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Proposed Public Pension Formula Makes Bad Situation Worse

The following important comment was posted by Actuary and Talk Show host Walter Blackman to respond to a comment raised on the blog 60 Love Can Lose – Blogmaster Pensions have surfaced as an extremely important issue at this stage of our national development, so I want to commend you for bringing this pension-related matter to…

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The following important comment was posted by Actuary and Talk Show host Walter Blackman to respond to a comment raised on the blog 60 Love Can Lose – Blogmaster
Walter Blackman – Actuary and Brasstacks host

Pensions have surfaced as an extremely important issue at this stage of our national development, so I want to commend you for bringing this pension-related matter to the attention of BU readers.

The challenge for me is to distil esoteric, actuarial and mathematical concepts into information that you and all BU readers can understand. Please forgive me if I fail to overcome that challenge

We grew up hearing that one of the major benefits derived from working for the government was the receipt of a pension and gratuity.

I will use a 5-year average pay of $5,000 (assumed to be under the NIS ceiling, for illustrative purposes only). I simply want to show how the changes in pension legislation have affected government workers hired before September 1, 1975, those hired on or after September 1, 1975, and those to be hired on or after January 1, 2023.

A person born on January 1, 1945, who was hired before September 1, 1975 and who retired after 33 1/3 years of service will receive the following:

  • Government pension = $3,333.33
  • NIS Pension = $3,000
  • Total Pensions received = $6,333.33

Note that this pensioner is receiving a total monthly pension which is greater than the pay he was getting as an active worker.

This was a problem that the government decided to solve.A person born on January 1, 1945, who was hired on or after September 1, 1975 and who retired after 33 1/3 years of service will receive the following:

  • Government pension = $333.33
  • NIS Pension = $3,000
  • Total Pensions received = $3,333.33

Note the drastic reduction in government pension. This was not the best approach to be taken by the Government of Barbados to solve the pension problem.

A person born on January 1, 2003, who will be hired on or after January 1, 2023 and who will retire after the following years or less of service will receive the following:

  • Government pension (1-36 years of service) = $0
  • Government pension (37 years of service) = $$83.33
  • Government pension (38 years of service) = $166.67
  • Government pension (39 years of service) = $250.00
  • Government pension (40 years of service) = $333.33

This proposed pension formula makes a bad situation worse. The unions ought to make their voices heard.

Walter Blackman – Audio Version

Note:
Gratuity = 25% x monthly pension x 150
Pension to be paid = 0.75% of calculated pension

For example:
Government Pension = $3,333.33 per month
Gratuity = $125,000.00
Monthly Pension to be paid = $2,500.00

182 responses to “Proposed Public Pension Formula Makes Bad Situation Worse”

  1. John A Avatar
    John A

    @ Artax

    I f the FTC had to investigate the sale for concerns over potetial market monopoly that is fine. What I am saying is that if the new entity started selling Toyotas or Nissans it would be a legal matter of distribution rights and territory, not a fair trade issue in my view. It would have to be settled between attorneys, distributors and manufacturers. I don’t see the FTC being party to that type of distribution rights dispute that’s what I am saying.

  2. Artax Avatar
    Artax

    John A

    “However, in an effort to ensure the future survival of Barbados’ other automobile dealerships, the regulator has revealed that Inchcape International Holdings Limited will have to “notify the Commission if it plans to introduce any new brands to its portfolio of offerings that are already represented in Barbados.” (Nation News, June 24, 2022)

    My concerns are based on the above comments.

    Are you implying that by REQUIRING Inchcape to “NOTIFY the Commission if it plans to introduce any new brands to its portfolio of offerings that are ALREADY REPRESENTED in Barbados,”……

    …… the FTC essentially became caught up in an issue that DID NOT fall WITHIN its REMIT?

    It’s a simple question that requires a ‘YES’ or ‘NO’ answer.

  3. Walter Blackman Avatar
    Walter Blackman

    Artax
    June 27, 2022 3:30 PM

    “Mr. Blackman
    I understand that persons entering the public sector after September 1, 1975, would not be entitled to both government and NIS pensions, which essentially means they would be entitled to NIS pension only.”

    Artax,
    Not quite.

    I gave the example of such a person retiring after 33 1/3 years, with an average pay of $5,000 per month:
    The NIS pension (max = 60% of pay) is calculated based on whether the person is born in or before 1946, in or after 1956, or in-between those years.

    The year of birth for this case is before 1946
    Thus, the NIS pension = 40% x avg pay + 1% x avg pay per year, after 10 years

    NIS pension = (40% + 23 1/3%) x avg pay = 63 1/3% of avg pay. But the maximum is 60% of pay
    NIS Pension = 60% x 5000 = $3,000

    Government monthly pension :=
    2% x 33 1/3 x 5000 – NIS pension

    Government monthly pension := $3,333.33 – $3,000.00 = $333.33

    Therefore, this participant gets two pensions.

  4. Walter Blackman Avatar
    Walter Blackman

    Artax
    June 27, 2022 3:30 PM

    “Mr. Blackman
    Recall that a few retired, ‘appointed’ National Assistance Board employees were receiving pensions from NAB and NIS, with government subsequently ceasing the pension from NAB.

    Artax,
    You did not say that these employees were medically boarded and retired medically unfit, so I have to search for a different explanation.

    A worker at the NAB could retire anytime between ages 60 and 65. The NIS pension is only taken away from the government pension when the employee actually starts to receive the NIS monthly pension

    So an employee retiring at age 60 will receive a NAB pension until age 67, when the NIS pension kicks in. If the NIS pension is greater than the NAB pension, then the NAB pension should cease.

    You said the employees “were receiving pensions from NAB and NIS”. Could it be that NAB was simply tardy in stopping the NAB pension cheques for these employees after the NIS pension had kicked in?

  5. Artax Avatar
    Artax

    Mr. Blackman

    The NAB issue was used as an example and not one that would require an explanation. I’m fully aware of everything you outlined in your above contribution.

    My question is as follows. If any individual employed by the public sector after September 1, 1975 is NOT entitled to both pensions, why did you calculate a government pension?

    By those calculations, are you suggesting if a person decides to retire at 60 years old, he/she would receive a government pension of $333.33 UNTIL 67 years old, and then thereafter, a NIS pension of $3,000?

    As it relates to the NAB, a few retired employeess were receiving both pensions, in some cases as long as 17 years, although they were entitled to one.
    My concern was, why did Mia Mottley abruptly stopped payment of the NAB pensions, WITHOUT PRIOR NOTICE, to a ‘handful’ of senior citizens, whose living standards would’ve been based on their income?

    Ironically, Cynthia Forde, who was the Minister at the time, claimed she did not know anything about it. Mottley’s elderly father would have benefited from the tax write-offs. And, Dame Antoinette ‘Billie’ Miller is being rewarded, at taxpayers expense, for some irrelevant post called, ‘Ambassador at-Large.’ 

    But, this is a topic for another discussion.

  6. John A Avatar
    John A

    @ Artax

    In is not a yes or no answer.

    My final reply is that if they offered brands already represented that is a matter for the law courts, the lawyers and the affected parties.

  7. Artax Avatar
    Artax

    John A

    In Bajan parlance….. ‘I wid you and dat.’

  8. Walter Blackman Avatar
    Walter Blackman

    Artax
    June 28, 2022 7:09 AM

    Mr. Blackman
    “…… any individual employed by the public sector after September 1, 1975 is NOT entitled to both pensions,”

    Artax,
    This statement is false.
    I have demonstrated to you in my comments above that it is possible for a civil servant, hired after September 1, 1975, to receive an NIS and a government pension.

  9. Walter Blackman Avatar
    Walter Blackman

    Artax
    June 28, 2022 7:09 AM

    “Mr. Blackman
    ………are you suggesting if a person decides to retire at 60 years old, he/she would receive a government pension of $333.33 UNTIL 67 years old, and then thereafter, a NIS pension of $3,000?”

    Artax,
    No.
    Each individual case is different. Please note the conditions below which apply to our individual.

    I am saying that if a person, born in or before 1946, hired on or after September 1, 1975, retires at age 60 with a 5-year average pay of $5,000 per month, after having worked 33 1/3 years, then he would receive the following:

    A government pension of $3,333.33 from age 60 to age 67
    A government pension of $333,33 from age 67*
    A NIS pension of $3000.00 from age 67**

    *Since he receives a NIS cheque of $3,000 at age 67, the government pension would now drop to $333.33 at age 67 ($3,333.33 govt pension – $3,000.00 NIS) due to the principle of abatement.

    **This example is for illustrative purposes only. Technically speaking, an individual born in 1946 would not have to wait until age 67 to receive a full NIS pension.

  10. Artax Avatar
    Artax

    Mr. Blackman

    I am not understanding the logic behind your examples.

    I understand that persons joining the public sector after September 1975, would no longer receive two pensions, as you illustrated in your FIRST EXAMPLE.

    I understand if a guy retires at 60 years he would receive a government pension until 67 years old.
    But, if he applies for his NIS pension at 60 years as well, wouldn’t he lose 0.05% until he reaches 67 years old?

    If you read my first contribution, you would’ve realized I ‘said’ it would interesting to see the GUIDELINES you USED as a BASIS for those calculations, FOR MY EDUCATION.

  11. Vincent Codrington Avatar
    Vincent Codrington

    @ Artax

    Try this formula. He receives his full pension from GoB until he qualifies for an NIS pension. When he qualifies for a NIB pension ,his GOB pension is reduced by his NIB pension. In total he receives the same quantum. That is how it operates in the private and state corporations pension schemes. The NIS pension cannot provide livable pension for those above a certain income bracket. I hope this is more logical/understandable.
    There is a ceiling to the amount the NIS ensures a pension regardless of the employees current income..

  12. Artax Avatar
    Artax

    Mr. Codrington

    What I’m aware of…… and I don’t know of any recent changes, is that if a guy receives a government pension if he retires at 60, and at 67 his NIS pension is less than his GP, he would receive the NIS amount and government would pay the difference.

    For example, GP = $1,000 and NIS = $975, then government would pay $25.

  13. Walter Blackman Avatar
    Walter Blackman

    Artax
    June 28, 2022 10:29 AM

    “Mr. Blackman
    I am not understanding the logic behind your examples.
    I understand that persons joining the public sector after September 1975, would no longer receive two pensions, as you illustrated in your FIRST EXAMPLE.”

    Artax,
    This concept gives people a lot of trouble, so I understand the difficulty you are experiencing.
    Vincent Codrington has nailed it.

    To determine the amount of government pension payable at any point in time after retirement, use this formula:

    Government pension payable at any point in time after retirement = Gross Government pension calculated – NIS Pension being actually paid (NIS abatement)

    Where
    NIS abatement = 0 for civil servants hired before Set 1, 1975
    Gross Government pension calculated = 2% x years of service (max = 33 1/3) x 5 yr avg salary for civil servants (not statutory Boards) hired before Jan 1, 2023

  14. Artax Avatar
    Artax

    Mr Blackman

    Isn’t Mr. Codrington’s comments similar to those I made in my June 28, 2022 6:10 contribution?

  15. Artax Avatar
    Artax

    “He receives his full pension from GoB until he qualifies for an NIS pension. When he qualifies for a NIB pension ,his GOB pension is reduced by his NIB pension. In total he receives the SAME QUANTUM.”

    But, Mr. Blackman’s calculations indicated the individual would receive less and not “the same quantum.”

    Anyhow, there won’t be a need for further explanations. I’ll conduct my own research.

  16. David Avatar
    David

    @John A

    This old paper coauthored by now Governor of the Central Bank in 1985 shows asset structure of the NIF.

    http://www.centralbank.org.bb/Portals/0/Files/WP1984-02.PDF

  17. Walter Blackman Avatar
    Walter Blackman

    Artax
    June 28, 2022 10:29 AM

    “Mr. Blackman
    I understand if a guy retires at 60 years he would receive a government pension until 67 years old.
    But, if he applies for his NIS pension at 60 years as well, wouldn’t he lose 0.05% until he reaches 67 years old?”

    Artax,
    Let us apply the formula for this case and see how it works.
    Gross Government monthly pension at age 60 = $3,333.33
    NIS pension payable at age 67 = $3,000

    The employee decides to take his NIS pension at age 60. You correctly stated that the NIS pension is reduced by 0.05% per month, so NIS payable at age 60 = $3,000 x 58% = $1,740. He loses 42% of NIS pension by taking it 7 years early.

    So Government pension payable at age 60 = Gross government pension payable at age 60 – NIS pension actually received at age 60

    Government pension payable at age 60 = $3,333.33 – $1,740 = $1,593,33.

    You asked if the employee would lose 42% of his NIS benefit “until he reaches 67 years old”?
    In this case, he would lose 42% of his NIS benefit for life. The NIS pension will not increase when he reaches age 67. A lot of people make this mistake in their thinking..

    Please note that, in this case, although the employee is hired after September 1, 1975, he still receives two pensions for life, starting at age 60 :
    Government pension = $1593.33
    NIS Pension = $1,740.00

    I hope this helps.

  18. Artax Avatar
    Artax

    “The NIS pension will not increase when he reaches age 67. A lot of people make this mistake in their thinking..”

    Mr. Blackman

    A few ago, during a conversation with a childhood friend, who coincidentally works at the NIS, I said I was thinking of applying for ‘early pension’ at 59 1/2 years old.

    I was told that I would receive 0.05% less until age 67.

  19. Walter Blackman Avatar
    Walter Blackman

    Artax
    June 28, 2022 6:39 PM

    “Mr Blackman
    Isn’t Mr. Codrington’s comments similar to those I made in my June 28, 2022 6:10 contribution?”

    Artax,
    Yes, the comments are practically the same.
    However, I only saw your comments after I had already written and posted mine.

    My bad.

  20. Walter Blackman Avatar
    Walter Blackman

    Artax
    June 28, 2022 7:17 PM

    “Mr. Blackman
    A few ago, during a conversation with a childhood friend, who coincidentally works at the NIS, I said I was thinking of applying for ‘early pension’ at 59 1/2 years old.
    I was told that I would receive 0.05% less until age 67”

    Artax,
    You were given bad advice. NIS pensions start at age 60. The reduction in NIS pension is for life.

    I have all of the time in the world for you because I know the nature of your profession. Once you understand these concepts clearly, you will be in a position to offer good and proper advice to your clients.

  21. Walter Blackman Avatar
    Walter Blackman

    Artax
    June 28, 2022 6:45 PM

    “He receives his full pension from GoB until he qualifies for an NIS pension. When he qualifies for a NIB pension ,his GOB pension is reduced by his NIB pension. In total he receives the SAME QUANTUM.”

    But, Mr. Blackman’s calculations indicated the individual would receive less and not “the same quantum.”

    Artax,
    Take a look at my example again:
    Remember, with an average 5 yr salary of $5,000 per month, the Gross Government pension is $3,333.33, This is the same quantum as total pensions received below.

    A person born on January 1, 1945, who was hired on or after September 1, 1975 and who retired after 33 1/3 years of service will receive the following:
    • Government pension = $333.33
    • NIS Pension = $3,000
    • Total Pensions received = $3,333.33

  22. Walter Blackman Avatar
    Walter Blackman

    Artax
    June 28, 2022 10:29 AM

    “Mr. Blackman
    If you read my first contribution, you would’ve realized I ‘said’ it would interesting to see the GUIDELINES you USED as a BASIS for those calculations, FOR MY EDUCATION.”

    Artax,
    I am aware that I wrote the following:

    A person born on January 1, 2003, who will be hired on or after January 1, 2023 and who will retire after the following years or less of service will receive the following:
    • Government pension (1-36 years of service) = $0
    • Government pension (37 years of service) = $$83.33
    • Government pension (38 years of service) = $166.67
    • Government pension (39 years of service) = $250.00
    • Government pension (40 years of service) = $333.33

    I know that I did not give an insight into the mathematics used to arrive at these numbers . I know also the tremendous ability you have as a researcher, so it is quite possible that some time in the future you may use these BU pages as a reference guide.
    Thus, I will see if, in a day or two, I can give you the mathematical guidelines I used to calculate these benefits.
    It would be much easier and quicker for me to do so than for you to go researching.

  23. Artax Avatar
    Artax

    Mr. Blackman

    Thanks.

  24. Critical Analyzer Avatar
    Critical Analyzer

    @Walter Blackman June 28, 2022 7:39 PM

    Thanks as well.

    If I understand your calculation, someone entering the public service now and earning above that NIS maximum earning threshold will still receive an additional pension from government on top of their NIS pension once they work the years required to qualify.

    Using an example, a government worker working for 9,000 would get a NIS pension based the first $5,000 if that is the NIS max earnings and a government pension based on the next $4,000.

  25. Walter Blackman Avatar
    Walter Blackman

    Critical Analyzer
    June 29, 2022 7:59 AM

    “@Walter Blackman June 28, 2022 7:39 PM
    Thanks as well.
    If I understand your calculation, someone entering the public service now and earning above that NIS maximum earning threshold will still receive an additional pension from government on top of their NIS pension once they work the years required to qualify.

    Using an example, a government worker working for 9,000 would get a NIS pension based the first $5,000 if that is the NIS max earnings and a government pension based on the next $4,000.”

    Critical Analyzer,
    Excellent!

    Using your example, let us assume the employee works 40 years.

    Remember it takes 36 years for the employee to reach the maximum NIS pension of 60% of pay, and 40 years for the employee to reach the maximum government pension of 66 2/3% of pay

    Average Government monthly salary = $9,000
    Gross Government pension = 66 2/3% x $9,000 = $6,000
    Average NIS monthly salary = $5,000
    NIS pension = 60% x $5,000 = $3000

    Government pension to be received by the employee = $6,000 – $3,000 = $3,000

    According to the regulations, the actuarial present value of this government monthly pension = $3,000 x 150 = $450,000

    The Prime Minister said that employees working above the NIS ceiling will have to contribute to their pensions. How much of this $450, 000 will this employee have to pay? Your guess is as good as mine. This is another area of pension reform that is a great cause for concern.

    For completeness, this employee will receive the following benefits:
    Gratuity = 25% x $450,000 = $112,500
    Government monthly pension after gratuity = 75% x $3,000 = $2,250
    NIS monthly pension = $3,000

  26. Critical Analyzer Avatar
    Critical Analyzer

    @Walter Blackman

    The Prime Minister said that employees working above the NIS ceiling will have to contribute to their pensions. How much of this $450, 000 will this employee have to pay? Your guess is as good as mine. This is another area of pension reform that is a great cause for concern.

    It sounds like this is where the problem really will be as I heard a caller on Brasstacks (Caswell Franklyn I think if I’m not mistaken) state that government workers were paid lower than contract government workers because that missing money was supposed to have been paid into a pension fund which the government appears to never have done and just paid government pensions out of the consolidated fund.

    Will the PM attempt to pretend that arrangement never existed and deduct a pension from government workers now to cover that government pension or will they attempt to correct that situation first and seek to deduct additional to make up the shortfall to bring things back into balance?

  27. Walter Blackman Avatar
    Walter Blackman

    Critical Analyzer
    June 29, 2022 10:43 AM

    “@Walter Blackman
    It sounds like this is where the problem really will be as I heard a caller on Brasstacks (Caswell Franklyn I think if I’m not mistaken) state that government workers were paid lower than contract government workers because that missing money was supposed to have been paid into a pension fund which the government appears to never have done and just paid government pensions out of the consolidated fund.

    Will the PM attempt to pretend that arrangement never existed and deduct a pension from government workers now to cover that government pension or will they attempt to correct that situation first and seek to deduct additional to make up the shortfall to bring things back into balance?”

    Critical Analyzer,
    I heard Caswell Franklyn making that point, but I have never seen any document or agreement which supports it.

    In any case, the issue relates to prefunding government pension benefits. If $1 billion had been put into that government pension fund, I would bet my last dollar that the politicians would have spent the cash and would have replaced it with government paper. Money would then have to be taken from the Consolidated Fund to liquidate that government paper, and we would be in the same position we are in now.

    Government pensioners face a very uncertain future.

  28. Walter Blackman Avatar
    Walter Blackman

    Generally speaking, here are the tools needed to calculate NIS Old Age pensions, and Government pensions.

    I am giving examples, under the proposed new government formula, of a person retiring after 36 years, and 40 years of service. I am also showing results for a person working for a salary under the NIS ceiling ($5,000) and a highly paid employee working for $10, 000 per month

    NIS Old Age Pensions:
    For persons born in or before 1946: 40% x Average Pay (for 1st 10 years) + 1% x Average Pay x (Years greater than 10) – OLD FORMULA

    For persons born after 1956: 2% per year x Average Pay (for 1st 20 years) + 1.25% x Average Pay x (Years greater than 20) – NEW FORMULA

    For persons born after 1946, and before 1956: 50% x (Result from OLD FORMULA + RESULT FROM NEW FORMULA)

    Note: Average Pay = (Pay for the highest 5 years)/5
    Maximum NIS Pension = 60% x Average Pay

    Central Government Pensions:
    For persons hired before September 1, 1975: 2% x Average Pay x Years of service (maximum = 33 1/3 years)

    For persons hired on or after September 1, 1975: 2% x Average Pay x Years of service (maximum = 33 1/3 years) – NIS Pension actually received

    For persons hired on or after January 1, 2023: 1/60 x Average Pay x Years of service (maximum = 40 years) – NIS Pension actually received

    Note: Average Pay = Highest 5-year average
    Maximum Central Government Pension = 66 2/3% x Average Pay

    Example 1: Person hired on or after January 1, 2023
    Date of Birth = 1/1/1996
    Date of Hire = 1/1/2027
    Date of Retirement = 12/31/2062
    Age at pension commencement = 67 years
    Years of service = 36
    Average monthly pay = NIS Ceiling =$5,000

    NIS pension = 2% x 20 x $5,000 + 1.25% x 16 x $5,000 = 60% x $5,000 = $3,000

    Central Government Pension at age 67 = 36/60 x $5,000 – $3,000 = $3,000 – $3,000 = 0
    Gratuity = 25% x 150 x 0 = 0
    Monthly Government pension cheque payable at age 67 = 75% x 0 = 0

    This person receives only a NIS cheque of $3,000 per month at age 67

    Example 2: Person hired on or after January 1, 2023
    Date of Birth = 1/1/1996
    Date of Hire = 1/1/2027
    Date of Retirement = 12/31/2062
    Age at pension commencement = 67 years
    Years of service = 36
    Average monthly pay = $10,000
    NIS ceiling = $5,000

    NIS pension = 2% x 20 x $5,000 + 1.25% x 16 x $5,000 = 60% x $5,000 = $3,000

    Central Government Pension at age 67 = 36/60 x $10,000 – $3,000 = $6,000 – $3,000 = $3,000
    Gratuity = 25% x 150 x $3,000 = $112,500
    Monthly Government pension cheque payable at age 67 = 75% x $3,000 = $2,250

    This highly paid person receives a NIS cheque of $3,000 per month at age 67, plus a government cheque of $2,250 per month.

    Example 3: Person hired on or after January 1, 2023
    Date of Birth = 1/1/1996
    Date of Hire = 1/1/2023
    Date of Retirement = 12/31/2062
    Age at pension commencement = 67 years
    Years of service = 40
    Average monthly pay = NIS Ceiling = $5,000

    NIS pension = 2% x 20 x $5,000 + 1.25% x 20 x $5,000 = 65% x $5,000 = $3,250
    But maximum NIS pension = 60% x $5,000 = $3,000

    Government Pension at age 67 = 40/60 x $5,000 – $3,000 = $3,333.33 – $3,000 = $333.33
    Gratuity = 25% x 150 x $333.33 = $12,499.88
    Monthly Government pension cheque payable at age 67 = 75% x $333.33 = $250.00

    This person receives a NIS cheque of $3,000 per month at age 67, plus a government cheque of $250.00 per month

    Example 4: Person hired on or after January 1, 2023
    Date of Birth = 1/1/1996
    Date of Hire = 1/1/2023
    Date of Retirement = 12/31/2062
    Age at pension commencement = 67 years
    Years of service = 40
    NIS Ceiling = $5,000
    Average monthly pay = $10,000

    NIS pension = 2% x 20 x $5,000 + 1.25% x 20 x $5,000 = 65% x $5,000 = $3,250
    But maximum NIS pension = 60% x $5,000 = $3,000

    Government Pension at age 67 = 40/60 x $10,000 – $3,000 = $6,666.67 – $3,000 = $3,666.67
    Gratuity = 25% x 150 x $3,666.67 = $137,500.13
    Monthly Government pension cheque payable at age 67 = 75% x $3,666.67 = $2750.00

    This highly paid employee receives a NIS cheque of $3,000 per month at age 67, plus a government cheque of $2750.00 per month

  29. NorthernObserver Avatar
    NorthernObserver

    @WB
    What is the function of the Gratuity calculations, they don’t seem to impact anything?

  30. Walter Blackman Avatar
    Walter Blackman

    Northern Observer,
    First, we calculate the “gross” pension, and then we have to calculate the gratuity.
    The net pension (Gross pension – Pension used to calculate the gratuity) is the actual monthly cheque the employee will receive.

    Pensioners in private, government, and NIS plans routinely compare benefits with other employees.

    Practitioners involved in calculating or checking NIS benefits will come across participants who claim that their gratuities or net pensions are incorrect. For these practitioners, I have tried to cover all bases in my calculations.

    Thats all. Thanks

  31. NorthernObserver Avatar
    NorthernObserver

    Thank you

  32. David Avatar
    David

    34 dead getting pension
    By Shawn Cumberbatch
    shawncumberbatch@nationnews.com

    Government has been paying millions of dollars in pension to some of its former workers even though they are dead – some for more than ten years.
    This was discovered during an investigation by the Auditor General’s Office and has prompted a separate probe by the Accountant General, who is now seeking to recover the $3.9 million in payments made by the Treasury Department.
    The overpayment of pensions was flagged by Auditor General Leigh E. Trotman in his report for 2021 and followed an audit of Government’s financial statements for the period ending March 31, 2021.
    Trotman said a review of the Government’s pension payroll “revealed that payments totalling $3.9 million were being made in the names of deceased persons; in some instances these payments were being made for over ten years.
    “These payments were in respect of 34 former pensioners. Information from the Registration Department confirmed that these former pensioners were deceased. The controls for the payment of pensions need to be reviewed and a stop order should be placed on any additional payments. Efforts should be made to recover the outstanding amounts,” he urged.
    In a response published in the Auditor General’s Report, the Office of the Accountant General, when presented with the findings on pensions being paid to deceased people, said that “the matter of overpayment of 34 former pensioners is being investigated”.
    “The accounts of those former pensioners have been inactivated in the system in order to stop any further payments to them. Stop payment orders have also been issued to the commercial banks for payments that were in transit in relation to the former pensioners,” said the Accountant General, whose office prepares financial statements on the activities of Government ministries and departments.
    “Efforts are being made to recover the amounts deposited to the relevant accounts subsequent to the death of those former pensioners.”
    The Accountant General said in the response that Death Register information “is very useful in the process of cleaning up the Treasury Department’s Pension Payroll Register”.
    The official explained, however, that “over the years, the Treasury Department was unable to access the Death Register information”.
    “After discovering that the information from the Death Register was recently made available to the Auditor General’s Office, the Registration Department
    was requested to provide the Treasury Department with access to information from the Death Register,” the officer added.
    An audit of the information system at the National Insurance Scheme (NIS) also revealed that benefits were disbursed to people months after they died, while the Barbados Revenue Authority (BRA) had value added tax (VAT)-related activity on the TAMIS (Tax Administration Management Information System) account of a business owner who was no longer alive.
    Concerning
    The Auditor General reported that an audit of the NIS computer system found that “payments were generated for persons who were recorded as deceased within the national Death Register”.
    “Payments were generated on behalf of ten persons for over five months after their recorded date of death. This is a concern as overpayment results in loss of funds that may be difficult to recoup. The national Death Register should be referenced regularly using computerised methods in order to prevent this,” Trotman advised.
    The NIS responded that its benefits section “receives information on deaths from the newspapers daily and members of the public”, noting that on receipt of this information, “the account of the deceased is locked pending the receipt of the death certificate”.
    “The NIS previously received information from the Registration Department but due to [information technology] issues, the NIS has not received death dates in three years. It is agreed that a steady stream of information from a reliable source can reduce overpayments,” the NIS stated.
    A separate audit of the BRA’s TAMIS system found instances in relation to VAT where the revenue agency “was not informed that the taxpayer, a sole trader, was deceased and activity continued under the TAMIS account”, the Auditor General said.
    “The Authority, being unaware of deceased taxpayers, may allow for unauthorised persons to conduct business with the entity. It may also allow for tax evasion in relation to income tax if the taxpayer who has taken over the business does not declare any additional income from the business,” Trotman warned.
    He recommended that “regular, automated, comparative checks be carried out of active taxpayers against the Death Register prepared by the Registration Department”.
    The BRA’s response in the Auditor General’s Report said that its management “accepts this comment and recommendation”. It also committed to initiating “a cross-check of death records to taxpayer registration data” from February 1 this year.

    Source: Nation

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