Thread by @MsGillyJ

The NIS Benefit for persons who have retired is currently $3,400 a week or $13,600 per month. Most persons who are currently contributing to NIS would not be able to sustain their current lifestyle with that benefit because it is lower than minimum wage.

A Thread on Pension 1/

The National Insurance Scheme (NIS) is another deduction that will come out of your salary to assist with giving you an income when you can no longer work.

The current NIS deduction rate is 2.5% for employee & 2.5% for employer up to a maximum of $1.5 Million

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So if you take a check of your current income, how would it compare to $13,400 a month? That clearly will not be enough for you to live on when you retire, and many Jamaicans fail to plan for this important part of their life. Many employers therefore offer pension plans..

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If your company has a pension plan, your employer will deduct pension payments from your salary & place it in a fund that earns interest, typically higher than inflation. That pension fund is regulated by the FSC who has rules about what the fund is allowed to do. 4/

Usually for a regular bank account you must pay the government tax on any interest you earn, but pension funds are a special savings vehicle that you can earn interest tax free!

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If you check my previous article, you will know why its important to earn at a rate higher than inflation.
gillianajackson.com/is-your-saving…

So why do you need a pension plan? ...
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When you retire, you will no longer be earning a regular income, unless you own your own business or invested in another way to make money on retirement (like rental income from real estate or investment in the stock market). 7/

Imagine if your expenses when you are 60 are $50,000 or even $500,000 a month and you did not invest/save enough in your earlier years to cover these expenses in your future? Most persons will not be able to rely on NIS income and then will have to turn to family for support. 8/

Your children should never be your retirement plan. There are actual retirement plans that if you invest in now, you will have something for the future. What are some additional benefits of a pension plan? The most important one is that you are guaranteed an income for life 9/

When you reach retirement age, an actuary will use the amount you’ve accumulated in your pension savings to calculate how much you can be paid on a monthly basis. If you save the money yourself (in a bank or investment account), you do not know when the money will run out 10/

E.g. if you saved up $5000 a year in the e.g. in this thread you would have $5.4 M after 30 yrs

This is the monthly amount you would have for the extra years

Years Monthly Amt
10 = $45,000

20 = $22,500

30 = $15,000

https://twitter.com/MsGillyJ/status/1171015289720512514?s=20

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Whether or not that will be enough to replace what you were making before you retire YOU DON'T KNOW HOW MUCH LONGER YOU WILL LIVE. If you are a part of a regulated pension fund (which you can join even if your employer does not have one) ... 12/

..an Actuary will calculate something called your Expected Future Lifetime, they will consider the future interest rates (among other things) & then give you a guaranteed payment for the rest of your life so that you don't have to worry about money running out before you die. 13

Visit my article here for more on why a Pension Plan is important:

gillianajackson.com/why-pensions-a…

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Forgot to add #financetwitterJa to this thread! #whypensionplansareimportant

Correction, as of April 1, 2019 the NIS contribution has been increased to 2.75% each for employee and employer!

jamaicaobserver.com/news/increase-…

Coincidence (or not) that this was in the paper today! NIS has benefits other than for retirement !
-Maternity
-Special Child Benefit
-Employment Injury
-Funeral Grant
-Invalidity Benefit
-Spouse Allowance
-Widows Benefit

Check it out. #FinanceTwitterJa