The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The National Insurance Board’s (NIB) benefits spending would likely have exceeded its 2013 contribution income had it not been for changes mandating increased payments by civil servants and tipped hotel workers.

The social security system’s 2013 report, obtained by Tribune Business, discloses that “the majority” of the 13 per cent year-over-year growth in contribution income resulted from th amendments impacting those two worker categories.

Given that contribution income increased by $25.6 million, from $203 million to $229.4 million, and benefits spending stood at $222.7 million, it is likely that the latter would have exceeded NIB’s ‘regular income’ without tipped workers paying on their gratuities and civil servants coming into line with others on insurable wage ceiling and rate.

Still, NIB touted the fact that contribution income exceeded benefits expenditure for the “third consecutive year”. The final $229.4 million collected, it added, was some 2.5 per cent ahead of the $224.2 million internal forecast.

And, with investment income standing at $86.3 million, down 2.6 per cent from the previous year’s $88.6 million, there was never any danger outgoings would exceed income.

Yet, the end notes to the 2013 annual report reiterate the long-term dangers to NIB’s health if no comprehensive reforms are undertaken. For the last actuarial review noted that, based on present value, future spending will exceed reserves plus contributions by some $10.546 billion in 60 years’ time if the status quo remains.

Elsewhere, NIB said interest paid on late contributions had almost tripled year-over-year to $414,500, compared to $157,230 in 2012. Its bid to crack down on non-paying employers and self-employed persons continued, with 454 such prosecutions completed in 2013 and another 474 new ones approved to proceed.

The NIB annual report also revealed that the $3.5 million loan facility, designed to compensate Bahamian-owned businesses impacted by the New Providence Road Improvement Project, comes ultimately from the social security system.

The report says: “During the year, a $3 million deposit was placed with Bahamas Development Bank for four years at 3.75 per cent interest per annum.

“The funds are to be used to establish a roadwork compensation loan facility to assist small businesses impacted by the New Providence Road Improvement Project.”

Although the report does not explicitly say so, it appears NIB is securing or ‘hedging’ this deposit with a $3.5 million Family Guardian deposit, which matures in 2023 and carries a 3.5 per cent interest rate.

Also, NIB’s capital injection into Bank of the Bahamas International appears to have effectively involved the conversion of its holdings of the bank’s bonds, and certificates of deposit, rather than new money.

“During 2013, 6,022,945 non-voting ordinary shares were purchased from the proceeds of Bank of the Bahamas bonds and certificates of deposit held by the Fund,” NIB said, adding that its stake in the BISX-listed institution now was 28.07 per cent.

The $2 million sales agreement to dispose of the Buena Vista property to John Watling’s Distillery was finalised in February, while NIB also agreed to restructure its finance leases on government buildings. This extended the payment of outstanding balances for 25 years, and adjusted the interest rate to Prime plus 0.25 per cent.