In Bahamas, national insurance are deducted from the earnings of employees to support the insurance pool in the country so as to be able to pay benefit to insured when need arises.
Why are insurance fee deducted from earnings of employee?
National insurance is a form of social insurance that is deducted from the earnings of employees in many countries, including the United Kingdom. The money collected through national insurance contributions is used to provide a range of social benefits to eligible individuals, including retirement pensions, unemployment benefits, and health care.
The primary purpose of national insurance is to ensure that individuals have a safety net of benefits to fall back on in the event of financial hardship, such as losing their job or becoming unable to work due to ill health. By paying national insurance throughout their working lives, individuals build up a record of contributions that they can later use to claim benefits.
Additionally, it also helps in forming a social contract, where the citizens of the country contribute to a common pool and collectively fund the country's welfare state. This ensures that everyone has access to a basic level of services, regardless of their personal income or wealth.
By having the contributions deducted from the earnings of employees, it is easier to ensure that everyone pays their fair share and there is less scope for individuals to avoid their obligations. Employers also play a role in this system by collecting and remitting the contributions on behalf of their employees.