MINISTER of State Myles Laroda.
By LEANDRA ROLLE
Tribune Staff Reporter
lrolle@tribunemedia.net
MYLES Laroda, the minister of state with responsibility for the National Insurance Board, says he anticipates that NIB contribution rates will increase within the next year given the unsustainability of the social agency’s fund.
However, he said, a decision on the matter has not been made as yet.
Mr Laroda made the revelation to reporters a day after he had exclusively told The Tribune that the NIB fund could be depleted by 2028 if the government failed to take urgent action.
According to the minister, the situation was predicted by a new actuarial review of NIB, which reduced the fund’s potential depletion timeline by one year, as the previous review had made a prediction of 2029.
The report, which is the 11th of its kind, was received by the Davis administration about three weeks ago.
Asked about potential contribution rate increases in view of the report, the minister told reporters it was very likely to happen this year.
Mr Laroda also said there have been recommendations for the Cabinet to impose a 1.5 percent to two percent rate increase incrementally given concerns about NIB’s financial situation.
“Yes,” he said about a possible rate increase before going to a Cabinet meeting, “I will temper that by saying that we haven’t voted on that yet, but a decision is being prepared and I will not be surprised if that happens for the mere fact that we are in this unsustainable position.”
According to Mr Laroda, the current size of the NIB fund is around $1.6 billion.
However, he said the fund’s size isn’t the issue, but rather the fact that social benefits have “far outpaced” contributions. At the peak of the COVID-19 pandemic, NIB administered unemployment assistance to 22,000 people. That number has now decreased to around 8,000.
“The issue isn’t the current size of the fund but the issue is that benefits far outpace the contributions. In the (1980s), I think the contribution was around $12m a year, the benefits. Now, the benefit payouts are north of $100m a year. That’s just not sustainable,” he said.
The situation, he added, is also compounded by deficit spending.
“The reality is the National Insurance Board has been running deficits for the past six years so this pre-dated COVID. This can was kicked down the road too many times. From the fund was established, there has been one rate increase and that was in 2010 from 8.8 percent and 9.8 percent. And you take all of what has been going, we are where we are.”
Because of these financial concerns, Mr Laroda said tough decisions will have to be made, adding the Davis administration is prepared to do what is necessary.
He said: “The prime minister has made statements in public and to his Cabinet colleagues. We have tough decisions to make and we are prepared to make those decisions. We are talking about tens of thousands of NIB individuals who have contributed, some of them for decades. It will be a shame for those who would’ve paid in not to be able to receive their benefits at their time and so we are prepared and willing and able to address this concern.”
As for proposed rate hikes, the minister said: “Anywhere from 1.5 to two percent annually (or) biannually so it’s not just going to be one. We could expect numerous increases. That hasn’t been decided by Cabinet as yet but it will be fair that an increase would be coming.”
Numerous previous actuarial reviews have called for contribution rates to increase, citing the proposed measure as just one of many to help sustain NIB.
However, successive governments have often elected out of taking such action, with one former minister saying last year no government has been bold enough to implement the recommended increase.
Asked when the government will make a decision on the proposed rate increase, Mr Laroda said “soon.”
Comments
KapunkleUp 2 years, 8 months ago
The conversation is always about increasing taxes and never about cutting expenses. NIB contributions increase so that the government can borrow more money from NIB. Also, why is the latest publicly available NIB financial report from 2017? Disgusting and crooked all around.
sheeprunner12 2 years, 8 months ago
Yep, get the books right, then let us see them. How can we say Amen to NIB secrets??
An actuary could comment on NIB latest records, but nothing is posted for the public to see??
Old fashioned FNM & PLP smoke & mirrors. Come clean Brave
moncurcool 2 years, 8 months ago
Rather than the government stop using NIB as a slush fund, they continue to pillage the Bahamians people by now increasing NIB taxes amount to pay. It is like putting water in an empty bucket and expecting it to fill up if they don't stop giving our money to government to build buildings they never get a return on.
Wonder now what Chester will say about this increase. Wonder if he will open his mouth and call this reckless, as he did when in opposition.
stillwaters 2 years, 8 months ago
Why not just come out and say this upfront. Stop the tricky lead up to increasing of taxes. The bottom line will be the same.....all of our governments squeeze more money out of people to pay all those board members, gussiemae cabinet, shady contracts, gas money for government officials, luxury car maintenance, sweetheart maintenance, and on and on ...........so stop trying to manipulate the minds of citizens....this money you're squeezing out of people is for yourselves, not Bahamian citizens.
TalRussell 2 years, 8 months ago
I sense we're witnessing rear not seen since a Milo B. Butler in crown minister Comrade Myles Laroda, ― Yes?
Sickened 2 years, 8 months ago
Of the $1.6 billion how much of that is in non-performing loans i.e. investment in BoB, government buildings? A big chunk of that money may not be valued at market value and be worthless.
KapunkleUp 2 years, 8 months ago
You raise an excellent point. I would not be surprised if the accounting is less than the acceptable standard in NIB's case.
KapunkleUp 2 years, 8 months ago
To repeat the obvious, as of 2017 NIB had $1,083,112,000 (over one billion) in "Loans and Receivables" on their balance sheet. How can anyone say NIB is broke? Because most people either don't care or are just plain ignorant of the facts.
LastManStanding 2 years, 8 months ago
There is a special circle of Hell reserved for Bahamian politicians.
God save us from these pirates!
DDK 2 years, 8 months ago
Fricking thieves!
The_Oracle 2 years, 8 months ago
First and foremost Government needs to stop borrowing the damn money to build grossly over priced government Buildings/pet projects, and pay the money back. Oh, thats right, they can't cover their own civil service pension liability so they'll bankrupt ours.
hj 2 years, 8 months ago
How about making civil servants pay contributions like everyone else. And stop "bortowing" from NIB to finance even more public hirings, government contracts,and any other way you have found to waste the money of the people.
M0J0 2 years, 8 months ago
A simply stunt simply due to the union negotiating, don't let the smoke blind you.
tribanon 2 years, 8 months ago
Many of us knew a long time ago this annoucement was coming, and at the worst possible time for so many Bahamians nearing retirement age.
This corrupt, incompetent and most cruel Davis and Cooper led PLP administration are now going to make us pay more for National Insurance while outrightly refusing to give us a Gas Tax Holiday for at least the rest of 2022 to help ease the extreme financial distress many of us are experiencing day in and day out.
Only a fool would continue making contributions to the National Insurance Fund. This Fund was long ago bankrupted by our corrupt elitist politicians (both PLP and FNM alike) and is now nothing but a struggling Ponzi scheme doomed to leave many Bahamians without the benefits they paid for and were hoping to receive upon their retirement.
John 2 years, 8 months ago
The government is doing itself and the people a disservice by constantly sending out these shockwaves about increases in taxes and other financial burdens. People are trying to keep their heads above water and catch a breath of fresh air. Yes, many things need to be fixed but give the people a lil break.
bcitizen 2 years, 8 months ago
Just put NIB to 100% of salaries now and get it over with. That would solve the problem.
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