By NATARIO McKENZIE
Tribune Business Reporter
nmckenzie@tribunemedia.net
National Insurance Board (NIB) contributions are not sufficient to cover its annual benefits and assistance payouts, an executive said yesterday, suggesting there will come a time when all monies coming in will go straight back out.
During a presentation at CFAL’s retirement planning seminar, Pandora Butler, public relations officer at NIB, noted that contributions NIB received were not sufficient to match the benefits and assistance payouts the Board provides.
“Over reserve fund is currently $1.687 billion,” Butler said. “Active insured persons in the workforce are about 142,000 but it doesn’t mean that everybody is paying.
“Last year we collected $229.4 million in contributions but we paid out $222.7 million and that included pensions to some 34,000 persons.”
She noted that administrative expenses at NIB were $45.1 million. “While we admit and agree that is high when you consider the make up of this country you will understand why the administrative costs are so high,” said Butler. Ms Butler noted that NIB was tasked each month with traveling to remote islands and locations throughout The Bahamas to payout benefits.
“The contributions that you pay are not sufficient to match the benefits that you receive,” she added. “Social security programmes around the world are challenged. We knew that we were going to reach a point from 1974 where all of the moneys coming in as contributions will be paid out as benefits. Right now our administrative costs are paid up by our investment dollars or investments.
“That’s why we are not broke. Those help us to stay afloat.
“There is coming a time and we are close to it a few years ago where every cent coming in as contribtuions would go out as benefits. Thats why there were some changes in the the 2010 amendments.”
Butler noted that since NIB was established in 1974, the most that any employed persons would have paid into the fund would be a little less than $21,000, with the employers paying a just under $32,000.
Comments
DonAnthony 10 years ago
Ms. Butler can try to spin this but NIB has been grossly negligent with extremely excessive administrative expenses. From the ninth actuarial review of NIB:
The report noted that NIB’s administrative costs in 2011 stood at 21.6 per cent of contribution income, a ratio far in excess of similar schemes in the Caribbean and developed world, and which had been driven by “overstaffing” and “relatively high salaries” paid to staff.
Barbados and Trinidad & Tobago ran social security systems where administrative costs, as a percentage of contributions, were 5.2 per cent and 4.9 per cent, respectively - more than four times’ less than NIB’s ratio.
Shortly, contribution rates will be increased again to compensate for this corruption. Stop wasting our pension contributions!
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