One of Barbados’ leading actuaries today cried shame on the authorities, saying the lack of transparency within the National Insurance Scheme (NIS) was “worrying”.
In light of recent assurances given by Minister of Labour and Social Security Dr Esther Byer-Suckoo that the island’s social security scheme remains financially sound, Founding Principal of Eckler Limited Charles Herbert today demanded hard proof in the form of a copy of the latest actuarial review.
However, he said despite repeated requests for a copy of the official document in order to carry out his own detailed analysis, to date he has not been able to access it.
“The National Insurance [and Social Security] Act actually gives a mandatory date for them to have audited accounts and for them to be laid in Parliament. So it is just one more case where we are actually breaking the law,” Herbert told participants at the fourth annual Eckler investment review seminar at the Lloyd Erskine Sandiford Centre today.
“We have a board of directors [of the NIS] who are mandated to produce audited accounts. They don’t produce them by a long shot and they are not fired,” he lamented, while revealing that he had sent “countless” unanswered emails to the Director of National Insurance.
“My emails to him are not returned. The Minister of Labour, who is responsible, tells us that we can’t get it until it is laid in Parliament, but that won’t take long . . . . It is not fair that these reports, required by law, they are prepared and we are not given access to them,” stressed Herbert, who is also chairman of the Barbados Private Sector Association.
The findings of the 15th actuarial review, made public last month by Minister of Labour Dr Esther Byer-Suckoo, revealed that reserves in the National Insurance Fund (NIF) could be depleted “as early as 2045 under the pessimistic scenario, or as late as 2074 under the optimistic scenario”.
While Byer-Suckoo gave the assurance that the fund remained safe, the report pointed out that if Government debts are excluded from the NIF, “depletion of reserves is projected to occur in 2033”.
The report, which looks at the period 2012 and 2014, said the Fund’s reserves grew from a revised $3.9 billion at the end of 2011 to $4.7 billion at the end of 2014.
The 68-page document also revealed that at the end of 2014, the NIF had $565.7 million in un-invested assets, comprising of $121.7 million in cash, bank balances of $223.7 million from contributions receivable, and $220.3 million from accounts receivable.
However, Herbert is demanding greater transparency within the NIS, including disclosure of the names of persons comprising its nine-member tripartite board.
He is also concerned that Government may not be paying contributions for public sector employees.
“The National Insurance is our business. We must demand transparency and accountability and we must hold our representatives to account,” he said, while suggesting that the social security scheme would need to undergo significant pension reform within the next decade in order to safeguard the NIS’ future.
The changes, he suggested, would include an increase in pensionable age and a hike in contributions.
“I think that contribution rates will rise sooner than we would have anticipated before. While that might have been put off to 2025 or 2026, I think we could see a rise in contributions [before then],” Herbert said.
“And I think we will see the retirement age increase again from time to time. I think the retirement age is the safety valve that keeps the ratio between contributors and pensioners at a level that is doable,” he added.
As a result of pension reform started in 2003, the pensionable age has been increasing by six months every four years from January 1, 2006, until it reaches 67 in January 2018 for un-reduced pension.