What is Parametric Reform?
Parametric reform involves changing one or more of the parameters of the pension system. Parameters include contribution rate, pensionable age, the rate of benefits etc.
Let’s reform for greater security!”
NIS Embarks on Parametric Reform, Effective January 1, 2014
NIS is celebrating 30 years of existence. This signifies that we are a maturing plan. It is therefore essential for us to assess our current pension system and make necessary changes so that we can continue to fulfill our mission to adequately provide social security for the citizens of Saint Vincent and the Grenadines. So let’s reform for greater security!
Why Do We Need To Reform?
We need to reform in order to ensure SAFETY:
- Security of benefits
- Adequacy of benefits
- Financial sustainability
- Efficiency
- Transparency
- Yield
Parametric Changes To The NIS System:
1. Pension Increase
Pensions will be increased as follows:
| Year of Pension Award |
Rate of Increase |
| 1 Jan 2010 to 31 Dec 2010 |
1.5% |
| 1 Jan 2009 to 31 Dec 2009 |
3.0% |
| 31 Dec 2008 and before |
4.5% |
2. Grant Increases
| Claim Type |
Previous Amount |
Parametric Increase |
| Maternity Grant |
$630 |
$660 |
| Funeral Grant |
$4,330 |
$4,525 |
| Employment Injury Funeral Grant |
$4,330 |
$4,525 |
| Non-Contributory Funeral Grant |
$2,165 |
$2,262.50 |
3. Enhancement Of Survivors’ Benefits
The age entitlement for a Survivors’ benefit for a child will increase from 16 to 18 years, and continuing until 21 if in full-time education.
4. Contribution Rate
The contribution rate will be increased from 8% to 10% from January 1, 2014
| Employers will pay |
5.5% |
| Employees will pay |
4.5% |
| Self-employed will pay |
9.5% |
| Voluntary contributors will pay |
8.84% |
5. Normal Pensionable Age
(age to receive your NIS pension)
The normal pension age will be gradually increased from 60 to 65, over a 15 year period as follows:
| Present to 31 Dec 2015 |
60 |
| 1 Jan 2016 to 31 Dec 2018 |
61 |
| 1 Jan 2019 to 31 Dec 2021 |
62 |
| 1 Jan 2022 to 31 Dec 2024 |
63 |
| 1 Jan 2025 to 31 Dec 2027 |
64 |
| 1 Jan 2028 and onwards |
65 |
| Year of Birth |
Pensionable Age |
| 1955 and before |
60 |
| 1956-1957 |
61 |
| 1958-1959 |
62 |
| 1960-1961 |
63 |
| 1962-1963 |
64 |
| 1964 and after |
65 |
6. Early Pension Age
An individual may receive his/her pension as early as 60. The pension would be reduced by 6% for each year you retire before the normal pensionable age.
7. Weeks Required For Full Pension Eligibility
The minimum required weeks of contribution will be gradually increased from 500 weeks ( 10 years) to 750 weeks ( 15 years) as follows:
| Present to 31 Dec 2015 |
500 |
| 1 Jan 2016 to 31 Dec 2018 |
550 |
| 1 Jan 2019 to 31 Dec 2021 |
600 |
| 1 Jan 2022 to 31 Dec 2024 |
650 |
| 1 Jan 2025 to 31 Dec 2027 |
700 |
| 1 Jan 2028 and onwards |
750 |
8. Reference Wages
(wages used to calculate pension)
The reference earnings will be adjusted from the “best 3 years” average in the last 15 years to the “best 5 years” of earnings in the system.
9. Accrual Rate
(rate of pension entitlement for each year of service)
The rates for full pension payment will still range between 30% and 60%. The following adjustment, however, will be made:
- A rate of 30% for the minimum qualifying contribution weeks plus 1.0% for every 50 contribution weeks over the minimum qualifying conditions, up to a maximum of 60%
