As you heard in the story, with these changes all contributors who earn more than $320 a week will get a bigger portion of their salaries insured. That means that if you should fall ill, and you need to make a sickness benefit claim, you will get a bigger payout.
It increases through the 3 phases all the way up to $520 by the year 2021, but, there is another benefit that comes with paying more money into the fund. The Social Security Board CEO told us that your retirement benefit will also be greater. Here's how he explained why:
Dr. Colin Young
"Your pension benefits up also increase. Right now the maximum pension that you can get from SSb is $192.00 per week and that is determine by a formula that is also in the legislation, but there are 3 major components; 1) you have to have a minimum of 500 contributions; 2) the total number of contributions matter. Why? because the law says that you need 500 to qualify and then the next 250 contributions - remember 50 is about 1 year. The next 250 contributions your pension rate goes up by 2% and then every additional year that you work it goes up by 1% until its max at 60% and the 3 best years of your salary. You put that into the formula and you get your pension rate which is $192.00 today. It's been that way since 2001. That is why a lot of people complain about adequately of benefit, because they are saying well how do you expect me to live on $192.00 a week when the cost of living in 2001 and today are very different. But remember its index based. Your pension is based on how much you pay and at the ceiling."
"Now that we are increasing the amount of your salary that we are insuring, we are able now to give you greater benefits, as an employee point of view. Now your pension after paying these new rates after 3 years goes up from currently $192.00 a week to $312.00 a week. That equates from a maximum pension $9,000 to $16,200 a year. So one way to think of it for paying an additional $13.85 a week, your pension rate goes up by almost 60% for those who have worked for a long time and have paid above the ceiling. Again, if you put $13.85 in your credit union account at 5% interest you will see that the rate of return, because remember we will pay you until you die and if you die and you have, in case of the man, then you have your spouse and your children that will collect even if you weren't at age 65, as long as you qualify for the pension."
So to recap, by 2021, the lowest income earners will have to pay $5.50 into the Social Security Fund every week. The employer will pay $4.47 and the employee will pay $1.03. At the SSB ceiling, which is $520, a total of $52 will be paid into the fund weekly. Of that amount, employers will pay $28.60, and employees will pay $23.40.
You can also expect that SSB may come back to the general public for another increase in 10 years, to keep up with the growth of the population.
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