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Columns : Investing in You - Glenn S. Ferguson Last Updated: Feb 6, 2017 - 2:32:04 PM

Retirement Planning - How National Insurance Is Putting More Money In Your Pockets
By Glenn S. Ferguson
Aug 10, 2010 - 2:15:57 PM

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Amidst the noise you may really not recognized that the resent amendment to the National Insurance Regulation may be the most important social reform legislation since National Insurance was established in 19974 - totally transforming the social security system and  bringing much needed  financial relief to you and your families.

I know that having “more money” deducted from your salary especially during these tight economic times, that it is very difficult to see the value in what seems like an just another added financial burden.  And I am sure that it was a very difficult political decision for the government given all of the other real taxes that have been imposed. Adjusting the National Insurance contribution just added to the tax confusion.  But it was the right decision and may even be the best thing that will happen to you during your working years.

Yes, I can hear you now “What is Glenn talking about,  how could the government taking more  money out of my already small salary be good for me?”

Well, over the next several articles I will share with you why the recent amendment to the National Insurance Regulation is just what you needed and once you understand it,  you agree with me that this is exactly what you will need for one of the most important time of your life - Retirement!

And you know by now that no matter your age or how long you may have been working that it is never too soon to start planning for your retirement.  As it is very likely that you may be spending more time in retirement than the years you have spent working.

That is right - your retirement can last for 40 years!

And if you have concerns about how far away it seems, let me assure that time goes by quickly and that there are really only two outcomes in life - you either die before you retire or you die after you retire. So no matter how you look at it you should be thinking about retirement.

On average, with the advances in modern medicine and technology you can expect to live longer. And while longevity can be wonderful it also come with some financial responsibility.

So the question then is “where will this money come from?” One of the sources of your retirement income will be your National Insurance Retirement benefit. And do you know what that benefit is? How much will National Insurance pay each month if you retire now? If you know then that is good but I do not think you know.

While you may be relying on National Insurance for your retirement benefit as almost 80 percent of Bahamians do not have any other form of retirement funding, you really don’t know what that amount is.

Well if you are a government worker then your National Insurance benefit will $286.00 per month and if you do not work for the government then its around $936.00.  And if you are like the persons I share this information with in my retirement seminars, I can see the shock look on your face now.  

You see your National Insurance benefit is based on your level of contributions to the scheme and really has nothing to do with your salary.  And currently you are only required to contribute to National Insurance on a weekly salary of $110.00 if you are a government employee or $400.00 if you are not. And any retirement benefit you receive is based on those salary level.

Is $110.00 or $400.00 really reflective of your current salary? I am sure that it is not.  Resulting in your pension benefit having no relation to the salary you currently earn as it is only a fraction of that amount.  Which is why the amendments are so important. As the current insurable wage ceiling limits significantly the level of retirement benefit that you can receive from National Insurance.

With the recent changes the insurable wage ceiling will increase:
  1. to $500.00 in January 2011
  2. to $600 in July 2012 and
  3. Every two years thereafter by inflation plus 2%.
The overall impact is that when it comes to retirement - National Insurance will be putting more money in your pockets.

Copyright © 2010 - Glenn S. Ferguson

Glenn Ferguson is a Speaker, Coach and Syndicated Writer, helping you to painlessly take control of your money to create wealth for you and your family. Email to: glenn@financialcoachingwithglenn.com  Web site: www.financialcoachingwithglenn.com

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