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Employers and Employees to Alternate Contribution Increase

by: - February 1, 2020
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Deputy Director of the Dominica Social Security, Mr. Augustus Etienne. 

The Dominica Social Security says this year, employers will be bearing the quarter per cent increased contribution rate.

In the national insurance system, employees pay a percentage of their wages to secure their income in case of an interruption or retirement. The employer matches that contribution by a particular percentage each pay period.

Since 2012 when the system’s sustainability was assessed, one of the recommendations was a necessary 7% increase in contributions that employers and employees make to close the gap between the rate at which benefits are paid and the rate of contributions coming in to the social security.

Speaking on vibes radio earlier this week, deputy director, Augustus Etienne explained that those contributions to social security have been increased by a quarter per cent since 2012.

“At the time it was 9.75% and we were paying benefits from between 30-60% of people’s earnings,” he said. “In the long term, we pay pensions starting from 30% after 10 years of contributions and that increased by 1% for every year past the first 10 years of contributions. That can go from 30% to 60%.”

He said it will take 20 years to reach a 5% increase in contributions for a less “burdensome” way for contributors.

Etienne explained, “We settled for a more gradual increase in the contribution rate…a quarter per cent increase in the contribution rate annually.”

He said the quarter per cent was borne by the employees from 2012 to 2019. But “for this year, the employer will be the bearing the quarter per cent increase and next year, the employee and so on. From now on we will be alternate that quarter per cent between the employer and employee.”