per cent of their statutory income, which includes income from all sources less expenses incurred in generating that income.

Voluntary contributors pay J$100 per week by attaching stamps to a stamp card. They must be under the retirement age, but used to contribute as employed or self-employed persons and are no longer contributing in either category. Although not yet retired and not generally intending to seek gainful employment, they want to keep up their contribution rate.

Retired persons may receive a grant or a pension, depending on the number of contributions made.

A Retirement or Old Age Benefit is paid to men 65 years of age or older, but, whereas women used to qualify for their benefits at age 60, that age is being increased incrementally to 65 over the period April 1, 2011 to March 11, 2016. Beneficiaries should have stopped working and should have made the required number of national insurance contributions.

Persons in receipt of an Old Age Pension or an Invalidity Pension may be paid a spousal allowance if certain specified conditions are met.

To qualify for an Invalidity Pension or Grant, contributors should be under the retirement age and must be no longer able to work due to mental or physical illness.

Individuals who do not satisfy the contribution requirement for a pension can receive a grant, a single payment by cheque, but must have made 52 weekly contributions and must make the claim within twelve months of the date of entitlement.

The NIS pays a Widow's/Widower's Benefit to persons who have been married for at least three years or have been in a common-law relationship for at least five years but the benefit ceases when the beneficiary remarries or enters a new common-law relationship.

Beneficiaries may receive a Widow's/Widower's Pension along with their own Old Age Pension. The payment of this benefit is contingent on certain specified conditions being met.

There are also benefits for the children. An adult caring for a child under 18, may claim a Special Child Benefit for a child whose mother is dead or whose father is dead, cannot be identified or whose whereabouts is unknown.

This benefit continues until the child's eighteenth birthday. An Orphan Benefit is claimable by an adult caring for a child less than 18 whose parents are dead, whether they were married or not.

The Employment Injury Benefit is payable to males 18 to 70 and females 18 to 65 who get injured during the course of the "insurable employment", or develop a prescribed illness attributable to the nature of the "insurable employment." Members of the Jamaica Defence Force, self-employed persons and domestic workers do not qualify for this benefit.

A Funeral Grant is payable on the death of a contributor or the contributor's spouse in respect of persons who were in receipt of Old Age Pension, Invalidity Pension, Widows/Widowers Pension and Disablement and Sugar Workers Pension.

The NI Gold Health Plan offers benefits, including doctor's visits, prescription drugs, diagnostic service, dental/optical, surgeon's fees and hospital room and board to pensioners under the National Insurance Scheme.

The National Insurance Scheme is more an insurance scheme than a pension plan, as its name suggests, and was never meant on its own to provide a liveable income during retirement.

It is very important to check regularly with the NIS office that your contributions have been received and properly recorded to avoid having difficulty at retirement collecting your entitlements due to incomplete or inaccurate records.

You may check the website www.mlss.gov.jm for more information on the NIS.

Oran A. Hall, a member of the Caribbean Financial Planning Association and principal author of "The Handbook of Personal Financial Planning", offers free counsel and advice on personal financial planning.Email him atfinviser.jm@gmail.com.