It has been over two years since Social Security Board, SSB, has been discussing the possibility of increasing employees’ contributions and benefits to the scheme. Fast forward to the present and SSB is ready to roll out the new plan. This morning, the Chief Executive Officer of SSB, Dr Colin Young, shared how it will affect employers and employees.
Johnelle Mckenzie: “One hundred and eight thousand persons contribute to the Social Security Board (SSB) on a weekly basis and effective July 1st contributors will be paying more to SSB. In 2017 the Social Security Board started public consultation countrywide to discuss the possibility of increasing employees contribution and benefits to the scheme. Those consultations have been completed and the Social Security Board has decided to increase contributions by 2% to be implemented over the next two and a half years. Dr. Colin Young the Chief Executive Officer of the Social Security Board said that the 2% increase will be implemented gradually.”
Dr. Colin Young – Chief Executive Officer of Social Security Board: “What we are doing today, seventeen years later is to increase both the ceiling which is the maximum insurable weekly earnings as well as the rate. The Actuary recommended that we have to get to 2% in the rate and we need to take the insurable earning up to 520. Unfortunately, we were unable to get the partners to agree to that proposal as is but what we were able to get them to do was agree in a phased increase. Essentially what we are doing is phasing in the rate of 2 ½ years and increasing the maximum insurable earning over three years as well so simply right now it is 8%. We want to go to 8.5% this year, 9% next year and one more % in 2020. The ceiling also goes from 320 to 440 this year, next year to 480 and in 2021 to 520.
Johnelle Mckenzie: “ The life expectancy of Belizeans has increased and with it so has SSB’s obligations to those persons. Furthermore Young points out the amount of pension that is paid out to a contributor far exceeds the amount the persons paid to a fund.”
Dr. Colin Young – Chief Executive Officer of Social Security Board: “In order for you to qualify for a pension, you have had to make five hundred contributions which are roughly ten years of work. Belize Social Security system, by the way, has one of the lowest qualifications for a life pension. Most places years is fifteen years of work to twenty, most places even thirty years. But after ten years of working at the highest end an employee would have paid in a total of $4900 from their paycheck, the balance from the employer for a total value of $13,000, that is what would have been paid in. When that employee reaches retirement age this is what they collect for a pension, $96 a week. Multiply that times 52 weeks you get the annual pension. Notice that this person obtains all of the money that they have paid from his or her paycheck in one year from the collection of a pension. At the high-end someone who has worked for 35 years and paid the highest rate, they would have paid no more than $30,000 into Social Security. Their minimum pension would be just shy of $10,000 which means that they would collect every single dollar that they ever paid into the fund after only three years of pension but remember men will live 19 years and women 23 after age 60 so where will that money come from, it has to come, it is subsidized by the scheme and it has to come from investment income but when those aren’t enough you absolutely have to increase contributions and that is how these systems are designed.”
Johnelle Mckenzie: “ Young went on to explain how SSB is working with employers to make the transition a smooth one?”
Dr. Colin Young – Chief Executive Officer of Social Security Board: “We have been working with all of the companies, the employers so that they can get their payroll systems amended to and now take into account the new changes. Similarly, SSB is an employer and we have to ensure that our payroll systems will be ready by July 1st to now apply the new rates that will be ongoing so as part of that we have been reaching out directly with the various providers who provide payroll software. In addition to that, we are having a sensitization session in every district from our branches and sharing the contribution schedule so that employers can get ready for July 1st.”
Johnelle Mckenzie: “Apart from SSB retirement benefits, the pensioners, a wife receives a survival pension after her husband dies swell as his children under the age of 21 who are in school. This is Johnelle Mckenzie reporting for Love News.
The new rates take effect on July 1, 2019.