THE wage ceiling on which National Insurance Scheme (NIS) contributions is calculated will move from $250,000 to $500,000 as of October 1, providing the funds to increase a full range of benefits offered through the scheme.

But only contributors earning in excess of $250,000 per year will pay more.

For all other contributors, the general contribution rate [DEMO]s at 2.5 per cent for employees, matched by a corresponding 2.5 per cent from employers.

Labour and Social Security Minister Horace Dalley announced the changes in a statement to Parliament on Tuesday.

Half a percentage point of the contributions from wage earners and employers will finance the recently established National Health Fund (NHF). Projections are that the NIS will supply $400 million to the $2.2 billion fund.

When the NHF was announced, here were concerns that the Fund may not be sustainable, and may encounter problems faced in some North American countries where similar schemes have hit a snag as aging baby boomers become eligible for benefits.

But Dalley explained, Tuesday, that the new NIS ceiling, which was based on a detailed actuarial study, was necessary to maintain fund viability and meet the growing demands of an aging workforce.

“It is a well-recognised fact that countries worldwide are experiencing a demographic transition,” he said. “The increased life expectancy currently being enjoyed in developing countries like our own, while an indicator of improvements in the quality of life, [DEMO]resents challenges for us.”

With assets of $25 billion, the NIS is currently the largest pension fund in the region, with 30 per cent of all pension assets in Jamaica, according to Dalley, who maintained that the scheme’s performance has outpaced the rate of inflation.

However with 450,000 active contributors, it only captures a little over half of the island’s 873,000 employed labour force.

Against that background, Dalley appealed for greater participation in the scheme, which, he argued should translate into the guarantee of a future pension for participants.

The labour and social security minister pointed out that there have been six increases in pension benefits over the past 12 years, with the last increase being 50 per cent on all benefits, including pensions and grants, amounting to over $2 billion.

This latest increase in pension benefits, effective July 1, 2003 will see:

* Full-rate basic pension increased [DEMO] per cent from $600 to $900 per week

* Three-quarter pension moves by the same amount from $450 per week to $675 per week

* Half-rate pension moves from $300 per week to $450 weekly (50 per cent)

* Disablement pension is up to a maximum of $1,740 per week (30 per cent)

* Sugar workers’ pension moves from $300 weekly to $450 (50 per cent)

* The special anniversary pension for those born in 1906 and earlier — and therefore could not contribute to the NIS — [DEMO]from $300 per week to $450 per week (50 per cent)

* Spouse allowance and old age pension from $200 per week to $300 per week (50 per cent)

* Orphan’s and special child’s allowance moves from $1,050 per week to $1,575 per week (50 per cent)

* Maternity allowance for qualified domestic workers and payable for eight weeks will remain tied to the minimum wage, now $1,800 weekly

The funeral grant has also been increased from $18,000 to $30,000, an increase of over 66 per cent, while the employee injury death benefit moves from $90,480 to $150,000 — an increase of 65.78 per cent, the minister announced.

Also, NIS pensioners will have access, as of October 1 this year, to a special health plan to cover benefits not covered under the NHF. Benefits include hospital expenses, surgical fees, doctor’s visits, diagnostic services and prescription drugs at a cost of $250 million in the first year. Some 84,000 pensioners will benefit from the increases in fiscal year 2003/2004, Dalley said, in addition to another 5,000 insured persons not qualified for a pension.

The minister said the new benefit levels, together with the health package, will cost the country just over $3 billion in 2003/2004, rising to over $5 billion by 2007/2008.