Government is making changes to workers’ and employers’ contributions to the island’s National Insurance and Social Security (NISS) managed Catastrophe Fund, as the island seeks to provide some shield for citizens in case of a global event or natural disaster.
As a result, the workers’ contributions, including those by self-employed and employers will be increased, while government will use the unclaimed monies in accounts at financial institutions including banks and credit unions to boost the Catastrophe Fund.
Addressing Parliament on Monday during the 2025 national Budget presentation, Minister in the Ministry of Finance Ryan Straughn told the Chamber: “The COVID-19 pandemic, the Russia-Ukraine war, the escalating trade war amongst the global superpowers, the threat to take over the Panama Canal, the impact drought is having on ships moving through that canal with the consequential hike in prices. And all of this as we confront the current geopolitical environment, this administration believes that the level of reserves that we have is both prudent and necessary. I know that your constituents and mine, sir, understand that in a time of uncertainty, it is necessary to have a cash cushion, as Barbados has today.”
The minister noted the efforts of Prime Minister Mottley to include protective disaster clauses into the island’s borrowings from institutions such as the World Bank through the Bridgetown Initiative, Straughn stressed that the current global environment will require further insulation.
“The Government of Barbados needs to be prepared to respond to current and future shocks, regardless of the source, in order to mitigate the economic impact of businesses and livelihoods. During COVID-19, we expanded the scope of the Catastrophe fund to include businesses but given the reality of the economy at the time, we did not address how they would make their contribution.”
The minister detailed: “With effect from April 1, 2025. . . utilisation of up to 50 per cent, of unclaimed and undistributed assets, including dormant accounts in commercial banks, credit unions, and other deposit-taking institutions for use in the Resilience and Regeneration Fund to build climate resilience and regeneration activities.”
However, Straughn immediately defended the move, stressing, “Let me make it abundantly clear. Ever so often, we all see the newspapers, banks, and other financial institutions publishing the names and the amounts of monies for persons for whom the accounts have been dormant for 10 years already.
“After 10 years those monies are deposited into the Central Bank of Barbados and are held there for approximately three years. If there is no claim, those monies then come to the Accountant General. At any point during that period of time, any person is entitled to make a claim on that money and the monies will be paid back. So, I want to make it clear that the government is not going into anybody’s account and taking up any money.
“That is not what the government is doing. . . . What we are doing is utilising resources that are just idle to help mobilise the response to help Barbados build climate resilience.”
With respect to changes to NIS contributions, Straughn explained: “Currently, only employees and self-employed persons contribute to the Catastrophe Fund at a rate of 0.1 per cent of their salaries, capped by the maximum insurable earnings ceiling, which is currently
$1 219 per week or $5 280 per month.
“This means that a person earning $2 000 per month currently makes a contribution to the catastrophe fund of $2 per month. However, a person who earns $10 000 per month only contributes a maximum of $5.28 per month due to the application of the maximum insurable earnings ceiling.
“In all fairness, equity will suggest that someone earning $10 000 per month should really be contributing $10, as opposed to the $5.28 as currently the case. It is the government’s mission to move from the current posture to a more proactive approach to future-proof the catastrophe fund.”
As a result, the contribution will increase from 0.1 per cent to 0.25 per cent for employees and self-employed persons and the insurable earnings cap will no longer apply. (IMC1)
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