The Montserrat Social Security Fund has released details on the amendments made to the Social Security Act and the subsidiary regulations.
In a release, published on its website, the organisation said “Social Security is funded by contributions and investment returns which are directly impacted by the number of people contributing to the Fund and the contribution rate.
“Montserrat has an ageing population and the number of persons receiving a Social Security pension is increasing at a faster rate than the number of persons contributing to the Fund.
“Over the past years, benefit and administrative expenses have exceeded income from contributions and investments. As a result, the Fund has been forced to dip into reserves each month to make pension payments. The shortfall this year is expected to be $4.1million.
“The Government of Montserrat (GoM), based on actuarial advice, has made several amendments to the Social Security Act and subsidiary regulations which will place the Fund on a sustainable path in the medium-term. These changes include: –
- Increasing the contribution rate for Employees from 4% to 5% starting April 2022 with a schedule of additional increases that would take the rate to at least 7% by 2026.
- Increasing the contribution rate for Employers from 5% to 6% starting April 2022 with a schedule of additional increases that would take the rate to at least 8% by 2026
- Increasing the contribution rate for Self – Employed persons from 8% to 9% starting April 2022 with a schedule of additional increases that would take the rate to at least 12% by 2026
- Eliminating the early pension thereby moving the eligible age for claiming an Age Pension from 60 to 65 years.
- Reducing the maximum pension percentage rate for Age and Invalidity pensions from 60% to 55%.
“While the future growth of our economy and population is uncertain, the Board is confident that the Social Security Fund can be placed on a path of financial sustainability with the enactment of these changes,” the statement read.