The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The National Insurance Board (NIB) yesterday pledged to this year launch an aggressive “zero tolerance” campaign against non-compliance, starting with the 30-40 per cent of businesses who default on agreed plans to pay-off existing arrears.

Stephen Thompson, NIB’s compliance department head, said the nation’s social security system was also targeting a 10 percentage point rise in self-employed compliance rates, among numerous initiatives to collect the multi-million dollar sum it is owed in contributions.

He told Tribune Business that the first of these will launch on Saturday with an Installment Agreement Initiative - an effort to tackle previously-delinquent employers who, after agreeing payment plans with NIB to tackle these arrears, then defaulted again.

Mr Thompson warned companies in this situation that “things will get rougher going forward”, with court prosecutions the next step if they did not come into NIB to make due payment and/or renegotiate their payment plans.

Emphasising that legal action was “a last resort” for NIB, which preferred to use the ‘carrot’ rather than a ‘stick’ approach to compliance, Mr Thompson nevertheless said: “The easy days are at an end.”

“My primary objective is to improve the level of compliance at NIB; compliance by employers and self-employed persons,” he told Tribune Business in an interview.

“My day every day is to improve the level of compliance. I must say that the level of compliance is not what it ought to be. There’s room for improvement.”

The failure of employers to pay NIB contributions can place their employees at a “serious disadvantage”, and potentially deny them access to both short and long-term benefits that should be due to them.

Besides denying Bahamian workers both replacement and long-term (retirement) income, the non-payment of contributions also threatens to undermine the long-term sustainability and soundness of the nation’s only social security system.

Mr Thompson acknowledged that there were “quite a few employers” breaching their legal obligations under the NIB Act by not making due contributions on their employees’ behalf.

These companies are either not making the deductions from their revenue and employees’ salaries or, in some cases, are taking the money from worker pay cheques but pocketing it themselves, instead of paying NIB.

Mr Thompson described the latter activity as “an unpardonable sin”, given that those employers were enriching themselves at the expenses of their workers, and added: “We have zero tolerance for that.

“We have coined a phrase for this year: ‘Zero tolerance for non-compliance.’ That’s what we’re going after this year,” he told Tribune Business.

Mr Thompson revealed that between 30-40 per cent of employers who had entered into Installment Agreements with NIB to settle previous arrears had subsequently defaulted on these, a rate he described as “very high”.

“We have employers who come in, sign a document in good faith to say they will meet their obligations to NIB, and they fail to do that,” he added.

“That’s something that;s challenging to NIB, and something that’s unacceptable. If those persons sign an agreement and fall into hard times, you come into re-negotiate and let us know your problems.

“We’re asking them to come in so they can bring these agreements up to date. We want to give these persons an opportunity to make good on these agreements, and where they may have challenges, to come in and let’s talk.”

Mr Thompson said the Installment Agreement Initiative, which will launch on February 13, will take place on the three remaining Saturdays this month at NIB’s Jumbey Village headquarters, between 9am to 3pm.

He added that NIB was prepared to extend the initiative into March if it received an “overwhelming”response, with employers seeking to regularise their affairs.

NIB has timed the Installment Agreement Initiative to coincide with the run-up to Business Licence filing and fee payments, which are due on March 31.

To renew or obtain a Business Licence for the first time, companies are required to submit a Letter of Good Standing to show they are up-to-date with NIB contributions. NIB is thus seeking to use the Business Licence deadline as leverage to boost its own compliance levels.

“If they fail to make contact with us, we’re going to be initiating legal action fairly soon,” Mr Thompson warned payment plan defaulters.

“Ahead of that, we want to give them an opportunity to come in. We do intend to take legal action against those who do not comply with the Board.

“We are forging a strong alliance with our Legal Department. We in the Compliance Department take the view that prosecution ought to be the last resort, but non-compliance will not be tolerated.

“I’d rather use the carrot approach. I prefer that. You go before the courts and the best interest is not served. We don’t want to flood the courts with these matters when we can bring these people in and have discussions with them.

NIB’s compliance department chief added: “We want to tell persons to take advantage of this opportunity because things will get rougher going forward.

“NIB is going to be less inclined to work with delinquent employers, people who had the opportunity to get their business straight and declined to do so.

“That’s a problem for us, and we don’t plan to carry that. We plan to aggressively tackle that going forward. The easy days are at an end. We take this very seriously.”

Mr Thompson said NIB contribution compliance rates among self-employed Bahamians remained as low as 25 per cent or ‘one in four’, although he “hesitated” to place a figure on the issue.

“I am not convinced we have extended sufficient effort to go after self-employed persons,” he told Tribune Business.

“I plan to, and I’m putting my head on the block, to improve that by at least 10 percentage points this year.”

Mr Thompson said compliance by Bahamas-based employers was as low as 30 per cent when it came to paying due NIB contributions in full, and on time.

He described this figure as a “guesstimate”, which would be refined when NIB “in the coming weeks” undertakes a registration dive.

Mr Thompson said this would enable NIB to refine how many businesses should be contributing to it, as it will identify both new companies and those that have closed.

“If we continue to keep them [closed businesses] on our books, our projections may be off,” he explained.