Grenada has no choice but to raise the pension age and contribution minimums for islanders to receive National Insurance Scheme (NIS) retirement benefits.
This was the message delivered today by Philip Telesford, Minister of Social and Community Development, and Dorset Cromwell, NIS Director, as they defended the government’s plans to change the National Insurance Act next week to raise the pensionable age to 65.
“If the government does not make the legislative changes, the NIS will collapse in a few years,” Telesford predicted.
Telesford disclosed that the pension fund was worth about EC$953 million.
“We must raise the pensionable age as a matter of national urgency to save our social security system,” Cromwell stated.
“If you are in your twenties and thirties, and we as a country and a people continue to do nothing, you will not receive a pension.” And even if you do obtain a pension, you will have to wait for it on some days.
The government intends to raise the retirement age to 65 by 2029 and the contribution rate to 16% by 2031.
By 2028, the minimum contribution rate will rise from $500 to 750.
The government’s proposed amendments will also shift the pension scheme away from being an age entitlement.
The first modification, if passed by parliament, will take effect in 2024, when the minimum contribution to qualify for a pension will be increased to 550.
Individuals who do not make the needed payments will not be left to suffer in their old age, according to Telesford, because they will receive a government allowance.
Cromwell observed that proposals to raise the retirement age had been presented to the government since 2002, but successive administrations preferred to “cherry pick” the policies they wished to implement while deferring the difficult decisions to the next administration.
“Over the course of our 40-plus-year history, the changes we’ve made have fundamentally harmed rather than helped the NIS,” he observed.
He claims that the country is already feeling the impact of failing to change the social security system, as current contributions are less than pay-outs.
