The National Insurance Board
Monday, February 2, 2009
The National Insurance Board’s (NIB) primary objective, as mandated in the National Insurance Act, continues to be providing income-replacement for workers when they are unable to work. To deliver on this income-replacement promise to workers of The Bahamas, NIB collects contributions from self-employed persons and from employers on behalf of employees.
According to NIB Director Algernon Cargill, the Board is currently in the process of updating its contribution records to ensure that all employers have paid the amount due for each employee for each month, and that contributions submitted by employers are accurately posted or deposited to the accounts of the appropriate employees.
He said, “This exercise is vitally important because each contribution paid goes toward NIB’s fulfillment of the promise of income-replacement. We have an absolute obligation to ensure that each contribution, which represents one week of a worker’s life, is paid and is properly assigned because one contribution can mean the difference between a sick, invalid or aged worker qualifying for a benefit or being disallowed.”
Mr. Cargill admitted that over the years, the Board has not always been vigilant and timely in notifying employers of gaps or omissions in their contribution payments. But he said that where gaps are now being identified, the Board is obligated by law to find the relevant contributions and/or secure payments where full payments were not previously made.
Additionally, various government agencies – like the Licensing Authority and the Department of Immigration – are now requiring from NIB letters of good standing, which confirm that businesses are in compliance with the National Insurance Act. “Compliance” in the National Insurance Act, does not only mean paying for current periods; it also means:
a. Being up-to-date on the payment of contributions for all employees for each month a business was in operation;
b. Submission to NIB of employees’ work records; and
c. Maintenance of proper employee records.
With regard to the retention of records, the National Insurance Act, 1972 (Chapter 350 of the Statute Laws of The Bahamas), is clear. Section 42 states in respect to Maintenance of Records: “Every employer and self-employed person shall at all times keep and maintain in his business premises or place the following records… b) payroll and other records connected therewith which would serve to prove the correctness of the entries on the contributions made; and c) the records relating to the payment of such contributions to the Board.
Further, the Act makes it an offence for employers to fail to keep or produce those records. Section 52, under Offences and Penalties, states: “Any person who… fails to keep or maintain the records in accordance with section 42… shall be liable on summary conviction to a fine…”
Additionally, the Employment Act, 2001 also addresses the issue of the retention of information. Part 13 on Information and Returns says: “Every employer shall – a) make and keep for such period as may be prescribed after the work is performed, such records of the names, addresses, ages, wages, hours worked, annual vacations and other conditions of work of each of his employees as may be prescribed.”
Director Cargill said, however, that NIB is mindful that some employers may not have kept contribution records dating back to when National Insurance started in 1974. He said this has presented a challenge for NIB and employers, particularly when it comes to the issuance of letters of good standing.
“Previously,” said Mr. Cargill, “we were reluctant to issue letters of good standing where there were gaps, even if the gaps were from as far back as 1974. But we’ve recently taken a decision that where gaps exist for old periods, we will look at the payment history of the employer and the nature of the outstanding items, and then make a case-by-case decision.
“For example, in cases where old records cannot be located but a series of letters had previously been issued confirming good standing, and contributions are otherwise current, we will work to ensure that there is no obstruction of the employer’s regulatory processes by issuing the letters of good standing.
“We recognize the importance of the letters, and have committed to providing them within two business days when there are no outstanding payments due from the requesting company. In cases where a company has a history of non-compliance, however, we will be unable to routinely provide these confirmatory letters. In such cases, we will seek, through negotiation with the employer, to regularize compliance status and, where this is not possible, use the means available to us under the National Insurance Act to collect arrears and enforce compliance.
“It must be noted,” continued Mr. Cargill, “that the issuance by NIB of any letter of good standing, does not mean that gaps in contributions do not exist; nor does it mean that NIB forfeits its right to pursue legally any missing payments. We do not see this as ambiguous and the letters will be worded to ensure that the employers’ regulatory process continues. Further, NIB will seek to obtain through contract with the employer, an undertaking to resolve the instances of arrears.
NIB encourages employers to first of all submit accurate and complete C-10 (monthly contribution statement) forms and then maintain good employee records in the event future queries arise. Employers and self-employed persons are urged to work with their NIB inspectors to ensure that all submissions are properly reflected on NIB’s database.
Workers of the country also have a role to play in ensuring their contributions are properly paid and assigned. Employees are, therefore, urged to obtain from NIB a Contribution Statement which outlines their history of contribution payments. From these statements they can confirm that the records are accurate, or they can identify missing or inadequate payments.
Again, each contribution is important. Contributions secure a safety net for workers of the country, as evidenced by NIB’s monthly benefits payroll. In addition to the thousands of recipients of short-term income-replacement, there are currently more than 26,000 persons receiving long-term payments – pensions – from NIB each month. One contribution, payable 30 years ago, if uncollected, can result in one worker being left off NIB’s monthly benefit payroll.