Rising Concerns about the National Insurance Fund
Barbados Underground (BU) has written extensively our concerns about the lack of public disclosure of the National Insurance Fund. Since 2006 Chairman after Chairman, Minister after Minister have promised to bring the NIS financials current with little success. The last time we sighted Dr. Justin Robinson on BU, Chairman of the NIS- who was not averse to posting to BU- he commented on the 01/11/2015 at 4:02PM as follows:
Walter, I respect your views, expertise and comments and I take being accountable to the public very seriously and I have responded to queries about NIS many times on this forum, in fact quite recently. What I don’t quite appreciate is the NIS ambush whatever the issue I am commenting on.
As I have said on many occasions, when I became a member of the NIS board in 2008, the last audited financials filed were for 1998, as a board we hired an accounting firm to help bring the financials up to date. As a result of that project the NIS has submitted its financial statements for up to 2014. The NIS is a government dept and as such has to be audited by the auditor general. The auditor general put out a tender for the large backlog of financials and EY was the only bidder. The audits have progressed much slower than expected for two main reasons. Firstly, the audits are going back well over a decade and secondly the 2004 audit posed a major challenge as this was the first year of the nis switch over to the sap system.
We have gotten the financials up to 2014 and cleared the audit backlog from 1998 to 2005 i think. I was not there when the backlog was created, but I am chairman now and the failure to have up to date audited financials is mine. I accept full responsibility, the failure is mine.
I still hope I can engage in a public debate on other matters without constantly having to explain NIS.
It is ironic the Walter (Blackman) mentioned in Robinson’s comment was also a frequent BU commenter until he landed a ‘pick’ hosting a talk show on the government the owned media outlet. We look forward to hearing him in his professional capacity as an actuary host a program which critically analyses the current state of the NIS Fund. We suspect the government ‘pick’ has effectively muzzled Walter and all for 30 pieces of silver.
Fortunately Barbadians have Charles Herbert who is head of the Barbados Private Sector (BPSA) and a respected actuary to share his view on the state of the NIS fund.
We do have real problems. But the truth is, all it is going to mean is – and we already have the highest NIS contributions in the region – they are going to have to go higher or we are going to have to cut benefits because we cannot realize our investments . . . . So I think cash flow is going to be an increasing problem for National Insurance like it is a serious problem for Government – Barbados Today
Here is what Robinson posted to BU on the 02/11/2015 at 11:49AM:
The NIS in Barbados is currently able to cover benefit expenditure from its contribution income. Given the population demographics and current contribution levels, unless either benefits or contributions are adjusted, at some point in the future the scheme will need to draw on its investment income and assets to meet benefits. I don’t think there is anything especially unusual about this. The NIS is very open about the fact that 75% of its portfolio is in government of Barbados of securities (its been around that level for most of the life of the scheme). Therefore if at some point the government of Barbados is unable to meet its debt obligations the NIS would be severely impacted.
Barbadians, an ageing population, find themselves between a rock and a hard place. Either our NIS contributions will have to be increased in the near future- already the highest in the region- or benefits will have to be reduced. As far as BU is aware the most recent actuarial study was received by government earlier this year but it has not made public. Barbadians are left to speculate about the state of the fund. If BU were to add our voice to the speciation we would hazard to state that the NIS is cash poor and Barbadians should be very concerned. We do not have the power of recall, 20,000 Barbadians marching appears not to have registered concern with the government even as a general election looms.
Is the NIS Fund cash poor?