One of many concerns Barbados Underground has been championing through the years is the rate of depletion of NIS funds. Quoting former Minister David Estwick who addressed the matter last week, “the operating balance at the NIS becomes negative by 2028, six years from now…and the NIS funds would be depleted in 12 years. Compounding…
One of many concerns Barbados Underground has been championing through the years is the rate of depletion of NIS funds. Quoting former Minister David Estwick who addressed the matter last week, “the operating balance at the NIS becomes negative by 2028, six years from now…and the NIS funds would be depleted in 12 years. Compounding the problem is a matter of poor compliance”. Do we have the capacity to run with the message for the purpose of engaging in constructive debate?
There are not many other ways one can continue to express concern about the management of the NIS by the Barbados and Democratic Labour parties through the years. Although Prime Minister Mottley has given the assurance the NIS is nowhere near to a crisis situation, the reality of the numbers tells a different story for the independent minded.
The country awaits the outcome from a recent national consultation on the NIS when it is anticipated significant changes will have to be implemented. As it stands our NIS contribution is one of the highest in the region with age eligible for full pension benefit being 67. The fact we are labelled an ageing population with restricted opportunity to expand the pool of contributions has opened the door for managed immigration.
While this blog highlights the NIS fund, the burgeoning pension liability of government for the public service, both central government and SOEs adds to the problems a future generation will have to wrestle.
Barbadians have jumped on the bandwagon and have become addicted to the latest flavour of gossip news. In the meantime…
The following article posted in the Nation newspaper on May 25, 2023 with the title Retirement crisis looming, says former Minister is recommended reading.
Retirement crisis looming, says former Minister
Article by Jonteau Coppin
David Estwick, former miniser
Barbados faces an impending retirement crisis.
This is the belief of Dr David Estwick, the former Minister of Economic Affairs, who was speaking during the Democratic Labour Party’s St Peter branch meeting at Mile-And-A-Quarter on Sunday.
The topic of discussion was A Crisis Within A Crisis – The Risk of Pensions in Barbados.
Estwick raised the alarm over the country’s future retirement prospects, highlighting the worsening dependency ratio and the unpreparedness of both the Government and the over-65 age group for the challenges that lie ahead.
Speaking about the solvency of the National Insurance Scheme (NIS) which he deems a national emergency, he said “The Government of Barbados is unprepared for these future pension liabilities, and the over-65 age group in Barbados is woefully unprepared for retirement.”
He continued: “It is now an emergency because there was significant damage done to the NIS balance sheet because of the domestic debt restructuring exercise of 2018, that resulted in the NIS losing over $1.6 billion in debt-based assets, in addition to the negative impact the COVID-19 pandemic had on contributions and benefit pay out. In fact, the operating balance at the NIS becomes negative by 2028, six years from now…and the NIS funds would be depleted in 12 years. Compounding the problem is a matter of poor compliance. In fact, about one in every eight self-employed persons pay NIS,”
Estwick, who headed the Infrastructure Committee of Cabinet under Prime Minister Freundel Stuart, recommends the elimination of double taxation on pensions and the scrapping of any direct tax on people who take up jobs post retirement, as strategies to help save the NIS from potential collapse. He also suggested that Barbados introduce a tax write-off of 150 per cent of business investment for people over the age of 60.
However, given the severity of the situation, Estwick believes things will become more expensive for those in the 16-60 age group who are responsible for paying NIS.
“It is my contention that Barbadians should brace themselves for increases to the present NIS contribution rates that apply to employees and employers of 11.1 per cent and 12.75 percent respectively; working for longer periods (70-75) and a reduced pension benefit”. (JC)
The chairman of the National Insurance Scheme (NIS) Leslie Haynes, KC has admitted that records at the social security agency are “a total mess” and efforts were being made to correct errors that go back as far as 15 years.
“I wouldn’t really worry about the National Insurance Fund, you know. What I would really worry about, really, is the operational aspect of the National Insurance,” he declared during an interview with Barbados TODAY.
Haynes noted that up to about two years ago, the NIS had not submitted audited accounts since 2008. Accounts for 2008 to 2014 have since been submitted to the Auditor-General.
“And we are working now on 2015 to 2017, and then we will work on 2018 to bring it up to date. But you have to ask yourself why the National Insurance was not in a position to submit audited accounts?”
“And the answer to that would be…the truth about it is that the whole computer system and the records in the National Insurance are in a mess…. It is a total, absolute mess,” the senior attorney revealed.
However, he pointed out that since the responsibility for social security was moved to the Ministry of Labour, greater attention was being paid to addressing the operational challenges facing the NIS.
“The Minister of Labour is paying attention to the National Insurance…his entire ministry, from PS [permanent secretary] down, everybody now pays attention to National Insurance,” Haynes noted.
“We have all of these operational matters [to deal with]….I can’t remember the figure, but we have thousands of claims in backlog that we need to bring up to date. We were bringing those claims down…. We had brought down those claims – I think from 8 000 or 12 000 or something like that – to about 6 000 before COVID hit. When COVID hit, as you know, everything came to a standstill and we had to pay attention to everybody who was out of work. So the backlog of claims has again increased and we have to work on those.”
Haynes stressed that significant effort was being given to “trying to fix all of these things”.
“We need a system that works; that’s what we have been working on, but you cannot fix everything one time. It is a question of identifying priorities and saying we will do A, B and C before we do G, H and K,” the NIS chairman explained.
“It’s a fight that we have. It’s not a battle that can be won in a day, especially because we are looking to correct . . . all the errors that have been committed since 2008 to 2018/2019. It takes time. It is like peeling an onion – every time you pull a layer at the National Insurance, there is another layer to pull.”
Haynes also expressed concern about issues being swept under the proverbial carpet at NIS and not being taken to the NIS Board.
Giving an example, he said: “Take the Accra [Beach Hotel] workers during COVID…. They didn’t get severance payments for a long time. You wake up in the morning and nobody brings that to you because there was a culture at the National Insurance – I don’t want to say the whole civil service – where you put things under the table and problems are not brought to the board,” Haynes asserted. emmanueljoseph@barbadostoday.bb
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NorthernObserver
Murdah!!!
Interesting comment about Ministry of Labour. Wasn’t NIS always under that (Sen Dr Byer etc) with “dotted line” to MoF.
Why were the Reports sent to the Auditor General and not simultaneously laid before the House?
Chairman Haynes is pointing back to this writer’s #1 suspect, the buck stops at the desk of the top Operations exec, who was since promoted to Director of Finance and lauded with National honours.
At least the Chair has ‘said something’.
First BERT 2.0 targets met but pension reform progress “disappointing”
The committee established to monitor the Government’s performance under the second Barbados Economic Recovery and Transformation (BERT) programme says all the quantitative performance and indicative targets have been met at the end of the first formal review period.
However, delays in moving forward with pension reforms have been described as “disappointing”.
The update was provided by the BERT Monitoring Committee (BERT MC) in its first report under the International Monetary Fund (IMF) 36-month arrangement under the Extended Fund Facility (EFF) and an arrangement under the Resilience and Sustainability Facility (RSF).
As of the end of the first formal review period on March 31, 2023, it said, “overall on the fiscal and monetary front the [Government] has comfortably met the targets under the arrangements”.
The arrangements include several structural benchmarks, the majority of which the BERT MC said have been met.
“The long delay in progressing the benchmark related to public pension reform is disappointing given the importance of this issue as highlighted in the Committee’s previous report. This was originally a benchmark under the prior programme that was due on March 31, 2022,” it said.
One of the March 31, 2023 targets was for the Government to table a revised public pension law to enhance the sustainability of the public sector pension scheme.
Noting that it welcomed the opportunity to continue in the role of monitoring the progress under these new arrangements, following the successful completion of the 2018-2022 EFF programme, the BERT MC said while significant progress had been made in many areas, there are still several areas requiring additional focus and reform if the long-term goals of the programme related to sustainability of debt are ultimately to be achieved.
(BT)
BARBADIANS CONTRIBUTING TO and benefiting from the National Insurance Scheme (NIS) must be on edge following the recent snippet in the news media from its chairman Leslie Haynes KC regarding planned reforms.
The transition of the NIS into a commercial state enterprise, as indicated by Haynes, will hardly bring comfort to the public given the unsettled history of these agencies. There is certainly a big question mark surrounding the issue of profitability at parastatal agencies in Barbados.
The public has been told of the dire consequences the NIS faces and why a review is both critical and urgent. The warnings from independent actuaries support the need for a major fix of the social security scheme.
Many Barbadians are anxious as they await the outcome of the measures to overhaul the system. Those people still in the workforce and without a defined benefit or defined contribution pension plan want a clear picture of what awaits them.
Citizens are eager to know if the NIS retirement age is moving from 67 and possibly going to 70 for full benefits. Such a move may be considered a benefit cut and less painful than tampering with a reduction in existing allowances.
However, early retirement may be a disincentive for those dependent on the NIS for their financial support post-retirement since many beneficiaries may not be able to take a big hit. The situation becomes even more challenging where individual company policy is retirement at 65 and the NIS at a much later date. The reform process
is not a matter that the NIS should give priority to the Barbados Workers’ Union, the National Union of Public Workers and the Barbados Employers’ Confederation. None of these organisations represents the interests of the thousands of retirees, they do not speak for the large number of selfemployed and they certainly do not represent a vast number of young people in the labour force but not contributing to the NIS and with little or no interest in it. The NIS’ board and its executive management need to go to the public with a series of meetings to explain the proposals. Its board should also remember that any change from a Government department to a state enterprise must be carefully considered given the trepidation many employees have about such a switch. There is always the fear of political interference in state enterprises that does not happen on such a scale in central Government.
The NIS, as it outlines the proposed changes, should also have up-to-date audited annual financial reports to be laid in Parliament. This is an urgent and important matter. The Financial Services Commission should be on the NIS’ case to look at its governance, risk and financial management.
NIS benefits, whether maternity or disability, unemployment or pensions, are a lifeline for many Barbadians. This issue will attract their attention.
Many Barbadians are anxious as they await the outcome of the measures to overhaul the system. The people still in the workforce . . . want a clear picture of what awaits them.
After years of plugging away our NIS concerns Barbadians have been reacting today to Minister of Labour Colin Jordan ministerial statement addressing maddening NIS reform coming.
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Bush Tea
Simple solution…
Let us bring in the Chinese to manage the NIS fund and send the current managers on retirement.
We took this approach with BNB, Bartel, BS&T, Banks, ICB, SAGICOR, SOL …. and every other shiite that found itself saddled with visionless management and political lackies for Boards of Directors.
Next, after the NIS, will be the damn illegal Parliament..
Perhaps we can get Singapore to lease that for 30 years, and then we can all lime on the block and be fed, employed and managed by effective leaders… like in the good old Plantation days….
What a cursed place…
zero self respect,
zero vision
and zero self worth….
The stuff that slaves are made of….
Now airy fairy stuff, address the arithmetic. An aging population equals increasing drawdown/expense and reducing contributions which equals less inflows.
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NorthernObserver
They have pushed back whatever expense categories they could.
Without affecting premiums. A noseeum until time comes to benefit.
It’s a mathematical stop gap. They will likely need more, but one blow at a time.
Was hoping the announcement maybe combined with the Annual Report from 07-08,with the news, reports from 09-12 were ‘well under way’ 😞😞
Absolutely no way as a self employed person, am I contributing to a fund, with no formal financials. The Hope and Prayer Dividend Fund is likely to be safer.
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Artax
It is a disgrace that we are still awaiting NIS financial statements from 2007 – 2012. At this rate, our children will be great-grand parents, by the time 2023 financials are prepared. Former NIS Director Ian Carrington was promoted to Director of Finance, perhaps as a reward for this incompetence.
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Bush Tea
An aging population equals increasing drawdown/expense and reducing contributions which equals less inflows.
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Clearly you buy the BS that has been spread around by the incompetents that have mismanaged this Fund now for decades.
Bushie recalls that you were also disposed to give the benefit of any doubt to the JA Denis Kellman when HE lent his ‘brilliant financial skills’ to the mis-management of this fund…while his shiite bar went bankrupt.
What aging population what??!!
Only Bajan brass bowls would accept that stupid story that citizens aged 60 to 80 should be a burden on an insurance scheme ..when these SAME citizens from 1960 until today have been the beneficiaries of nearly 100% FREE education all the way to tertiary level.
Why the hell should a brass bowl with multiple O’ Levels, A’ levels, a bachelors degree and, unless very unlucky or lazy, a Masters degree, be a DRAIN on a NIS at age 70?
Why is such a lifelong BENEFICIARY of national largesse not a NET CONTRIBUTOR to society by productively paying for his own damn children … and probably a few others who are less fortunate?
When did the NIS become the font of mendicancy for a nation of slave-minded beggars – whose idea of being ‘educated’ is that it empowers them to demand larger monthly handouts…while producing nothing..?
Face it Boss…
Your model of ‘society’ is fatally flawed. NOTHING makes sense.
-The long time idiot who MISMANAGED the NIS was promoted to a HIGHER financial management role…
-The JA dentist who f*&%$d up the Chinese Steal houses …promoted to oversee ALL national infrastructure..
-A mediocre radio talk host is promoted to solve a national crime crisis
-We change our constitution to get an even WORSE minister of Eddykashun than the last DLP moron.
…then we are handed stupid excuses for failure, … and you fall hook, line and sinker…
Noted Boss…
But SURELY you know that it is the Actuaries and Auditors who are TRULY behind the national PLAGUE of mismanagement and malfeasance that is driving us to serfdom..??!!
These are the scoundrels who have FACTS on the mismanagement, bribery and thieving that characterizes business in Barbados, BUT who choose to play along with the lawyers and politicians…for FAT fees.
Did CLICLO not have auditors?
Who are the auditors and Actuary of the NIS ?
Let us say that they did NOT have all the data which they needed back in 2002..in 2003, 2004, 2005 …
Share ANY other scenario besides COMPLICITY that could explain how we are in the SAME position in 2023…!!
These people are either ALL a bunch of interconnected CROOKS, or they are the most incompetent set of brass bowls imaginable…of the Kellman ilk.
Perhaps your resident ‘Audit consultant’ can explain how these BB ‘professionals’ are so clueless….or crooked…
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Artax
David, people cannot, in all fairness, be a burden on a scheme to which they have contributed, in many cases, over 40 years…… and from which many of whom would benefit at most, 20 years. The reality is that successive BLP & DLP mismanaged the fund and made crucial financial decisions, in the absence of current financial statements, (e.g debt restructuring). Unfortunately, we will have to wait until the financials for the period during which the restructuring was undertaken, before knowing how that decision adversely affected the fund. Notice Jordan talked about ‘everything else, barring’ the financial losses as a result of that exercise.
Billion dollar asset slash – by Barbados Today August 11, 2022
Government’s debt restructuring in 2018 wiped out more than $1 billion in the National Insurance Scheme’s (NIS) assets, it was revealed Wednesday by the fund’s consultant actuary.
Derek Osborne, who recently completed the 17th Actuarial Review of the NIS, which was laid in Parliament on Tuesday night, said the NIS needs urgent reform given the number of challenges being confronted by the social security scheme.
“Government saw it necessary to reduce its debt obligations, and like other bond holders, the NIS lost some of its assets. In this case, just over $1 billion,” he disclosed.
“When Government decided to have a haircut on its bonds, the NIS lost $1billion. NIS assets were reduced by $1 billion but government’s obligations to NIS were also reduced by $1 billion,” he however noted.
“In so doing, future taxpayers were saved $1 billion and so debt restructuring looked as though it made NIS a lot weaker but that is not the case because the same group who would have been called upon to make higher contributions, would have been called upon to pay higher taxes. So, it is a net wash, for the most part, for Barbados.
“The debt restructuring only had a three-year effect on the year that the NIS Fund would have been threatened to be depleted, had debt restructuring not occurred.”
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managing expectations
National pension fund management has gone pear shaped.
Government is ‘managing expectations’ of the people.
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Artax
I’m fully aware of that information in 2022, David. My point is, the financial statements would provide an accurate assessment of the losses incurred as a result of the debt restructuring. Did Colin Jordan mentioned any about the losses in his ministerial statement?
There is no person who has argued more than for audited financials to be made available, it is a governance issue first and foremost. It is obvious the government along with others in the region are struggling to manage social security funds. We can view the losses but the reality of the fund will be the same not so?
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TLSN
I presume a chunk of this money would have come from NIS funds. But never mind, those responsible for it should be treated like ex-American presidents and afforded “respect and privileges” after they have left office according to Senator John King and Senator Elizabeth Thompson.
In a country that relies on tourism. Perhaps the above mentioned senators should create a tourism outlet and call it – La la land. You simply cannot make this stuff up.
“BARBADOS GOVERNMENT GIVES BUTCH STEWART CONCESSIONS WORTH MILLIONS OF DOLLARS
The Barbados government has granted millions of dollars in concessions to Jamaican hotel magnate Gordon “Butch” Stewart who recently signed an agreement to operate a Beaches Resort and Sandals hotel there.
According to an article written by Roy Morris, Editor-in-Chief of the Barbados Nation newspaper, for the next 25 years, Beaches and Sandals will be exempted from paying all import duties, taxes including VAT, imposts and levies of any nature whatsoever on the importation or local purchase on all capital goods needed for the equipping, operation and promotion of the hotel, as well as on all food and beverages.
When that tax holiday period is over, Sandals will only be required to pay half of the “applicable rates and taxes prevailing” for the next 15 years.
The details of the concessions were contained in a letter dated Tuesday, November 5th, 2013, and signed by Minister of Finance and Economic Affairs Chris Sinckler.
The Nation newspaper said the tax holiday period began on Tuesday, the day before Sandals officially began operation in Barbados and encompasses the period before the start date of the commercial operation of the hotel, and while it is being acquired, expanded and developed. Sandals in Barbados will be managed by Josef Zellner, who once managed Beaches Turks and Caicos Islands.
The Barbados Minister of Finance further advised that the letter was only interim approval which shall remain valid until replaced by a permanent letter together with the appropriate statutory instrument to be issued by him.
What the newspaper describes as a “sweetheart deal”, includes the waiver of:-
(a) all import duties, taxes, imposts and levies of any nature whatsoever, including Value Added Tax, on the importation or local purchase of:
(i) all capital goods such as building materials, articles of hotel equipment, furniture. furnishings, fixtures, fittings, construction machinery, boats, watercraft, vehicles for the Hotel’s use, televisions, computer equipment, telephones, software, hardware, shrubs and plants, garden and agriculture equipment, promotional and marketing materials for operating the Hotel and for the cyclical re-furbishing undertaken from time to time in order to maintain the Hotel to the standards of the Sandals brand;
(ii) consumables for the operation of the Hotel, including but not limited to operating supplies, soft furnishings, printed materials, guest supplies, spa supplies, paper, stationery, books and spare parts for equipment;
(iii) food, alcohol and beverages;
(b) all import duties taxes, imposts and levies of any nature whatsoever on all vehicles required for the operation of the Hotel including vehicle assigned to senior managers;
(c) all import duties taxes, imposts and levies of any nature whatsoever on personal and household effects and vehicles for senior staff (as outlined in (b) above) who are contracted to work in Barbados and are not citizens or permanent residents of Barbados;
(d) Value Added Tax on the provision of services that directly relate to construction works or cyclical refurbishment of the Hotel undertaken from time to time in order to maintain the Hotel to the standards of the Sandals brand;
(e) all import duties taxes, imposts and levies of any nature whatsoever on all vehicles required for the operation of the Hotel including vehicle assigned to senior managers;
(f) all import duties taxes, imposts and levies of any nature whatsoever on personal and household effects and vehicles for staff who are contracted to work in Barbados and are not citizens or permanent residents of Barbados.
Jordan Samuda, group manager, procurement division of Sandals International, said the conglomerate was delighted with the terms of the concessions, which he described as competitive.
“The product that we will put out in Barbados will be one of the best that we put out anywhere in the Caribbean,” Samuda told the Nation via telephone from Jamaica.
Samuda said he did not think Sandals would have been able achieve the excellence their brand represented without the concessions, and noted that the tax breaks would allow them to able to keep their product in tune with the times.
“They allow you to put a product out for your guests that can compete with anybody worldwide. . . . Duty free concessions allow us to up the ante on the food and beverage product. You have the physical aspect which you can continue improving and continue investing in, you also have the daily food and beverage product that you are able to provide.
The Sandals executive praised the efficiency of Sinckler and the various civil servants, Customs and Port Authority for facilitating the group to swiftly get the relevant documentation and materials processed between the signing of the Memorandum of Understanding (MOU) with Government on October 18 and the hotel’s opening on Wednesday.
He was particularly impressed with Sinckler, the Barbados Minister of Finance, saying: “Obviously the minister understands and can see what this level of investment in Barbados can do and will do.”
In his recent ministerial statement on the MOU between Government and Sandals International, Minister of Tourism Richard Sealy said the arrival of Sandals marked a “seismic shift for the tourism industry in Barbados” in its effort to capture a bigger share in the very competitive global tourism market.
“It is expected that these two properties will contribute annually in net terms, that is, the money to be retained by the taxi drivers providing transfers, the farmers; the 1 500 workers; the utility companies and others an amount in excess of BDS$100 million to the Barbadian economy.”
SOURCE: suntci.com
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Artax
David, please explain how “the reality of the fund will be the same?”
Expense (payouts) based on what is known will outstrip contributions. Isn’t this what is recorded in the actuarial reviews?
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Artax
This issue was discussed on BU….. ad nauseam.
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Bush Tea
“….the reality of the fund will be the same”
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You seem to have gulped down the kool aid Boss…
When such funds are conceptualized, the projections are that losses would be within industry limits.
How on EARTH can the reality of the fund be the same in the two circumstances where, in scenario 1, Billions of dollars are stolen, mis-managed, given away (with kick backs built in), or lost – due to lack of due diligence? Also in scenario 1, where productive investments such as in the electric utility are sold, and the proceeds invested in Four Seasons?
In scenario 2, not only would timely audits and actuarial reviews have been done, but immediate CORRECTIVE ACTIONS taken when things went wrong, including jail time as required.
Then, the NIS fund would now have EXCESS liquidity and could even offer venture capital loans to long-term contributors at 1% interest rates to stimulate local industry.
The reality of the fund will be like chalk and cheese…
Can you advise what we’re the conclusions relative to expense and contributions prior to the debt restructure?
Thanks.
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Bush Tea
Bushie told you that the actuarial reports are BS!
The actuaries seem to ACCEPT that money WILL be stolen / misused in BULK, and tat management will be poor.
The do NOT report malfeasance (even though they HAVE to be aware) but seem to conclude that the contributors MUST close the gap…
Auditors and Actuaries… accessories after the fact.
Boss
Bushie DO NOT accept ‘conclusions’ from brass bowls in the ABSENCE of facts and figures that are independently checked.
…surprised that a person of your extensive local knowledge would…
Independently checked? I’m f only that were the only big underlying issue.
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Bush Tea
Perhaps you see now why Walter would not have been given a pick at NIS.
He is obsessed with scenario 2 where proper management and transparency is key.
Conversely, you should pick sense from the persons appointed….
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Artax
David, I don’t believe ‘payouts’ from the NIS (pensions, benefits etc) are classified as expenses.
Last word Boss!
The BIG UNDERLYING ISSUE is the lotta stealing, incompetence, kickbacks, nepotism and downright maladministration that has characterized the NIS.
That ANYONE would now allow THOSE RESPONSIBLE for this, to cast the blame on the VICTIMS, and to bring RED HERRINGS like ‘population and birthrates’ into the equation is pitiful….
Bushie done did dat!
Brass bowls that know not that they know not … best avoided.
The people will always be the ‘bailee’ of last resort. The government is the people, don’t forget it.
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Artax
David, consideration must also be given to the fact that employers may have submitted schedules without payments of contributions. The income statement may show total contributions for any given month, but separated on the balance sheet as ‘contributions receivable,’ for example. And, bear in mind, benefits are paid to the employees of delinquent employers.
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TheOGazerts
Don’t you like to hear them talk accounting and government?
Don’t you love the long articles from talking heads and the simple and obvious predictions. Recycling the same shit under a different title.
When are you going to admit it.
Neither you or them get it
Poor you, convinced they know what they talking bout
Sounding like professionals and not having a doubt
But none of them have a clue
Prepare yourself for a big screw
So far all you have seen
Enjoythe ice cream and nuff Vaseline
When the big ‘deckie’ hit ya, smile and don’t scream
—xx—
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