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Barbados Underground has been exhaustive in its prosecution of the mismanagement of the National Insurance Scheme (NIS). Government after government has mismanaged the Scheme. The issues range from faulty governance practices, late production and availability of actuarial reports, updated certified audited financial statements, appointment of incompetent individuals to the board, questionable IT decisions, questionable investment decisions…

As usual, taxpayers are left holding the ‘bag’.

The raging COVID19 pandemic has exposed the vulnerability of the NIS which has come has no surprise to some members of the BU family. To be expected the partisan political players will seize the opportunity to criticize to feed a rabid political appetite. The time has come however to have a mature discussion about the state of the NIS and what measures are urgently needed to protect the fund.

Is it possible for Barbadians to understand the importance of a dispassionate debate about the NIS?

Is it possible for politicians to understand the time has come to address structural deficiencies how the NIS is being managed?

Chairman of the fund Leslie Haynes declared this week the NIS Board has submitted a paper to Cabinet to approve the transition to a Statutory Board. Elsewhere in the press Leader of the Opposition Joseph Atherley has questioned how the NIS and Central Bank of Barbados are being managed.

Relevant link:

Discussed for 100 marks

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126 responses to “NIS Virus”

  1. NorthernObserver Avatar
    NorthernObserver

    All one need do is read the reasons given, (in the referenced GIS article) for becoming a Statutory Board (not a bad thing IMO) and one can appreciate this is already mired in misdirection and obfuscation. It is the furthest of reaches (too far?) to imply staff and staffing challenges, at the NIS, are the roots of the entity’s challenges.

  2. John A Avatar
    John A

    Well finally someone at the very top comes out and voices serious concern over the continuous mismanagement of the fund. I admire Leslie Haynes for laying the cards out, then again anyone that knows him will tell you he only will take so much. I wouldn’t be surprised to learn he has resigned as Tony Marshall did a while back.

    So what does that tell us? Well it confirms the mismanagement of the fund has no political colour as both parties are equally poor at managing it. One printed government paper and the made the NIS buy 2 billion dollars roughly in it, the other could not print due to the IMF being the overload so simply misappropriated the money in the fund.

    Can wait to hear the fowls on either side of the fence fight this was one out. Lol

  3. Hal Austin Avatar
    Hal Austin

    @ John A

    The scheme may be mismanaged by both parties, but fundamentally it is a flawed scheme, not fit for purpose. It will take someone to come down from Heaven to make it work perfectly.
    It needs restructuring, and urgently.

  4. Pachamama Avatar
    Pachamama

    David
    No, to all the substantive questions asked above.

    Elsewhere you presume that some good could become of this duopoly system.

    We will contend that not even the eventual failure, collapse, of the NIS could make any difference within the political system, such as we like it.

    And if we are so feckless as to play fast and loose with the retirement savings of most Bajans then “crappo should smoke we pipe.”

  5. WURA-War-on-U Avatar
    WURA-War-on-U

    Mia appointed Haynes to the board, so why does he have to come out in the press to beseech for any upgrades or whatever, he could have CALLED HER…and have it done….so what game are these two playing AGAINST BLACK PEOPLE….

    NO ..this is MISDIRECTION.

  6. WURA-War-on-U Avatar
    WURA-War-on-U

    “Leslie Haynes”

    ya can’t even get a personal injury case finished, settled, closed in the supreme court because these types OBSTRUCT every time ya try……and yall wil believe the bullshit coming from them, when the highest court in the Caribbean know that they are fraudulent..

  7. David Avatar
    David

    @NO

    Is there value in the transition to a statutory board? How has this helped the QEH for example.

  8. David Avatar
    David

    @Pacha

    Is this what you are forecasting, collapse of the NIS?

  9. David Avatar
    David

    ‘Push reforms to protect against economic shocks’ – IDB study – ‘Push reforms to protect against economic shocks’ – IDB study: https://barbadostoday.bb/2021/03/05/push-reforms-to-protect-against-economic-shocks-idb-study/

  10. WURA-War-on-U Avatar
    WURA-War-on-U

    Pedigree..

    https://scontent.xx.fbcdn.net/v/t1.15752-0/s206x206/157331255_1372308023118409_3087793625549507811_n.png?_nc_cat=108&ccb=1-3&_nc_sid=58c789&_nc_ohc=z0c6uK8KKW4AX_sRtFG&_nc_ad=z-m&_nc_cid=0&_nc_ht=scontent.xx&_nc_tp=30&oh=24568ca1576bb0439699d7092df26612&oe=6066566F

  11. NorthernObserver Avatar
    NorthernObserver

    @David
    to use your terminology, this maybe an attempt to ring-fence the NIS. I am unsure of its likely success.
    Note, we heard from the Chair and the Managing Director (Ag) and neither made any reference to the outstanding Annual Reporting, nothing about when to expect the Tri-annual NIS Audit.
    The news? They had redeemed some Bonds early to fund the depleted Unemployment Fund. [no cash available elsewhere?]
    The biggest NIS challenge would appear to be teefing of employees from the NIS, hence the need to ring-fence those employees from other prying Ministries.
    @JohnA mentioned “mismanagement” but I never heard that term, nor the insinuation of it.

  12. David Avatar
    David

    @NO

    One has to speculate why the move to SB for the reasons offered. SBs have not been managed well in Barbados if we are to judge from AGs reports. The fund is too important for the matter not to be offered for public comment.

  13. NorthernObserver Avatar
    NorthernObserver

    IMO…little speculation. Mariposa will shout ‘smoke and mirrors’. How could the reporters have failed to ask about Annual Statements or the Actuarial Audit?? When do they get to ask questions of the Chair and MD(Ag)?

  14. Pachamama Avatar
    Pachamama

    David

    A basis rule of insurance savings is that investments are to be made in low risk products.

    For several decades now government has been violating this simple rule and raiding the NIS to fund all types of high risk ventures. And we consider the government of Barbados and its paper to be too risky for the Scheme as well.

    More broadly, globally such savings are being turned over to private sector interests lacking a commitment to any sense of public good. For example, Four Seasons.

  15. Pachamama Avatar
    Pachamama

    Of course, there are demographic and other problems faced by the NIS

    Just a matter of time before something will have to give.

  16. David Avatar
    David

    One of the issues proffered by the NIS over the years is the scarcity of forex to support aggressive foreign investment.

  17. Hal Austin Avatar
    Hal Austin

    One of the issues proffered by the NIS over the years is the scarcity of forex to support aggressive foreign investment…….(Quote)

    What?

  18. Pachamama Avatar
    Pachamama

    David

    We are well aware of that fact. It has been a genuine problem for decades.

    There was a time when Charles Herbert had asked government to allow him to manage the NIS investment funds.

    We are however more concerned about the declining numbers of young workers to pensioners and so on. There is no way in current circumstances that we could naturally increase the population by 80 000, or a similar number, as Mugabe estimates. This problem, the result of the genocide by of Gollop and the Family Planning Association, cannot be easily solved. Is an actuarial nightmare

  19. Pachamama Avatar
    Pachamama

    This is not the NIS of Humphrey Walcott.

  20. Pachamama Avatar
    Pachamama

    We are not a failed state but are reaching a point where there are more and more no easy answers

  21. David Avatar
    David

    @Pacha

    You may recall in the 90s Sandiford forced private insurance companies to liquidate pension monies invested overseas. The reducing tax base is a problem.

  22. Pachamama Avatar
    Pachamama

    David
    Very well, yes

  23. angela cox Avatar
    angela cox

    NIS virus or incompetence
    I dare say the latter
    So with and ageing population and high unemployment the Next NIS IS akin to riding a dead horse
    The only way back up is to increase the funding
    However in order to do so govt would have to release some of the stranglehold of taxes off the shoulders of people
    Govt had no qualms to ensure that its financial obligations to the IMF was kept
    Hence inlike manner and zeal unload some debt off the people shoulders and apply a moral gumption for the people in a policy towards helping them

  24. John Avatar
    John

    Wasn’t Leslie Haynes a director of CLICO at one time?

  25. NorthernObserver Avatar
    NorthernObserver

    For clarification….were monies liquidated, or, were certain firms (and I believe it went beyond Insurance) asked to use their assets to back loans to the GoB?

  26. NorthernObserver Avatar
    NorthernObserver

    Anyways, we are HERE. Without some factual in-depth understanding of the overall financial situation, proposing actions is like tossing darts in the dark.

  27. Pachamama Avatar
    Pachamama

    “Whoa unto those who rob the poor of their rights.”

  28. David Avatar
    David

    In one of her speeches soon after winning government, Mottley signaled the NIS is a problem and at some some the government will have to address it. Are we there yet?

  29. Pachamama Avatar
    Pachamama

    David
    We are minded that this issue is not within the power of Mugabe to fix. Not at this time,

  30. David Avatar
    David

    Well Covid 19 is not helping.

  31. Tron Avatar
    Tron

    The reasons for the poor state of the NIS are obvious: the DLP totally ran down the NIS from 2008 to 2018. I only remember the Apes Hill scandal, where the blue GOB at that time misappropriated NIS funds for the benefit of their master COW.

    Our Supreme Leader alone is capable of stabilizing the NIS. Mia Mottley is our very last hope. As always.

  32. Pachamama Avatar
    Pachamama

    Not even on a time value of money basis.
    Can Mugabe stabilize the NIS by adding 80, 000 additional young people to the workers’ roll? If so she’s really Supreme in trute!

  33. David Avatar
    David

    Public Notice: Severance payment applications & employers – Public Notice: Severance payment applications & employers: https://barbadostoday.bb/2021/03/05/public-notice-severance-payment-applications-employers/

  34. Tron Avatar
    Tron

    Pacha,

    We need 80000 old rich investors to build a villa in our country and employ many locals for housing, furniture, gardening etc pp, no young needy immigrants. We already have enough loafers, freeloaders, welfare recipients and civil servants who cost taxpayers a lot of money. If each of these people invests just $25000 a year with us, that would be 2 billion a year! Permanently.

  35. John A Avatar
    John A

    The NIS has a major problem that they do not want to address. They have a massive portfolio of non performing government paper, coupled to large exposure in over priced realestate. In other words the value of their real estate holdings based on cost overruns and inflated building cost, can not give them a decent return in todays rental market.

    When you have more than half your portfolio returning say 1 percent and inflation running at 3 percent, the problem is obvious. Then you have the cash flow problem caused by the debt restructuring, where $2 billion dollars that was earning 7% fell to where it now earns 1% to 2%. That alone is $180 million annual shortfall roughly.

    We then add to this massive unemployment claims coupled to the lost of contributions from 40,000 who lost their jobs to Covid. One could say what we have on our hands here is the most vulnerable the NIS has ever been since its inception. The days of placing a plaster on the wound has past, only amputation can save the patient now.

    Question is who got the cuhoonas to take up the scalpel ?

  36. Pachamama Avatar
    Pachamama

    John A

    You’re mixing apples and oranges. The NIS has different pockets for these benefits.

  37. John A Avatar
    John A

    @Pacha

    That’s right and when you start picking the apples faster than planned because the oranges pocket empty is when the domino effect starts.

  38. Crusoe Avatar
    Crusoe

    DavidMarch 5, 2021 3:36 PM @Pacha Is this what you are forecasting, collapse of the NIS?

    Maybe the better question is whether it has already collapsed?? I agree with John A. It is obvious, even without seeing financial statements, that the returns from investments cannot fulfill future actuarial obligations.

    Add that the financial statements…. do not exist?! How can that RH be? What RHery is that? I though that some fancy people were helping sort it? But that is when you have people who do not know their x from their elbow and also refuse to tell it like it is.

    Financial statements do not exist…..beejeesus as the rumshop drunk would say. Total foolery.

    But you know what those statements would probably show? As John A says, lack of liquidity in investments, write downs in both real estate and bond holdings.

    The big question is, ARE THE FUNDS LIQUID?!!!

    Really, what has been funding the NIS is current contributions. As the pandemic has caused these to dry up, the issue has come to the fore, even if it did not take a twelve year old with common entrance maths to see that long ago.

    Why has the fund reached this state? As others said, borrowing by the government for structural and operational funds. LACK OF PAYMENT OF NIS CONTRIBUTIONS BY MANY. How many companies have not paid and even went into liquidation owing the NIS?

    The directors of those companies are directly liable for the NIS funds not paid in. How many have been charged?????? That is theft plain and simple. How many???? But noooooo, rather charge some fella from the gully for smoking one blasted spliff. Stupse.

    Bunch of jackxsses.

    Then, how did the one from the West coast that the guvment bail out, the faweigner, has he been investigated for the collapse of that particular venture?

    Like Walter Mattheson, from Kings Beach, who allegedly walked through the airport wid a prior DLP guvment Minister on his way out.

    Stupse….Since then it shoulda been fixed. But life too sweet fuh some.

    And wunna wonder why the NIS is brek?!!?? Wunna serious??!!??

    Look, ignore all the fancy talk. The NIS is brek.

    Prove otherwise, produce the audited financial statements, that an auditor sign off. But then, nowadays one wonders if that means much, too many high profile international cases where the company collapsed even after years of clean audit reports.

    Ask Northern and John A bout dat.

  39. Donna Avatar
    Donna

    Indeed! Woe AND whoa unto them.!

  40. David Avatar
    David

    Source: Nation Newspaper

  41. WURA-War-on-U Avatar
    WURA-War-on-U

    “Why has the fund reached this state? As others said, borrowing by the government for structural and operational funds. LACK OF PAYMENT OF NIS CONTRIBUTIONS BY MANY. How many companies have not paid and even went into liquidation owing the NIS?

    The directors of those companies are directly liable for the NIS funds not paid in. How many have been charged?????? That is theft plain and simple. How many???? But noooooo, rather charge some fella from the gully for smoking one blasted spliff. Stupse.”

    Hope yall don’t let these liars and frauds off the hook, look at Haynes trying to pull a fast one on the people..look hard and see who they are covering up for, buying time for them to sell and leave the island..

  42. Hal Austin Avatar
    Hal Austin

    @ John A
    @ Crusoe

    Do we know if any of the hotels benefiting from the Bds$300m handout are in default on VAT, national insurance contributions, income tax or land tax?
    Do we know if they all pay corporation taxes (ie on profits), or are they trading at a loss or break even? Do they claim other state benefits, such as company motor vehicles and other executive expense claims?
    @John A the major problem the NIS has is that it is not fit for purpose. It is rubbish. We earlier had someone who posted a joke that Charles Herbert asked to manage the NIS investments.
    I laughed myself to sleep. Maybe he should start by going through the legacy investments of the Mutual, which in my view was badly mishandled.
    Sadly the Mutual was turned in to a political argument, headed by Hillary Beckles, rather than one about finance and demutualisation. We paid for our collective ignorance.

  43. Miller Avatar
    Miller

    @ Crusoe March 6, 2021 2:53 AM
    (Quote):
    Why has the fund reached this state? As others said, borrowing by the government for structural and operational funds. LACK OF PAYMENT OF NIS CONTRIBUTIONS BY MANY. How many companies have not paid and even went into liquidation owing the NIS?

    The directors of those companies are directly liable for the NIS funds not paid in. How many have been charged?????? That is theft plain and simple. How many???? But noooooo, rather charge some fella from the gully for smoking one blasted spliff. (Unquote).
    +++++++++++++++++++++++++++++++++++++++++++++++++++

    Your scathing criticism but ‘constructive’ contribution only reinforces what some BU family members with foresight have been observing (with the inevitable fallout) all along ably led by the well-informed and ‘experienced’ Walter Blackman in the role of chief prosecutor.

    The NIS is in its current state (and sadly heading for the same fate as LIAT) primarily because of downright mismanagement at both the technical and political levels.

    As Caswell Franklyn may agree, how can the NIS management bring charges against dishonest and recalcitrant company directors (as required under the Act)
    when the same directors are in cahoots with the same political class who sleep together in the same incestuously corrupt bed?

    From whom do you think members of the political class receive “contributions” to help fund their electioneering jamborees?

    With contributions of ‘largesse’ from their respective political party members or from behind-the-scenes business benefactors with deep pockets full of humanitarianism towards the development of the country?

  44. WURA-War-on-U Avatar
    WURA-War-on-U

    “Like Walter Mattheson, from Kings Beach, who allegedly walked through the airport wid a prior DLP guvment Minister on his way out.”

    reinforces what we have said for years, it proves the LENGTH OF TIME…that there has been SELLOUTISM directed at the Black marjority and perpetrated by the SELLOUTS in the CURSED parliament..it’s ALWAYS HAPPENED…ya can’t get the negros to be LOYAL to the people who elected them, never could, never will..they are born and bred TRAITORS……..this Mattheson matter happened sometime in the 80s or earlier….that is DECADES AGO…and it’s still happening.

  45. John A Avatar
    John A

    @ david

    Lets look at what we do know About the fund even without audited financials based on the holdings you published. We will keep it simple I promise.

    Lets look at the NIS fund with a claimed asset base of $3.8B only for this exercise and ask our selves what is the yield from this overstated asset base,1 so here goes.

    The fund needs to return roughly 8% or $300 million annually on its investment base to keep up with demand and to have some factor of self capitalisation, that we know is a historic fact. So how is the 3.8b working for us there. Well let’s look at just one component that as we say “cat spraddle” the earning base and that was the debt restructuring.

    If we take the fact that the fund was holding $2B in Sinkyuh worthless paper which was generating 7% roughly before the restructuring, that was yielding then roughly $140 million a year. After the restructuring that fell to roughly $20 million a year as the rate was a little over 1% there after. So that one blow caused the fund a shortfall in cash annually of nearly $120 million dollars !

    So in order to meet the target 8% return of the $3.8B that means the other holdings of the fund, like the overstated real estate holding of a claimed $1.9 billion, would have to earn $280 million which with the $20 million from the restructured bond holdings, would give us the $300 million in targeted annual earnings i laid out at the beginning on the total asset base yield. To do that it means the real estate “investments ” for lack of a better word, would have to produce an average return of just over 15% net of expenses which is basically impossible, as the average return on such investment barely scrapes 5% if you lucky.

    So what does the above tell us? Well the fund while having some assets which are yet to be confirmed, is technically insolvent. Even on its claimed asset base of $3.9b it probably in real terms is generating if we lucky, no more that 2% a year. The true value of the fund probably is no more than $2B in total again if we lucky, at todays Market value.

    But you know what pisses me off the most? Over a year ago a handful of us were here on this blog explaining the dire state the fund is in and neither the opposition or the press could be bothered to pursue the issue then. I therefore give both of wunna a F.

  46. Vincent Codrington Avatar
    Vincent Codrington

    @ David BU at 5 :59 AM
    In view of the information you posted, how can the NIS funds be said to be mismanaged ? How can there not be financial statements? I think posters and commenters need to distinguish between published audited statements and the absence of financial accounts, and accountability. The staff at NIS are well qualified and very competent. As usual we are too concerned with form and not substance. It would be beneficial if members of the BU household investigate the reasons why there are no published audited reports.

  47. John A Avatar
    John A

    @ Vincent

    To be honest at this stage the financial statement i did not even bother to mention, instead I just spoke to our financial reality based on what we do know.

  48. John A Avatar
    John A

    The problem is not the staff at the NIS either its the interfering politicians from both parties who think the fund is their political piggy bank when all else fails.

  49. Vincent Codrington Avatar
    Vincent Codrington

    @ John A
    You are usually more balanced than most commenters on BU.Please get back on track. The viability of NIS depend on the demographics of the working force/ contributors, the state of the financial markets local and international ,and forbearance of the political directorate from putting financial burdens on the Fund that it was not designed for.

  50. Vincent Codrington Avatar
    Vincent Codrington

    @ John A

    I was probably typing my intervention while you were setting my mind at rest. I think we are still on the same track. We need to concentrate on the fundamentals and ignore the “white noise”. The latter is used in its engineering sense.

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