Barbadians are being assured that the National Insurance Scheme (NIS) remains viable, with assets of approximately $4.7 billion up to the end of last year.
Armed with statistics, a fiery Minister of Finance Chris Sinckler Tuesday morning sought to debunk any notion that the fund was in danger of being depleted, pointing out that it was instead raking in hundreds of millions of dollars in investment income and contributions each year, despite the hundreds of millions it was also paying out.
The total benefits paid out by the social security scheme reached $637.8 million at the end of 2016, up from the $49,227 when the fund started in 1967, and the $238.8 million reached in the year 2000, the minister said.
At the same time, Sinckler said in 1967 short-term contribution income to the fund was $2.7 million, rising to $300 million by 2000 and $527 million by the end of last year.
Meanwhile, investment income to the fund moved from $24,905 when it first started to $87 million by the year 2000, up to $289.6 million by the end of last year.
Sinckler said the growth of the fund over the 50-year period proved that it was “viable, can continue to meet its obligations well into the future, is not broke or has run out
of money or is about to close down and leave pensioners in the lurch.
“I want to make the point that by any yardstick of measure, by any series of analysis, by any casual glance . . . that we have a substantial social security scheme in Barbados that, based on both previous and current actuarial reviews, it is a viable scheme,” the Minister of Finance told fellow parliamentarians.
Sinckler, who was leading off debate on the amendment to the National Insurance and Social Security Bill 2017 in Parliament Tuesday morning, said at the end of last year the fund had recorded a total of 63,391 short-term claims, up from the 3,073 in 1967.
Sickness benefits that were paid out by the NIS, he said, rose from $48,000 in 1967 to $19.8 million in the year 2000, and reached $24.2 million by the end last year.
In the year 2000 there were 33,539 pensioners and by the end of last year there were 42,000 pensioners benefiting from the scheme, he said.
Describing the growth of the NIS fund as impressive and substantial, Sinckler said this growth should be attributed to those who had the foresight to establish the scheme in the first place, good leadership, and smart and conservative investments.
“I think that when we look at what we have in front of us is a fund that is well capitalized, that even in spite of the challenging economic times, continues to meet its actuarial requirements, but is not devoid of challenges,” Sinckler said.
He said Government was aware there were some areas on which the authorities should keep a close watch in order to ensure the fund’s viability. Those areas, he said, included demographic changes, lower birth rate, economic growth rate linked to unemployment, and the quality of investments.
Also pointing out that he was aware of the substantial investment of the fund in Government papers, Sinckler gave the assurance that “if at any time such investments come under strain because of things happening in our economy and society the Government of Barbados will step in to ensure that our NIS remains a viable entity contributing to the development of our society”.
He also gave the assurance that Government had no intention of lowering the rates of benefits being paid out by the fund.
It was just last week that the minister responsible for the NIS, Dr Esther Byer-Suckoo complained at a safety and productivity workshop sponsored by her ministry that sickness claims submitted by workers were eating into the funds held by the scheme at a rate of over $50 million per annum.
She warned then that if the number of claims continued to increase, Government may have to start to talk in terms of increasing the premiums.
In April, Byer-Suckoo had warned that the NIS could face serious financial problems and challenges to meet pension payments no later than the year 2067 if the current trend of an ageing population continued.