Principles of National Insurance

The universality of the system should be noted. All wage-earners irrespective of type or place of employment are covered, except the self-employed, whom it is intended to cover at a later stage.

National Insurance is unlike the more restrictive Social Welfare System which applies a means test before paying benefits. It also differs from private insurance systems which screen applicants and exclude certain categories of malignant diseases, or impose higher premia if the individual risk is considered high, e.g. because of age or ill health.

Another feature is the pooling of risks. The good risks are pooled with the bad. Those who are more susceptible to disease are insured at the same premium as the rest of the population, spreading the risks evenly.

Thus the security of all workers is enhanced. To ensure this right to security, workers and employers have a related responsibility - to contribute to the system.

The system is therefore compulsory. No one is allowed to opt out even if in his view he already has sufficient coverage or has in fact adequately provided for himself.

The principle of compulsion ensures the availability of funds to cover all workers for the various risks. It also avoids the risk of the system covering only low income earners.

Another principle is that of redistribution from those who earn more to those whose earnings are not as high. Thus, persons in the lower earnings classes receive a higher percentage of their assumed earnings as pension than those in higher earnings groups.

Finally, there is the wage stop principle. The worker should not be better off when not at work than when at work.

This is why benefits form only a percentage of assumed earnings. The idea is to ensure that benefits are not incentives to remain away from work.

It will be observed that the system is self-financing, with contributions of a compulsory nature emanating from both employers and employees. On the other hand, Social Welfare Systems which provide assistance to the needy, whether they be children, adults or the aged, are funded by the Government. The similarity lies in the provision of income to those in need.

One can see therefore that another role of the National Insurance System, because of its self-financing nature, is to relieve the State of part of the burden of welfare expenditure. This is done by ensuring that several categories of persons who find themselves in financial need are catered for by the System. The State is accordingly relieved of part of the responsibility for ensuring standards of living in accordance with a desirable minimum.

The operations of the National Insurance programme are centered around three main areas: Registration of employers/employees, collection of contributions and payment of benefits.

National Insurance applies to all persons between the ages of 16 and retirement age (60 and under 65) who work for an employer. (With the proclamation of Act No. 23 of 1980, an insured person may retire between the ages of 60 and under 65 and receive a National Insurance Pension if the contribution requirements are met).

As indicated earlier, Self-employed persons are not yet covered under the System. Provision has been made for working persons under 16 years and over retirement age but such persons’ coverage is limited to only the Employment Injury Benefit.

Persons at school may be included in the programme when they take up part-time and holiday jobs. Provision has also been made for those who have left school and are in paid or unpaid apprenticeships.

It is important to register on first employment (part-time jobs or apprenticeships included) not only to secure yourselves in the event of illness or accidents, but in order to build up a contribution record for the Retirement Benefit. When you work, contributions are paid according to the Earnings Class into which you fall. This Class is determined by the amount of earnings you receive

 

 

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National Insurance Board of Trinidad and Tobago (NIBTT)