Oran Hall | Voluntary contributions to NHT and NIS

Both the National Housing Trust, NHT, and the National Insurance Scheme, NIS, allow certain defined individuals to make voluntary contributions to, thereby opening a way for those contributors to derive the same benefits as regular contributors.

There are three categories of NIS voluntary contributors – people who have retired from full-time employment before reaching retirement age; people who have re-located for an indefinite period to another country, with which Jamaica does not have a Reciprocal Social Security Arrangement; and people who have become unemployed. Qualified people who want to become voluntary contributors should get approval by completing and submitting to the NIS the Voluntary Contribution Application Form to the nearest parish office, and must have a TRN or taxpayer registration number.

The contribution rate is 6 per cent of earnings up to the wage ceiling of $5 million, but the minimum is $250 per week. Contributors must make 10 years or 520 weeks of contributions to qualify for benefits, but the contributions need not be in consecutive years. Thus, a person who contributes for six years, but is not able to contribute for three years, can later resume and contribute for four years.

Voluntary NIS contributors have access to a wide range of benefits. A significant benefit is the old-age pension and grant. A good friend of mine who emigrated to the United States many years ago talks very happily about hers and the money it provides for her to spend when she visits Jamaica.

Other benefits include the invalidity pension and grant, widow’s and widower’s pension and grant, orphan’s pension, funeral grant, and NI Gold insurance plan, which provides benefits such as in-hospital room and board, surgeon and assistant surgeon fees, anaesthetist fees, doctor’s office and home visit fees, diagnostic services, prescription drugs and dental and optical expenses. Although the payments are not very significant, they are a great help to beneficiaries in managing their health-related expenses.

The voluntary contributors to the NHT are pensioners and people living in another country as either permanent residents or citizens of the foreign country, or holders of a valid residency card in the country where they reside. Such people should register with the NHT by completing the voluntary contributor’s application Form. The applicant must first apply to the Tax Registration Centre to secure a TRN, which is needed in the registration process. Applicants must attend an interview or authorise a representative or agent to represent them. The letter of authorisation should be signed, stamped and dated by a notary public for overseas residents, or by a justice of the peace for Jamaican residents.

Voluntary contributors to the NHT should contribute 3.0 per cent of gross earnings if they are employed to someone else, or 3.0 per cent of their income after the deduction of business-related expenses if they are self-employed.

The contributions of overseas contributors are to be paid in the currency of the country in which they are working. The contribution will then be converted to Jamaican currency at the prevailing rate set by the Bank of Jamaica on the date that the payment is processed.

The first payment is due at the time of registration and after that on the last day of every month but no later than the 15th day of the following month. For example, a voluntary contribution due on the 31st of May has to be paid no later than the 15th of June. However, no interest is charged on contributions due since registration, but which are not paid.

Like other contributors to the NHT, voluntary contributors can qualify for loans, and are entitled to a refund of contributions in Jamaican dollars in the eighth year after they made the contributions. Therefore, contributors may apply in 2024 for a refund of the contributions they made in 2016 and, in fact, for contributions made in prior years that have not yet been refunded.

To qualify for a loan, a voluntary contributor must have made at least 104 weeks, or two years, of contributions, of which 52 weeks must have been made in the period immediately before the date of the application. This means that a contributor who had made six years of contributions before emigrating from Jamaica would have to make contributions for at least another year before being eligible to apply for a loan to build, buy, repair or make improvements to a house in Jamaica.

After receiving a benefit, voluntary contributors are required to continue making contributions to the NHT. In the event of their contributions falling into arrears, the sums due will be deducted from the amount presented as the mortgage payment, thus making it inadequate, with the likelihood of the mortgage falling into arrears.

Individuals residing in Jamaica or abroad who qualify to be voluntary contributors to the NIS or NHT have the opportunity to apply so that they, and their families, can derive the associated benefits and improve their welfare.

Oran A. Hall, author of Understanding Investments and principal author of The Handbook of Personal Financial Planning, offers personal financial planning advice and counsel. finviser.jm@gmail.com