PM: Pension reforms could be reversed with growth

Some of the recently announced pension reform measures could be reversed if Barbados is able to achieve a certain level of continued economic and population growth, says Prime Minister Mia Mottley.

She gave that assessment on Friday as she stoutly defended her administration’s decision to raise the pensionable age and the number of contributions for which individuals will become eligible for full pension benefits.

During a press conference at Ilaro Court, Mottley told reporters that if Barbados could achieve “world-class” status by 2030, the eligible age for a full pension could be rolled back to 67 years “or even lower”, depending on the population and economic growth.

“But this is not something that can happen next year or the next three years. You need to be able to look at every actuarial report from now on and see that as a medical check-up,” explained Mottley who stressed that the challenges facing the NIS were structural in nature.

“If we can have the level of growth that we want to have and if we can bolster and increase our population, those are the two surest ways that a future government will get to do that which this government cannot do because of what it inherited,” she insisted.

Government has announced that the age at which Barbadians are eligible for a full NIS pension will move from 67 years to 67 ½ years in 2028 and then to 68 years in 2034. The age of retirement to qualify for a reduced pension will also be adjusted, from 60 years to 61 years in 2025, 62 years in 2028, and 63 years in 2031.

The number of contributions required for pension will move from 500 weeks (approximately 10 years) to 750 weeks (approximately 15 years).

Since the announcement at the end of last month, the Mottley administration has come in for harsh criticism from individuals, political pundits and some trade unions. There has also been a weekly protest march, organised by outspoken union leader Caswell Franklyn and involving former NIS senior workers.

However, Mottley said she would not allow anyone to “use the country as a platform for political elevation or for union expansion in order to put the country at risk”.

“I am asking Bardians to continue to trust this Government because in everything we have done, we have been upfront . . . . I ask Bajans to please, allow us to do as we can as we grow,” she said.

“I want the scare-mongering, the fear-mongering to stop. It is going to become like the boy who cried wolf, because when you really have something to complain about that has merit, nobody is going to be listening to you because you are continually promoting things on the basis of fake news or a false platform.”

The Prime Minister said the fact that half of the pensioners who started receiving pension in 2000 were still alive up to mid-2022, meant something had to be done. She also pointed to an ageing and declining population, and low economic growth over the years, as among reasons for measures to be taken now to stave off future challenges.

Mottley also indicated that the 2007 projections for the NIS Fund to have about 30 000 more contributors by this time had fallen short. She also reiterated that the series of measures undertaken by her administration since 2018, including the debt restructuring which resulted in a $1.3 billion haircut for the NIS, were necessary.

“We have made it clear that the NIS Fund is not in crisis, but what we are doing is taking preemptive action to ensure there is no crisis,” she said.

The Prime Minister indicated that the options to put the NIS on a more sustainable path are limited, but the Government was not prepared to sit back and do nothing and allow the NIS to collapse.

She said it would be unfair to increase the contribution rate, which was the highest in the region at just over 18 per cent, and it was not practical to reduce pension benefits given inflation.

Mottley acknowledged that compliance and governance of the NIS were also critical in ensuring its sustainability.

She said she has asked the NIS Board to ensure new investment guidelines are put in place.

“I have also asked the Minister of Labour to be very clear in exposing what the investments are that the NIS has made over the years,” the Prime Minister said.

“This country cannot be about who is loudest, who is most sensational, who is the most dramatic. If I want entertainment, I will go and look for entertainment on Instagram and other social media. I will go and look for some old Trevor Eastmond and some old Mac Fingall, but this country cannot have people making entertainment with the reality of people’s pensions. If you want to do it, then be prepared to be answered frontally,” said Mottley.

(MM)