JUST 17% OF POOR GETTING BENEFITS
By NEIL HARTNELL
Tribune Business Editor
LESS than 17 per cent of poor Bahamian households are receiving social security benefits, an Inter-American Development Bank (IDB) report highlighting a dysfunctional welfare system that is failing to reach those most in need, and where the potential for fraud and abuse is rampant.
The IDB report, which has been obtained by Tribune Business, also reveals that just 45 per cent of the Food Stamps issued by the Department of Social Services go to the poorest 20 per cent of Bahamian households, raising immediate questions of whether the system is being abused by wealthier persons and those with the right 'connections'.
Noting that there was no 'means testing' of applicants for social security benefit payments in the Bahamas, the IDB report said government officials found difficulty in accessing even the most basic information on welfare programmes, such as how may people were benefiting from them.
Evaluations of the Government's various social security initiatives, to determine whether they were functioning efficiently and reaching their targets, were described as "virtually non-existent".
The IDB report is part of an initiative to Strengthen Social Protection Programmes in the Bahamas, which is seeking to consolidate the various welfare benefits into a more streamlined package targeting the most vulnerable in Bahamian society.
It is also targeting waste, fraud and inefficiency in the system, in a bid to reduce the burden social security spending places on the Government's finances.
"The Bahamas has a range of non-contributory social protection programmes. However, there is considerable scope for consolidating, redesigning and strengthening programmes so that the safety net is better positioned to protect the poor and promote their human capital development," the IDB report said.
"The Ministry of Labour and Social Development implements over 10 cash-in-kind programmes, and households could potentially benefit from all of these."
These initiatives included the Food and Financial Assistance Programmes; the School Uniform and Footwear Programme; School Feeding Programme; Rent Programme; Water Programme; Electricity Programme; Disability Allowance; Emergency Assistance; Medical Care Assistance; and Residential and Non-residential Social Care Services.
Yet the IDB report warned: "Multiple small programmes are administratively burdensome, and increase possibilities for abuse. At the same time, gaps in coverage are present, with only 16.7 per cent of poor households in receipt of safety net benefits.
This suggests that the Bahamas' social security/welfare system is failing abysmally where it is most needed, in providing help to the poorest in society.
The IDB report said all the Government's benefits "rely on inefficient targeting mechanisms", with both those under the Ministry and the National Insurance Board (NIB) involving different applications and targeting procedures.
"Each programme has its own criteria for approval," the report added. "Applications for assistance to the Ministry of Labour and Social Development go through a labour intensive seven-step review process.
"Even with this multi-tiered approval process, only 45 per cent of Food Coupon benefits go to households in the poorest quintile, and this is despite the fact that the programme is ostensibly targeted to the indigent."
All of which suggests that the majority of Food Stamps, some 55 per cent, go to those who have no, or minimal need, for them - indicating the system is being abused.
"Information and monitoring systems are weak," the IDB report added. "Programme information is not fully computerised, and programme officials have difficulty accessing even basic programme information, such as how many programme beneficiaries there are, or beneficiaries' geographic and demographic composition.
"Programme evaluations are virtually non-existent. As a result, we do not know which programmes are achieving their objectives, and if they are efficient and cost-effective."
The IDB said the Government wanted to "improve the efficiency and effectiveness" of its social security spending. As a result, the project aimed "to help lessen, in the medium term, the fiscal burden of the welfare system by reducing leakages of transfers to non-eligible beneficiaries".
Administration was also targeted for improvement, and rationalising the Government's various benefit programmes "to avoid duplication, and restructuring to enhance efficiency and impact, is needed". Consolidation was a priority, along with expanding social security coverage "to a greater share of the poor".
"The consolidated programme should focus on protecting the most vulnerable and on promoting human capital development among children, including promoting healthy nutrition and keeping adolescents in school," the IDB report said.
Means testing, to ensure those actually needing social security support, are set to be introduced. The welfare programmes to be consolidated are the Food and Financial Assistance (rent, water and electricity) programmes; the School Uniform and Footwear programme; School Lunch programme; and Disability Allowance.
The IDB report acknowledged that the programme could be "politically sensitive" given the upcoming election, but the Government is moving to counter this by appointing a broad-based social protection reform working group.
January 06, 2012
tribune242
A political blog about Bahamian politics in The Bahamas, Bahamian Politicans - and the entire Bahamas political lot. Bahamian Blogger Dennis Dames keeps you updated on the political news and views throughout the islands of The Bahamas without fear or favor. Bahamian Politicians and the Bahamian Political Arena: Updates one Post at a time on Bahamas Politics and Bahamas Politicans; and their local, regional and international policies and perspectives.
Showing posts with label social security Bahamas. Show all posts
Showing posts with label social security Bahamas. Show all posts
Saturday, January 7, 2012
Monday, October 4, 2004
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
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.
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