The other reform proposal is to establish a new contribution floor. That floor for weekly earnings is currently set at $55 dollars and it has not changed since 2001.
Contributors at that rate receive only a measly pension - as little as $50 per week, which is hardly enough to meet basic living costs. So, the proposal is to remove the lowest two wage bands-$55 and $90 weekly. That will affect 6,006 contributors currently in those bands. The idea is to move them up to the new minimum contribution sum of $130 weekly. They would get more benefits but would also have to pay more, which is a tough proposition for those making very little. We discussed it with the CEO:
Jerome Palma, CEO - SSB
"Anybody contributing at those lowest bands are not full time employees, so they're not anybody who is working a 40 hour work week, but they are contributing because they work the minimum number of hours to actually contribute to the scheme."
"We recognize as well that if they were to fall ill, they would be out of employment and it would impact them very likely more significantly, because that really means nothing coming in; they're part time. So it does improve their sickness benefit immediately when we move them up to our $130 floor. So not just will they be contributing more, they'll be entitled to a better benefit. Both if they fall ill and also at retirement."
"And that is where it's important for us to look at the split between employers and employees. At the moment, at that lowest band, out of the 10%, the employers are contributing more than 8%. And we recognize where there's a desire for us to keep it as close to that. Feedback from the consultation - several employers have said they actually contribute the full amount for the employees, because it's just more efficient for them to do that, especially at that lowest rate."
