Home » Posts » Projection: NIS could be empty in 12 years

Projection: NIS could be empty in 12 years

by Barbados Today
4 min read
A+A-
Reset

Barbados’ $4 billion National Insurance Scheme (NIS) is at risk of being depleted in as few as 12 years, ripping the social security safety net from under Barbadian workers.

That is the stark reality facing the country, as the social security fund’s actuary explained that the contributions being paid into the NIS and the amount and range of benefits it pays out, cannot continue at current levels.

Derek Osborne, the Bahamian expert tasked with assessing the health of the NIS, delivered the grim news Wednesday, as he called on Barbadians to agree on a local solution to the threats facing the NIS.

In a shock disclosure, the actuary said the NIS was now calling in some fixed deposits it has in financial institutions before the maturity dates and using all its investment income to help meet obligations to workers and beneficiaries.

“What we saw in 2020 and 2021 is that investment income, all of it, was needed to help pay benefits. All the assets – the savings we have accumulated over the last 55 years are now being tapped into and being used to help pay benefits.

“Starting with fixed deposits in the bank, those have been called early to help pay benefits. The fund is now going down in size. The challenge with dipping into your savings and reserves is that eventually, you will run out if you keep doing that,” he disclosed during a national broadcast led by Prime Minister Mia Mottley.

“Depletion of the fund could be as soon as 12 years from now in 2034 on a pessimistic outlook, but on a more optimistic outlook, it could be in 2041.

“In 12 to 15 years, we are looking at the fund being really challenged in a crisis position; and a fund being depleted does not mean an NIS no longer exists, it just means the NIS will have to find additional funds because there are no longer any savings on which they can depend to meet your benefits,” he outlined.

Osborne, who took the lead in outlining just how dire the NIS situation was becoming in the absence of much-needed adjustments, said a gaping $700 million hole has to be plugged by the scheme.

“The fund is certainly not sustainable with the current rates of contributions – not for the people in this room and certainly not for our children and grandchildren,” he explained.

The NIS, which celebrated its 55th anniversary this year, is challenged to collect benefits from a growing number of self-employed persons, who are operating in the informal sector as well as professionals with private practices.

Self-employed people, he noted, were at greatest risk of having no income when they retire because they have not contributed to the NIS and could face destitution in their senior years.

“We have a challenge with a lot of self-employed people and informal sector workers who are a growing group in society who are not contributing and will not qualify for pension when they get older. [They] will become a burden for neighbours, the community and government,” Osborne stated.

In addition, the NIS financial situation was not helped by the lack of consistent economic growth in Barbados over several years.

“Unfortunately, the last 14 years have been challenging. Some economic cycles have not been good to Barbados and the NIS. The population is also declining. Starting in 2017, there have been more deaths each year than births. The natural increase in the population is now negative,” the expert outlined. 

You may also like

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. Accept Privacy Policy

-
00:00
00:00
Update Required Flash plugin
-
00:00
00:00

About Us

Barbados Today logos white-14

The (Barbados) Today Inc. is a privately owned, dynamic and innovative Media Production Company.

Useful Links

Get Our News

Newsletter

Subscribe my Newsletter for new blog posts, tips & new photos. Let's stay updated!

Barbados Today logos white-14

The (Barbados) Today Inc. is a privately owned, dynamic and innovative Media Production Company.

BT Lifestyle

Newsletter

Subscribe my Newsletter for new blog posts, tips & new photos. Let's stay updated!