Eleventh actuarial valuation of the National Insurance Fund as of 30 June 2013 and feasibility study on the extension of the Social Insurance Scheme to self-employed persons.

Eleventh actuarial valuation of the National Insurance Fund as of 30 June 2015 and feasibility study on the extension of the Social Insurance Scheme to self-employed persons 1. Background and Justification According to Article 24, Paragraph (1) of the National Insurance Act of 2000, the tripartite Board of the National Insurance Corporation (NIC) shall recruit the services of an actuary to review the operations of the National Insurance Act not later than every fifth year and to report to the responsible Minister on the financial condition of the National Insurance Fund (NIF) on the sufficiency of its funding to meet its benefit and other obligations according to the provisions of the National Insurance Act . The actuarial report is normally presented to the House of Assembly. Salaried workers are compulsorily insured while self-employed workers are voluntarily covered. Contributions are set at ten per cent of insurable earnings for salaried workers, equally shared by employers and workers while self-employed voluntary contributor pay ten per cent of their declared earnings by themselves. The National Insurance Act covers a wide range of contingencies, including (i) work injuries and occupational diseases and accidents, (ii) old-age, disability and death, and (iii) temporary disability due to sickness or maternity . Although there is no need to adjust the current contribution rate in the near future, it was recommended in the tenth actuarial review to adopt a regular mechanism of contribution rate increases in the coming decades. Other policy issues as recommended in the tenth actuarial valuation include (1) using the career-average wage as a base for calculating pensions instead of the best five-year average, (2) automatic adjustments of pensions in payment and of scheme’s parameters such as the ceiling on insurable earnings, the amount of minimum pension as well as funeral grants, and (3) reviewing the current threshold amount to be eligible for two pensions at the same time . Feasibility study on the extension of the Social Insurance Scheme to self-employed persons In 2010, 73 per cent of persons employed in Saint Lucia were covered by the Social Insurance Scheme (SIS). While almost all salaried workers are covered by the SIS, less than 10 per cent of the self-employed persons are estimated to be covered, leaving them and their dependents vulnerable to risks such as illness and old age. It is increasingly realized that the compulsory social insurance coverage should be extended to self-employed persons so that: 1) self-employed persons and their families should not fall into poverty in case of their income loss caused by accidents, illness, old age and unemployment; and 2) cost of the Government and community organizations for poverty alleviations based on taxation should be contained. ILO approach ILO benefits from a unique position to deliver technically sound and neutral advice recognized by all social partners based on an internationally accepted framework of ILO Conventions on social security. The ILO is trusted as a neutral and technically-competent specialized agency of the United Nations. ILO’s findings and recommendations arising out of technical cooperation advisory services are highly respected in member States for providing guidance for national social policy-setting. ILO models The ILO uses a series of models (and sub-models) for the financial projections of social insurance schemes. These models can be adapted to the particular situation of various national pension schemes. 2. Objectives Development objective The project focuses on two objectives, namely to ensure the long-term financial sustainability of the NIF and to provide recommendations in extending the social security coverage to self-employed persons. 3. Outputs Eleventh actuarial valuation of the National Insurance Fund as of 30 June 2015 An output is an ILO report on the eleventh actuarial valuation of the NIF, which includes: • a review o

Project symbol

LCA/15/01/LCA

Admin unit

SOCPRO

Start date

15/11/2015

End date

30/06/2018

Total allocation

190361

Total expenditure

Status

Closed

189210

Development Partners

Saint Lucia, National Insurance Corporation

Country/Countries

Saint Lucia

Outcomes

Outcome 8: Comprehensive and sustainable social protection for all