Unfunded Government Pension a Worry

Fiscal Problem In Barbados ! eb2d17288e33d24ec34a90fd04dca0d0 Dr. Justin Robinson recently shared some interesting information on Facebook, he attempted to breakout government expenditure and revenues – see the presentation, ‘facts on the Fiscal Situation in Barbados last 20 years. A focus on Transfers and Subsidies‘.

Successive governments have been challenged by the size of the transfers and subsidies allocation and it has become more so in the last decade given the fiscal challenges being experienced. Although out of the scope the blogmaster used the opportunity to question the chairman of the NIS about government’s non NIS pension liability. Private registered pension plans AND the NIS receive input from actuaries to inform the level of funding required to ensure they are able to meet future obligations.

It is an open secret the pension plan which covers statutory agencies, members of parliament and other public sector agencies continue to be a significant pension expense for government. From arms distance the fund appears to be ‘under-funded’. This is the interesting point of the exchange on Facebook with the Chairman.

David King Interesting to see how you sliced the time series Sir. Was this by special request?
Justin Robinson I just went decade by decade
David King Do you have analysis of the pension expense for the same period for public sector separated by MPs, PSs, and other grades? Any info at all?
Justin Robinson the pensions were only broken out as a separate line item from the years shown. we can make some inferences. There is supposed to have been a sharp increase in retirements in the last five years or so.
Justin Robinson I am hoping that a comprehensive reform program is part of the campaign, so we can get buy in from the populace.
David King The concern by many is the existing burgeoning pension obligation.
Justin Robinson the unfunded pensions in the public service is a major issue that needs to be addressed. No doubt about that one. With pensions and interest, there has been less flexibility in terms of public expenditure than many think.
David King How is the pension managed? Who has oversight? Is it that the government has recourse to fund therefore there is no legal obligation to ensure the plan is adequately funded?
Justin Robinson the pensions mentioned are those not covered by the NIS.
Justin Robinson the public sector has a fairly large legacy of noncontributory pensions.
Justin Robinson as Philip mentioned persons have legal entitlements that were never part of a contributory scheme.
See full exchange on Facebook page – FB Senate

This is a highly technical issue and one worthy of public discourse to ensure an ignorant public is educated about one of the more hidden liabilities taxpayers and their children will have to honour in years to come. Here is a link to the approved 2017 -2018 Government Estimates. Select the Find option and enter the word pension, the size of the pension expense  of government will shock you.

The blogmaster is hopeful the BU intelligentsia will assist with the defogging of the issue.

104 comments

  • NorthernObserver January 20, 2018 at 2:51 PM #

    Caves of Barbados, interesting because Dr JR’s chart shows them getting money in the last 2 years of his spreadsheet….the last report? 2009. and filed in 2015…(Quote)

    I say again, the Barbados public sector is riddled with gross incompetence, not political corruption. Why were questions not asked in parliament? Why did our media not raise these questions? Have any of the managers responsible for the delay been promoted during that time? How about the responsible ministers?
    Again I must go back to the NIS, which is late with its triennial actuarial report. Why is the CEO still in a job? Why is the chairman still in a job? Why is the minister still in a job? Why is this not major news story?

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  • This is the most recent report from Accountant General. I went to sleep twice and hadn’t reached page 25 yet. But it has in lots of interesting reading
    https://www.barbadosparliament.com/uploads/sittings/attachments/0cfdd6c83ccb12c03abc477ba295c2a7.pdf

    Like

  • Just to let you know. Greece is now hanging the 8th year in the talons of IMF. Greece will never ever recover UNTIL the country leaves the Euro zone and devalues. All talk that Greece will return to the capital market this year is nonsense. They are not able to issue billions of long-term bonds, but only foolish T-bills.

    The same lesson applies to Barbados. The 2:1 peg is de facto a membership in a USD zone. Barbados must leave it and devalue the local dollar to a grade where the very bad work ethic and the rotten attitude of the many lazy laggards in the ministries, courts and admins equal the value of the currency.

    Just ask yourself how many hours a US worker needs to finish a task and how many months or even ages it takes in Barbados. Or just look at the backlog at the Supreme Court which seems to be a national distinction or something like that.

    Liked by 1 person

  • millertheanunnaki

    @ Tron January 20, 2018 at 8:48 PM
    “The same lesson applies to Barbados. The 2:1 peg is de facto a membership in a USD zone. Barbados must leave it and devalue the local dollar to a grade where the very bad work ethic and the rotten attitude of the many lazy laggards in the ministries, courts and admins equal the value of the currency.”

    In just a few more months Bajans will have to face the music and sit that inevitable test to show how they will be able to swim the long distance back to the shores of economic survival or sink to the bottom of the pile of failed statehood.

    At least they can rely on their once derided Caricom brothers and sisters in Jamaica and Guyana to help them to practise on past test papers.

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