COMMERCIAL LOOK

- by Emmanuel Joseph June 1, 2023

NIS CHAIRMAN SAYS SOCIAL SECURITY SCHEME TRANSITIONING TO NEW TYPE OF ENTERPRISE

By Emmanuel Joseph

Prime Minister Mia Mottley and members of her Cabinet could in a few weeks have in their hands proposed provisions to transition the island’s social security scheme into a “commercial state enterprise” to make it more profitable and ensure its long-term viability.
Chairman of the National Insurance Scheme (NIS) Leslie Haynes, KC made the disclosure to Barbados TODAY, indicating that the NIS is targeting the end of June to send the draft of the new National Insurance Bill to Cabinet for approval.
He said the NIS and the Minister of Labour and Social Security Colin Jordan have already held discussions with the Barbados Workers’ Union (BWU) and the Barbados Private Sector Association (BPSA) to get feedback on the provisions. A similar meeting was slated for Wednesday evening with the National Union of Public Workers (NUPW).
“The new Act is establishing the National Insurance as a commercial state enterprise. That would establish the board of directors, it would establish the relationship between the Government and the statutory body, and it will deal with certain provisions of the National Insurance Fund and how it is to be administered,” the NIS official told Barbados TODAY in an interview ahead of that meeting with the NUPW.
“We in Barbados are leading the way in the Caribbean to ensure our Fund is not depleted. Every three years, the actuary, according to the present National Insurance Act, has to review and put in a report. The last report received from the actuary was last year when he said action has to be taken in order to avoid the depletion of the fund sometime in the 2030s,” Haynes recalled.
In that 17th Actuarial Review of the National Insurance Fund (NIF), Unemployment Fund and Severance Payments Fund, dated July 2022, actuary Derek Osborne projected that the NIF would move from expenditure being 36 per cent more than contributions in 2020, to 77 per cent more than contributions when all reserves are exhausted in 2036.
As of December 31, 2022, the NIF stood at $3.679 billion.
Haynes pointed out that as a matter of urgency, there is now a general reform of the pension fund and the system for self-employed Barbadians to contribute to the social security scheme.
“In addition to those major reforms, we are also dealing with the pension fund because of the actuarial report and trying to make it easier for self-employed persons to contribute to the scheme. I cannot speak of these reforms as yet because they still have to go to Cabinet,” he said.
“This is in addition to the number of other matters that we are working with at the National Insurance . . . such as payments of pensions into bank accounts to becoming more digitised, and curing problems…about employers not paying in contributions. So, a number of major reforms are taking place at the National Insurance,” Haynes said, adding that the International Monetary Fund (IMF) was supporting the reforms.
Recalling that there was a run on the NIF during the height of the COVID-19 pandemic, Haynes disclosed that more than half of the $100 million-plus which the Government had pledged to invest in that fund to recapitalise it had already been paid.
“And they have agreed to pay off the balance at certain intervals to recapitalise it, but they have already paid one tranche. So I really wouldn’t worry about the National Insurance Fund,” the chairman asserted.
Last week, former Minister of Economic Affairs in the Democratic Labour Party (DLP) administration Dr David Estwick recommended the elimination of double taxation on pensions and the scrapping of any direct tax on people who take up jobs post-retirement as strategies to help save the NIS from potential collapse.
He also suggested that Barbados introduce a tax write-off of 150 per cent of business investment for people over the age of 60.
[email protected]

Read our ePaper. Fast. Factual. Free.

Sign up and stay up to date with Barbados' FREE latest news.