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ADVISORY COLUMN: PERSONAL FINANCIAL ADVISER

Oran Hall | Unremitted NHT contributions can cause serious financial pain

Published:Sunday | May 8, 2022 | 12:07 AM

A NHT housing scheme under development in 2020.
A NHT housing scheme under development in 2020.
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Home ownership is a significant life goal of many Jamaicans, a goal that the National Housing Trust, NHT, has made possible for thousands of Jamaicans since its establishment in 1976. This goal can only be realised if the contributions deducted from their income is remitted to the NHT.

NHT’s mission is to increase and enhance the stock of available housing in Jamaica as well as to provide financial assistance to those who need support to build, buy, improve, or repair their homes.

One reason many Jamaicans encounter difficulty to access these benefits from the NHT is the failure of their employers to remit the contributions they deduct from their income to the NHT.

The NHT refunds contributions with interest of two per cent per annum as of the eighth year after the contributions have been made, but the failure of employers to remit the sums they deduct puts the employee at the risk of not being able to access the refund.

Additionally, when contributors retire, they qualify for a refund of all contributions not refunded, including the contributions they made in the last seven years of their employment and contributions for all previous years that were not returned to them.

This lump sum can be substantial for some contributors and can be quite useful in the post-work life of the beneficiary. Sadly, some individuals, upon retirement, find that they are not able to collect that sum because of the failure of their employers to pay over the sum to the NHT.

A standard excuse given by some employers is cash flow problems. Businesses that encounter cash flow problems generally turn to financial institutions for loans on which they pay interest. Perhaps it is time for such employers to pay interest to their employees for the NHT contributions they borrow from them without their knowledge and permission.

Would failure to remit the contributions of employees count as stealing?

Although the compliance officers of the NHT carry out their own investigations when employers do not remit the contributions of their employees and the NHT uses various tools available to it, including litigation, to encourage employers to comply, but which do not seem to be a strong enough deterrent, contributors need to satisfy themselves that their contributions are going where they should and on time.

They may do any of the following to verify that their returns have been made:

•Ask their employers if they have remitted their contributions to the NHT;

•Ask the compliance unit of the NHT at the branch office nearest to them;

•Enquire at the compliance office of the NHT at 13 Caledonia Avenue, Kingston 5;

•Call the NHT contact centre at (876) 929-6500 although it is likely that it may not necessarily have all the details at the time the contributor makes the enquiry;

•Send an email to compliance@nht.gov.jm.

NHT loans are categorised as either homeowners’ or non-homeowners’ loans. Each offers different benefits to contributors.

A contributor who does not own a house and has never received a loan from the NHT can apply for a non-homeowners’ loan as an individual and may join with a qualified co-applicant to borrow more.

A contributor who owns a house but has never received a loan from the NHT can apply for a homeowners’ loan, which can be used to:

•Assist in acquiring an NHT scheme benefit, but the homeowner cannot be the primary applicant;

•Assist with the purchase of another property;

•Purchase and install a solar panel; or

•Repair/improve the house.

One significant benefit is the interest rate the NHT charges. Residential mortgage rates in the financial sector generally range from 6.75 per cent to 8.0 per cent. The NHT charges rates ranging from zero to 4.0 per cent. All contributors earning from the minimum wage to $30,000.99 weekly can borrow at zero per cent per annum.

In the salary band $30,001 to $42,000.99, contributors who are disabled and new mortgagors who are 55 years old and over and who have been contributing to the NHT for ten years and more are also able to borrow at zero per cent per annum. Public-sector contributors can borrow at 1.0 per cent and all other contributors at 2.0 per cent.

Contributors who earn $42,001 per week or higher pay the following rates: the disabled and new mortgagors 55 years old or older who have been contributing to the NHT for ten years or longer, 2.0 per cent; public-sector employees, 3.0 per cent; and all other employees, 4.0 per cent.

When employers misdirect the NHT deductions of their employees, they rob them of their right to actualise one of their most significant goals and the opportunity to build for themselves and their families a better life, not to mention the distrust they earn and the harm that may come to their own businesses.

Oran A. Hall, author of Understanding Investments and principal author of The Handbook of Personal Financial Planning, offers personal financial planning advice and counsel. finviser.jm@gmail.com