By Elesha George
The contribution rate to the Social Security Scheme will increase this year by one-half (0.5) percent, causing employers and employees to pay up to a total of 14.5 per cent in contributions each month.
The increase is part of yearly continuous adjustments that will last until 2025.
The additional 0.5 percent is shared between the employer and the worker, and takes the employer’s contribution to 8.25 percent, while the employee pays 6.25 percent, therefore totalling 14.5 percent for private sector workers.
The same is true for public sector employers and employees whose joint contribution amount to 13.5 percent.
The self-employed rate remains at 10 percent.
Although the decision to increase the revenue paid to the statutory body is not new, residents are upset, and are accusing the Antigua and Barbuda Social Security Board (ABSSB) of being unsympathetic to the economic situation in Antigua and Barbuda.
Residents, displeased with the increase which takes effect this month, articulated their dissatisfaction under the Board’s Facebook post where the change was announced a few days ago.
People are also upset that, habitually, they have been unable to receive their benefits for several months after making a claim.
Usually, recipients would receive benefits two to three months after claiming, however the Covid-19 pandemic has further reduced the programme’s ability to payout in a reasonable manner.
Pensioners and other beneficiaries have been receiving late payments as a result.
The comments became so obnoxious that the statutory body discontinued the comment option.
Nonetheless, the increase will be deducted beginning this month, but the Executive Director of the ABSSB, David Matthias, told Observer that it is not all what it is cracked up to be.
“Every single year from 2016 onwards there has been a half of a percent increase in the social security contribution rate and it is absolutely necessary to fund the operations of social security,” he remarked.
In fact, Matthias explained that the current dependency ratio (the number of persons working to the number of beneficiaries) is not high enough to independently support the obligations of the statutory body.
He said that approximately 11,000 of the 35,000 eligible contributors are actively employed, meaning that the salary of three persons are needed to cover a pension payment each month.
“The efficient operation of social security requires 10:1 [ratio]; that is for every single pensioner, there are 10 persons working. We have 3:1 that is to say that for all 11,000-odd pensioners, we only have 35,000 contributors currently contributing today,” the Executive Director noted.
According to Matthias, there is no employee who pays more than $390 into social security and in order to maintain existing benefit expense, more money must be taken from working individuals.
Compared to the monthly contributions from a single active worker, he noted that a pensioner can receive up to $3,250 a month – eight times the amount required to meet the payment of a single beneficiary. In conclusion there are five less persons contributing.
Speaking to the half percent increase, he explained: “So, in true terms, the amount that is coming out of an employee’s wage and or salary is as low as $7.50 and has high as $16 additional to what they were contributing before.”
“If we look at things in this context, we will then understand what is absolutely necessary,” he remarked.
The first adjustment made to Social Security contributions was in 2013 under the United Progressive Party (UPP) administration when the payout went from 8 percent to 10 percent.
In 2016, after a change to the Social Security Act took effect, the rate increased by another 2 per cent – from 10 percent to 12 percent — and the scheme continued to increase by one half of a percent each year.
In 2025, the private sector will pay a joint 16 percent (7.75 percent for employees and 9.75 percent for employers) of their monthly salaries and wages into the scheme while the public sector will pay 15 per cent (6.75 percent for employees and 9.75 percent for employers).
The monies collected by Social Security assist in paying pensions, maternity leave, sickness and invalidity benefits to eligible residents.