CONTRIBUTIONS: Frequently Ask questions(FAQ)
Q. Who should contribute?
A. All employed and self employed persons and voluntary contributors between the ages of 16 and 65 years.
Q. How much should a person contribute?
A. A total of 10% of insurable earnings should be made on behalf of each employee; 5% to be deducted from the employee’s wages or salary and matched by 5% from the employer.
In the case of self-employed/voluntary contributors it is 10% of an agreed stipulated amount.
Q. How does one know that the deductions made are being paid at the office?
A. National Insurance encourages all contributors to visit the office periodically to ascertain that their contributions are actually being paid and that all other relevant matters are in order.
Q. How is NIC able to ascertain that employers are complying with the NIC Act and Regulations?
A. There is a group of officers employed by the office called Inspectors. Their powers are extensive and enshrined in the NIC Act. Their duty is to enter any premises where there is employment and ensure that all the provisions of the Act are being followed.
Q. Can the NIC office tell how much money one has in the Fund?
A. No, the NIC is an insurance and like all insurances, it operates on the principle of pooling of funds. No one has a specific sum of money at any insurance. It is because of this principle that insurances can pay benefits to individuals, in excess of the total of their individual contributions
Q. When must NIC contributions be paid?
A. National Insurance contributions must be paid monthly. They can be paid at any National Insurance Office in the state no later than seven days of the month following the month for which they were collected.
Q. How does the N.I.C. office know on whose behalf that the contributions are paid?
A. Every employer must submit a Form C3 (schedule of the names, numbers and amount of contributions for each person employed by an employer) every month when the payments are made.
Q. What happens if the names of persons employed in one month are different than those in another?
A. The employer simply has to cross out the name of the person who is no longer employed and add the names of new employees.
Q. Is it difficult for the employer to complete this form every month?
A. It is not at all difficult since the forms are pre-printed by the NIC office and delivered to the employer well in advance of the date for submission.
Q. Are there any penalties for employers who do not pay in the contributions to the NIC office?
A. There are severe penalties for employers who default on their obligations to the N.I.C. The first step is that a surcharge of 1.25% of the amount due and unpaid for the month is levied for every month that the amount remains outstanding. Employers can also be prosecuted in the courts for the unpaid contributions as well as for the late or non-submission of the returns.
Q. What are insurable earnings?
- Basic Salary/Wages
- Overtime payments
- Cost of living allowances
- Family allowances
- Commission or Profit on Sales
- Payments on account of night or shift work
- Service Charge
- Holiday Pay
- Christmas Bonuses
- Annual Production Bonuses,
- Severance Payments and
- Terminal Gratuities.
Q. Is there a maximum (ceiling) upon which deductions should be made?
A. Yes. Deductions should be made on all amounts up to and including the first $5000.00 earnings in a month.
Q. Why is the ceiling increased periodically?
A. The ceiling is increased periodically so that the benefits which the NIC pays remain meaningful to the recipients. All benefits are related to the contributions, therefore as wages and salaries increase, so must the contributions.
Q. Suppose an employee is employed by more than one employer during a contribution period, who is responsible for making the deductions?
A. Each employer is responsible for making deductions. However, contributions paid should not exceed the maximum for that year, and a refund is given of amounts paid in excess.
Q. How many claims is an insured person allowed to make in a year?
A. Contributors are entitled to claim as many times as they meet the qualifying conditions for a benefit
Q. Can a person borrow money from the NIC?
A. No, a person cannot borrow money directly from NIC. However, NIC has made monies available to other lending institutions. A contributor would have to meet the qualifying conditions set out by these institutions. These institutions are St Lucia Mortgage Finance Co Ltd., St Lucia Development Bank, Credit Unions, NRDF and all the Commercial Banks .
Q. Does NIC offer scholarships to the children of the contributors?
A. National Insurance operates a scholarship programme for needy students. The scholarship programme was launched in September 1988. It assists students who have secured a place at a Secondary School in the state but who experience difficulties in securing the necessary finances to attend the schools. It is administered through the Ministry of Education. The recipients do not have to be the children of contributors.