On Monday, August 22, Barbados TODAY published the article, ‘DLP at Fault’ which incorrectly stated that St Michael South Central MP Marsha Caddle placed the disaster facing the National Insurance Scheme (NIS) at the feet of the Democratic Labour Party. The Barbados TODAY Inc apologises for its error.
Below is a true reflection of Caddle’s comments on the NIS expressed at Saturday’s meeting of League of Young Socialists.
Barbados must explore a more progressive National Insurance Scheme (NIS) that could include higher contributions from the wealthy with no increased benefits for those individuals, economist Marsha Caddle has proposed.
“I stand by it. I don’t know if it is a recommendation that the Government will take but I think that the NIS contribution system has to start to more closely align with our progressive tax system,” she said as she presented wide-ranging proposals for the fund which experts warn could be depleted in 12 to 20 years if urgent action is not taken to bolster it.
Addressing the annual general meeting of the League of Young Socialists at Barbados Labour Party headquarters last Saturday, the Government backbencher cautioned that the country must be very cautious about determining which category of citizens can afford to pay more.
“Because when we set these thresholds for higher contributions too low, then we have an issue with a middle class that is vulnerable and that is about to become poor,” she said.
The former Minister in the Ministry of Economic Affairs and Investment advised that while Barbados has long based its social protection policies on protecting the vulnerable, this group is not static and the policy should therefore be set based on a person’s life cycle.
“We also have to understand that when we talk about this middle class, increasingly we are talking about people who have complex vulnerabilities and our policy has to be very fluid and very nimble. It is not just a question of taking care of a set number of families because tomorrow that number could change,” she added.
Caddle, who praised the Government for attempting to face and fix a complex issue that has been ignored for too long, made clear that the challenges facing the scheme have nothing to do with investment but fall in line with the problems facing broken social insurance models all over the world.
“The returns on NIS investment have been high and the rate of return versus the risk of investment is sound. The problem that the NIS has today is the problem that every social insurance scheme that is set up in this way has all over the world, which is that we have increased life expectancy and a declining population,” he noted.
The Michael South Central MP proceeded to recommend a slew of reforms, suggesting that the scheme should start with compliance by companies.
“When I talk about compliance, I think that we know that there are large companies and companies that do well that either collect National Insurance contributions and don’t pay them in or don’t collect them, and I think we have to start there with this compliance issue,” Caddle said.
Additionally, she said, “I think that if we are going to have a reform of the NIS system there has to be an alignment between what we would call standard employee benefits and self-employed benefits”.
Caddle further suggested that NIS should give self-employed people the flexibility to make their contributions based on how they receive their income, in a manner that does not destabilise the certainty of the scheme.
She advised that a restructured NIS should take a robust investment policy that is more varied and buttressed by all necessary controls and high levels of accountability.
The economist also urged Government to right-size the disability benefit to allow those who retire medically unfit from a particular field to still contribute while provisions are made for those who cannot work as well as their caregivers and family.
Caddle made clear that a reformed NIS must create value and increase the speed at which it delivers benefits, provides access to client information, and stay current on its audits.
“This is a whole part of the question of building trust. But I don’t think that we can look at the whole question of NIS reform if we are not talking about a scheme that creates value,” she said.
“There are countries in the Eastern Caribbean that pay out benefits in 48 hours. Our National Insurance Scheme has to get there because I do not think that we can propose to the people of Barbados some of the reforms that are on the table if we are not increasing efficiency, [and] cutting the time of benefit payments. People need benefits today.
“I think the NIS has to commit to improving these times and creating value for people if we are to take forward these reforms because you can’t ask people to sacrifice more for nothing or for the same sub-optimal value that they are getting today,” Caddle added. sandydeane@barbadostoday.bb
