#BTColumn – The management of the NIS

Disclaimer: The views and opinions expressed by the author(s) do not represent the official position of Barbados TODAY.

by Dennis DePeiza

The raging debate on the management of the National Insurance Scheme in Barbados has captured the attention of most, given that it has serious implications for the security of the scheme and its ability to meet its obligations to the workers on the island.

The red flags which have been raised by the findings of the actuarial report, are enough to warrant members of the public to question the integrity of the scheme. This starts with questions to be raised over the management
of the scheme.

Irrespective of whatever may be the difficulties which are being experienced and what may have given rise to them, there is nothing to negate the fact that the public needs to be given full explanations and answers to what can best be described as a fiasco.

The mission of the National Insurance Scheme of Barbados serves as a guide to what is expected in the management of the organisation.

The mission speaks “to prudently manage the investment portfolio of the National Insurance Fund and to maximise returns on investment within acceptable risks and maintain a level of liquidity to facilitate timely payments of National Insurance benefits.”

With claims and evidence provided by the actuary that the Fund is under threat, it is confusing to have counter claims being made that there is nothing to worry about.

It is a longstanding concern as to where does the authorities reside within agencies, departments and state-owned enterprises when it comes to the expending and investing of public funds.  It is questionable as to what extent the decisions taken by Board of Directors and management of such state organisations are guided by the directions of the political directorate.

Regardless of who is the piper who may call the tune, it is expected that Boards would maintain their autonomy, independence and creditability. It is also to expected that all times, that accountability and transparency would form part of the character of their operations.    

In keeping with the vision of the NIS, it is expected that the members of the Board of Directors would understand that they have a responsibility to ensure that the organisation becomes the model agency/ entity for the management of the pension funds within the Caribbean.

This is an awesome responsibility, given that that National Insurance Fund is funded by the contributions paid by workers and on the behalf of workers by employers. The Board then has a responsibility to manage and invest the contributions which are paid into the Fund, as well as to manage the pensions and other benefits which are to be paid from the Fund.

The broad legal responsibilities of the Board include, ensuring the proper financial administration of the NIS Fund, the adoption of a positive and vigorous investment policy to maximise returns on investment of the Fund, the diversification of assets holdings, the protection of the integrity of the Fund and good financial management to be demonstrated by the financial statements which are audited annually.

Based on the list of the legal responsibilities of the Board, it is clear that it is the custodian of the National Insurance Fund.

Where there is an apparent overreach by the political directorate, this raises issues regarding the boundaries which exist between policy directions and management decision making and operations. This can occur where there are blurred lines within the governance structure.

The fact that Boards are appointed by a Minister of the Government on the behalf of the Government, may be interrupted to mean that there is an obligation on the part of those appointed to serve, to oversee the policy mandates of the Government.

If this is the case, then those appointed to serve on the Board, should reflect on whether their individual or collective action, would be consistent with their responsibility to protect the integrity of the Fund and its good financial management.

In triggering the individual’s thought process, reference is made to the observation of the NIS actuary, who reported that for the period 2018 to 2020, $56.6 million was due to the Severance Payment Fund from employers who did not make their required severance payments.

It boggles the mind as to how this could have been allowed to happen and continue, despite the knowledge that workers who were at the time and are yet paying into the Fund, stand to be shortchanged if a high demand for severance payments is made, and the Fund finds itself under pressure to respond.

Some commentators have suggested that the problems being experienced with the investment portfolio and the nonpayment of benefits payable by employers, are the two of the critical problems which have given rise to the issues plaguing the
NIS Fund.

These along with the matter of accountability may be determined to be management issues which have the potential of bringing the integrity of the Fund into question.

At the end of the day, those who are most likely to feel the pinch of the shoe from all this fallout, are the workers, who may find themselves hard pressed to receive their benefits which are due, and to obtain them in a timely manner.

Dennis DePeiza is a labour & employee relations consultant, Regional Management Services Inc. Visit our Website: www.regionalmanagement services.com