Barbados’ National Insurance Scheme (NIS) is not in any crisis.
This was the clear point made by Prime Minister Mia Mottley today after it was revealed that the National Insurance Fund was in danger of being depleted in the next 12 to 20 years if decisive action was not taken.
“We are not in crisis, but we want to avoid crisis 15 years from now. That is therefore going to mean that all of us who have the responsibility for taking decisions can do so at the earliest possible opportunity.”
Meanwhile, consultant actuary Derek Osborne, explained that the national scheme is under severe stress describing a “worrisome situation” in which the NIS was collecting 18.25 per cent in contributions and paying out 24 per cent in benefits and pensions.
In his grim analysis of the state of the national fund Osborne said his assessment follows the most recent review of the scheme which included a review of the Severance Fund and the Unemployment Fund. He said ways must be found to increase the amount of contributions paid by workers and employers or to cut the amount paid out of the scheme.
In the national broadcast, Mottley told the country: “There are countries in the Caribbean that are five, six years away from the moment that we are talking about. We don’t want that to happen to us because if that happens to us it means like everything…the longer we leave something to fix it the more we are at risk of it being fatal to us… so early, timely intervention is critical.” Mottley said during a press conference at the Lloyd Erskine Sandiford Centre this afternoon.
“Secondly, that this is about the country. It’s not about Government, it’s not about any party, it’s not even about the NIS alone as an institution. It is about the people of Barbados, and to that extent a strong Barbados requires a strong system of solidarity and the NIS is, for us, that system of solidarity.”
Mottley attempted to calm the fears of Barbadians by insisting that the NIS was in a position to honour all claims today and in the not-too-distant future.
“I want to reinforce that the NIS is in a position to satisfy all claims that are made legitimately on it today and therefore this meeting and these conversations have nothing at all to do with it.
“But all of us know that you want to make sure that if ever there are rainy days again and God knows we just went through a series of rainy days with this COVID-19 pandemic and had the NIS not been there to get tens of thousands of Barbadian families through this moment that we were going through, God knows where we would be today,” Mottley pointed out.
“As you know in March of this year the Government took the decision to also address the issue of pensions in the public service and while it is never easy to deliver news of reform, the reality is that if we want to make sure that we don’t topple over as a country and as a Government then we need to make these decisions and we’ve done so in a way that we believe to be least harmful and least hurtful because it relates to new people coming in and not adjustments to the existing population.”
The Prime Minister said Barbados’ dwindling workforce and population was a key factor behind the NIS’s troubles.
In fact, she revealed that there were 33 000 less contributors to the NIS than expected, leading to Government losing around $200 million annually.
Mottley said “one of the worst statistics” she had received during her time in office was that in 2050 one in every two Barbadians will be over the age of 65 years old.
She described that statistic as “untenable and unsustainable.”
The Prime Minister said the NIS also needed to formulate a system in which it could capture more self-employed persons.
