Review calls for heavier penalties for late NIB payments
Guardian Business Editor
Published: Oct 04, 2013
With less than 25 percent of monthly National Insurance Board contributions paid on time, and almost 50 percent paying more than three months late, an NIB actuary has recommended the board move at its “earliest opportunity” to significantly increase penalties on late-paying businesses.
The Ninth Actuarial Review of the National Insurance Fund, for the period 2007 to 2011, recommends increases that would see an employer with 10 employees and a monthly contribution payment of $1,500 see penalties rise from just $6 for a late payment of a month to $156.
If three months late, the same business would face a penalty of $185, up from the $35 currently imposed as a penalty.
“The current penalty for late paid contributions is minimal and not consistently applied. With only a minimal penalty for contributions paid late the fund is losing interest on monies that could have been invested had they been received earlier,” stated the review, which was tabled in Parliament on Wednesday.
The Ninth Actuarial Review points to a “lack of political will” to penalize non-compliant businesses as contributing to a situation which has “jeopardized” the financial sustainability of the fund, which forms the basis of the Bahamian social security program.
It projects that based on current contributions and benefit provisions, the fund’s total expenditure will exceed income between 2017 and 2022, and it will be depleted between 2028 and 2033.
At the time of the review, penalties in place are interest applied at the prime rate.
The review, prepared by former actuarial consultant to NIB, argues that penalties for late contributions to the fund from employers and the self-employed should be set at 10 percent plus interest at prime rate, or a slightly higher rate, or $1 per employee per week that contributions are late.