Retirement in Barbados – Thesis Part 3

Let’s continue looking at the literature review 2.2

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2.2. Retirement in Barbados

This section aims to present the benefits provided by the social security system in Barbados. Previously, it was mentioned that the Barbados National Insurance Scheme (NIS) covers five main types of benefits: short-term benefits, long-term benefits, retirement benefits, unemployment benefits, and severance benefits. However, the full list comprises nine (9) categories of benefits: sickness, maternity (benefit or grant), disability (benefit or grant), unemployment, funeral grant, work-related injury (injury benefit, disability benefit, medical expenses, funeral grant, death benefit), age pension (contributory or non-contributory), and survivor’s benefit.

According to the updated 2016 Guide to Benefits, there are three types of age-related benefits: the contributory benefit, which can be a grant or a pension, and the non-contributory benefit for those who have never contributed to the fund.

For contributory benefits, it is essential to distinguish between a grant and a pension. How does one determine eligibility for either? It primarily depends on the individual’s contribution history. Below are the requirements summarized for each benefit:

Old Age Grant (Contributory)	Old Age Pension (Contributory)
Reach pensionable age	Reach pensionable age
Have at least fifty (50) contributions paid or credited to their account	Have at least 150 contributions paid into their account
	Have at least 500 contributions paid or credited to their account

Source: A Guide to Benefits, National Insurance Scheme Barbados

There are three types of retirement ages: (1) the normal or average age, which is being incrementally raised due to pension reform but currently stands at 66 1⁄2 years for both men and women; (2) the voluntary or early age, which is between the minimum age of 60 years and the normal age; and (3) the late retirement age, which is any age after the normal age up to 70 years.

Pensionable Age (NIS Barbados)	Before January 1, 2006
Before January 1, 2006	65 years
January 1, 2006, to December 31, 2009	65 1⁄2 years
January 1, 2010, to December 31, 2013	66 years
January 1, 2014, to December 31, 2017	66 1⁄2 years
After January 1, 2018	67 years

Source: National Insurance Scheme Barbados

Due to pension reform, different methods for calculating the Age Pension have been established based on the insured’s age as of December 31, 2002. Therefore, insured individuals aged 56 or older on 12/31/2002 will have their pensions calculated according to the old method. Conversely, those aged 47 or older but younger than 56 will have half of their benefits calculated using the old method and the other half by the new method. Finally, insured individuals younger than 47 on 12/31/2002 will have their benefits calculated using the new method.

Below is a summary of the retirement benefit calculations:

Old Calculation Method:
The annual pension rate is 40% of the insured’s average annual earnings, supplemented by 1% of the total earnings on which contributions were based after the first 500 contributions paid or credited, but capped at a maximum of 60% of the average annual earnings (at retirement age) and a minimum of BBD$179.00 per week. For age pension purposes, the average annual earnings are the sum of the earnings on which contributions were based during the best five years of the insured’s contributions, divided by five. If the contribution period is less than fifteen years, the total number of contributions will be used.

Supplementary Pension:
The supplementary pension is calculated by summing the weekly earnings represented by contributions beyond the first 500 and taking 1% of that amount.

Maximum Pension:
The maximum pension at retirement age, i.e., the basic pension plus the supplementary pension, shall not exceed 60% of the average annual earnings.

New Calculation Method:
Using the new calculation, the pension is based on the contribution period and the average annual earnings over the best five years. The pension is calculated by summing 2% of the average annual earnings for the first 100 contributions and 1.25% of the remaining contributions, but the benefit amount cannot exceed 60% of the insured’s average annual earnings.

There is also a pension for those who have never contributed to the fund, called the Age Pension (Non-Contributory). According to the Guide to Benefits (N.I.S BARBADOS, 2016, pp. 31), to qualify for a non-contributory age pension, the applicant must meet the following requirements:

• Be 66 years old or, in the case of blind and deaf-mute persons, 18 years old;
• Meet the Citizenship and Residence Requirements:
  • Be a citizen of Barbados;
  • Have permanent residency in Barbados according to the Immigration Act, with residence in Barbados for:
    • Citizens of Barbados: 12 years since the age of 40 or a total of 20 years since the age of 18;
    • Permanent residents of Barbados: 15 years since the age of 40 or a total of 20 years since the age of 18.

The applicant is not eligible for a Non-Contributory Age Pension if they:

• Receive a pension related to service in the public sector of Barbados;
• Receive a pension related to service in another government or an international organization of which Barbados is a member;
• Receive a pension from the National Insurance Scheme at a higher rate than the non-contributory pension;
• Receive a pension from another social security system operated by another government;
• Earn more than BBD$30 per week and are blind or deaf-mute and below pensionable age;
• Have been absent continuously from Barbados for more than six months;
• Are an in-patient in a government-maintained healthcare institution, such as a hospital or a home;
• Are detained in prison, although there are exceptions.