Prime Minister Mia Mottley has defended Government’s involvement with the National Insurance Scheme (NIS), saying the monies were used to benefit the country.
However, she admitted that the NIS needed to find investment opportunities outside of Barbados so as not to “put all of its eggs in one basket”.
Mottley was responding to recent criticisms that both the Democratic Labour Party (DLP) and the Barbados Labour Party (BLP) administrations had used the NIS as their personal piggy banks.
The critics also suggested that Government was too involved in the NIS and called for the involvement to be limited.
But Mottley explained that with limited options the NIS needed to invest its money, while pointing out that Government was the safest way to do so, while providing some of the highest returns on their investment.
“The bottomline is that the pension funds and the NIS funds represent a pool of savings. If they did not do anything with it, it means that they would not be able to earn from the savings. Remember that their income is not only contributions from what you pay in, but it is also investment returns and therefore, you only have so many things that you can invest in.
“To assume that a social security system is going to have a pool of savings that is not going to help to build out schools in a country, that’s not going to help to build out an airport in a country, that’s not going to help to build out the health systems in a country, is to assume first and foremost that there is somebody else’s system and country that you are going to build out because if you don’t invest what are you going to get back? You’re going to get back no returns and a $100 30 years ago is not a $100 today so it can’t do what it could do otherwise 30 years ago, so you’ve got to be able to invest,” the Prime Minister contended.
“The question then is who best and how best do you invest? Now I think that there is a legitimate case for saying that the level of diversification is perhaps not sufficient and that we need to have more investments than simply just Government investments.
“But at the same time, who is the most certain bet on a small state? More often than not, people know that when a Government owes them they are going to get paid even before a private sector investment because some private sector investments will succeed and some will fail miserably.”
Mottley said the problems highlighted in relation to the National Insurance Fund, which is in danger of being depleted in the next 12 years, were much deeper than simply Government’s involvement with the NIS.
“The issues are broader and deeper and more structural than are being said, but it sounds sexy to put it in terms of B’s and D’s. But, when you break it down and ask yourself as a small state what are the investments that the NIS can make to ensure that they’re not only relying on $100 paid in 30 years ago – but that they make that $100 work for them to keep up and outpace with inflation so that they can pay you benefits when they need to be paid and on time when they need to be paid,” Mottley said.