Let’s get real on redeeming the National Insurance Board (NIB) fund, Minister Myles LaRoda

Let’s get real with National Insurance, Minister Myles LaRoda 

By Dennis Dames

Minister of State in the Office of the Prime Minister with responsibility for the National Insurance Board (NIB), Myles LaRoda, has been talking a lot lately about increasing contributions of employers and employees in order to stabilize the NIB fund.

That is an impractical proposition by itself in my view as the NIB fund is already in a very critical state, and employers and employees are presently paying a combined 9.8 percent!

How much higher does any sensible government thinks that that rate can realistically and practically increase without serious financial ramifications for the employer and employee?

The minister stated that the government is in no position to assist NIB financially.  What nonsense!

NIB’s problem has always been poor governance and a lack of prudent vision from its inception, in my humble opinion.

Too much political interference and sweetheart jobs over the decades have contributed significantly to the deplorable state of the NIB fund today.

Add the issue of inept management, over-staffing and political crony jobs, and we get an even grimmer picture of the depressing and ongoing disgraceful state of the rapid erosion of the NIB fund.

The government must find a way to become a partner in the rescue of the NIB fund, Minister LaRoda.  Let’s start with reducing the government’s travel budget, for example.

We live in the 21st Century and technological age where we can show some international leadership, and encourage and persuade our respective global counterparts to have more conferences online.  We can use the savings from the elimination of unnecessary state, political and sweetheart travelling to enhance the NIB investment fund.

Let’s stop acting brand new and talking fool like we just realize that more and more of us are living longer, and are thus putting a strain on the NIB fund by collecting our well deserved monthly pension checks.

Let’s get real on redeeming the NIB fund, Minister LaRoda.

Now is the time for the government of The Bahamas to show real political and executive leadership in the salvation of the NIB fund by letting the people know what the government’s financial contribution is going to be until the NIB fund is put in to a healthy position once and for all - for the future posterity.

We want the truth, the whole truth and nothing but the truth concerning the disposition of the people’s money at the National Insurance Board (NIB)

Come Clean on NIB

The Bahama Journal Editorial

That matter concerning who did what, who decided who should get what and that matter which concerns money in the care of the National Insurance Board is one that should be decided now.

The Hon. Shane Gibson is himself clear enough in his mind as to what should be done.  Like us he seems to be on the side of those Bahamians who know that whatever is to be done should be executed now rather than later.  As one news report suggests: – “…National Insurance Minister Shane Gibson said he is already satisfied [in his mind] “what course of action we should take” based on the findings of the audit into the National Insurance Board.

Decisions made by NIB board members “based on the information (they) had when they were first appointed, seem to be justified…it went way beyond where we thought it would go and so we don’t want to make any rushed judgment or decision; we want to think about it carefully.

But I can guarantee you one thing, at the end of the day – it will be made public and it’s just a matter of when…”  Just a matter of when is not good enough.  Whatever is to be done should be done now.  We need to know all that the Minister and whomever else already knows the whodunit questions and the corresponding answers.

In his statement of the obvious, Minister Gibson says that, “…As soon as we make a decision based on the recommendations of the AG’s Office, then one of two things will happen:- “He will either return to work or he won’t return to work.”  We all must wait to hear, see and understand what the Attorney-General’s Office has to say on the matter concerning the stewardship of the people’s money.

The time is now for demanding that the Hon. Shane Gibson show and tell the Bahamian people all that he knows concerning whatever it is that has come to light in the aftermath of that forensic audit into the affairs of the National Insurance Board ordered and/or sanctioned by his colleagues in the Cabinet.  And let it be known that we shall have none of that good old fudge that some among us are prepared to feast on when there is information in hand that might hurt this or that favored character of ours’.

The chips – as they say – should be allowed to fly where ever they may.  Very many other right-thinking Bahamians want to know about what really did go down at National Insurance to cause all the furor and innuendo that now engulf a number of current and former employees of that star-crossed government owned entity.

Not only do we want to know what happened, we want to know if anyone is going to be charged with any wrong-doing.  And most of all, we take this opportunity to let this administration know that the Bahamian people want them to come clean and let the chips fall where they may.  And lest there be some other mistake concerning the extent of the people’s justified anger about what they have heard concerning the National Insurance issue, these people are also angry because things are tough for them.  They are therefore in no mood to turn a blind eye on this scandal.

The hurt for many continues, so too does the gravy train hum for some others who are mired in games now being played out in other sectors of this or that state-owned entity.  Enough remains enough!  In addition, as we look in on scandal’s NIB face, we are reminded of the fact that this nation now reels not only at the hammer blows inflicted by a world-economy over which it has little to no real control, but that the so-called man in the street now cowers in the cold shadow of poverty on the hoof.

An ever expectant people now demand transparency, accountability and responsibility from all who lead and all who would lead.  But above all else, the Bahamian people demand action, results and transparency from those elected to serve them.  In addition, they are now demanding the same from all those nameless, faceless bureaucrats who work with, for and under the command of politicians.  We too need to know whether the National Insurance Fund has been pillaged and somehow or the other been diverted from their proper use.

Put simply:-We want the truth, the whole truth and nothing but the truth concerning the disposition of the people’s money.

April 17, 2013

Jones Bahamas

The National Insurance Fund in The Bahamas Faces Depletion by The Year 2025 unless Serious Reforms are Instituted

The Social Security Reform Commission wants A Portion of The National Insurance Fund to be Invested Outside of The Bahamas - to Give it a Chance to Diversify Its Portfolio and Help It To Grow

NIB Losses Worsen

By Candia Dames

candiadames@hotmail.com

Nassau, The Bahamas

04/10/2004

Return on National Insurance Fund investments continued to decline last year, a clear sign that the country’s social security scheme is in urgent need of reform, according to Chairman of the Social Security Reform Commission Alfred Stewart.

Mr. Stewart, who was a guest on the radio Love 97 programme, “Jones and Company” Sunday, said at the end of 2003, the rate of return to the Fund was just under six percent.

When the 7th Actuarial Review of the National Insurance Board was completed at the end of 2001, the rate of return stood at 6.25 percent.

The Review, which was made public last year, created widespread concerns about the future of the Fund and prompted the government to establish the Reform Commission to chart the way ahead for NIB.

The returns to the National Insurance Fund peaked around 1984 when the Fund was earning close to 10 percent per annum, said Mr. Stewart, who added that since that time, there has been a decline in the level of the returns to the Fund.

He said this is a clear sign that the social security programme is earning less and less money every year.

“The need to make changes to the Fund to increase contributions and so forth could significantly be impacted depending on the level of investment returns,” he said.  “In other words, the higher the investment returns, the less you need to increase rates or increase the contribution ceiling and the like.”

With the National Insurance Fund facing depletion by the year 2025 unless serious reforms are instituted, the commission wants a portion of the Fund to be invested outside The Bahamas.

Mr. Stewart said this would give the Fund a chance to diversify its portfolio and help it grow.

“In addition, what we’re recommending is a proper investments policy and proper investment guidelines so that all investments of the Fund, whether local or international, are done within the context of the approved investment policy of the Board,” Mr. Stewart said.

He added, “In The Bahamas, $1.4 billion available for investments is a very large sum of money.  The local capital market in The Bahamas is only just beginning to develop and it is difficult to lay off $1.4 billion in The Bahamas in sufficient investment instruments to give the National Insurance Fund the kind of asset allocation that it ought to have and also the diversification that it ought to have.”

The government appointed the commission after the Actuarial Review warned that depletion was imminent without reform.

Changing demographics and other factors are being blamed for this possibility.

It is a problem that is not unique to The Bahamas, with developed countries like the United States facing the same dilemma with their social security schemes.

The challenge for administrators of these type funds is keeping them afloat, as aging populations would mean more recipients and fewer contributors.

“When the National Insurance scheme was initially established given the characteristics of the demographics of The Bahamas and the expected mortality, the design at that time was adequate and could meet the needs for the indefinite future,” Mr. Stewart pointed out.

He added, “However, [like in many places around the world] people are living much longer than was initially anticipated, so what’s been happening is the number of persons in retirement compared to the number of contributors in the scheme has been increasing rapidly.”

In addition to falling birth rates and increasing life expectancy among the elderly, the Actuarial Review also pointed to a contribution rate that is below the average cost of benefits as a key factor that would contribute to the death of the Fund.

According to the review, on December 31, 2001, NIB benefits reserves stood at $1.1 billion.  Mr. Stewart revealed while on the show that those reserves now stand at $1.4 billion.

He pointed to problems faced in investing the Fund, saying that some changes need to be made.

Keith Major, who chairs the commission’s public relations subcommittee, said the commission recommends that up to 40 percent of the Fund be invested abroad.

The Actuarial Review pointed to the challenges associated with investments, saying that the size of the National Insurance Fund relative to the Bahamian economy, and the restriction on investing overseas, often makes it difficult to find suitable investments.

As a result, almost one-third of the portfolio is now held in short-term bank deposits, investments not consistent with the long-term nature of NIB’s liabilities, the Review said.

“With reserves projected to nearly double in the next 15 years, new investment avenues and a revised approach to investing NIB funds will be required,” it also said.

Mr. Major on Sunday reminded that, “Funds like these are affected 20, 30 years down the road by decisions you make now.”

He said there are five contributors now for every person who is receiving retirement money from the Fund.

“A few years down the road there is going to be two or one and a half,” he said. “A lot of us are going to be receiving.  So the Fund will go up and it will come down suddenly if we don’t make these changes.”

The Review said that reserves are expected to begin decreasing in 2019, when total expenditure will exceed total income for the first time.

The Actuary has recommended that the insurable wage ceiling be reviewed and changes should occur annually and reflect the increases in either official wage or price indexes, as are commonplace in social security schemes in developed countries.