By Youri Kemp
Tribune Business Reporter
ykemp@tribunemedia.net
THE National Insurance Board (NIB) must be digitised and the age of retirement raised to save the fund from collapse, a top insurance executive has warned.
Larry Gibson, chief operating officer of CG Atlantic Pensions, told Tribune Business that the problems at NIB are “no secret” and that it is time for action as he agrees with Myles Laroda, Minister of State with responsibility for the fund.
Mr Laroda told reporters on Tuesday that the fund is getting no better as each day passes by and that the government has to “make decisions” on what to do with the fund as it is projected to lose $70m this year alone.
Mr Gibson, on the other hand, said while the $70m is significant, it should not be looked at as losses in the accounting sense as they are just benefits to be paid out. These are obligations the fund has committed itself to doing, so the fund is not losing money, it just has too many people it has to pay benefits to and not downsizing the fund or raising rates to make up the deficit.
Mr Gibson also said: “We could do in terms of more digitisation in the way we deliver social insurance benefits that will certainly drive down the cost. That’s probably one of the bigger things we need to look at.
“We can also look at the level of contributions or the amount of contributions before you’re eligible for benefits, because I remember way back when people had to make 150 contributions before you were eligible and that has subsequently been adjusted, but maybe it could be adjusted again.”
The 11th actuarial review of the NIB recommended the contribution rate for the pension branch be increased immediately to a level that is at least equal to the PAYG (pay as you go) rate.
It also recommended an increase of the contribution rate by two percent on July 1, 2022, followed by increases every two years until 2036, which could restore the short and the medium-term financial sustainability of the scheme.
Mr Gibson said: “There are a lot of things they can do at NIB. I don’t want to be an alarmist because a lot of people are out there saying that NIB is going broke and all of that stuff, but I just want a social security system that’s effectively managed from top to bottom and effectively administered.”
Pointing to the US social security system where the administration is just five percent of the total fund, but in The Bahamas the administration of NIB sucks up over 20 percent of the fund’s resources. “You’ve got to look at the investment returns and the way we go about that whole investment policy and implementing it. We have to look at the retirement age. Many countries are putting up their retirement age. That certainly would help the long-term sustainability of the fund. Those are just a few things that that come to mind. So yes, we can, we can make the fund sustainable, but changes, changes clearly have to be made,” Mr Gibson said.
Mr Gibson added about Mr Laroda’s comments: “I believe they are sober and forward looking, but that’s not supported by comments you would have from other cabinet ministers. His comments seem at times, whilst they are spot on, to be at odds with the broader policymaking body.”
Comments
bahamian242 1 year, 10 months ago
How about NIB getting paid Dividends on the Public Companies they have share in! Say like Commonwealth Brewery?????
Sickened 1 year, 10 months ago
They need to put in another tier for contributions as well. Say $100k and maybe even another at $150k.
sheeprunner12 1 year, 10 months ago
Larry Gibson cannot speak for the common man ............... he is RICH. What he should suggest is that the well-connected PEPs should take their hands out of NIB cookie jar. He says that 20% of the NIB fund goes to pay salaries and other benefits & perks. That is the biggest problem with NIB. The next big problem is that the politicians are using the NIB Fund as an IOU to cover shortfalls in other areas of Government and then calling it "investments". That has to stop and the NIB Board needs to recoup these billions of dollars lost over the decades.
If Larry Gibson wants to defer his NIB pension beyond the age of 60, that is fine with him. He sits in his ivory tower (like the politicians) and thinks that ALL Bahamians see things like he does. Most Bahamians are praying to see the age of 60, given the stress, crime, drudgery, and ill health that this dysfunctional 242 society presses down upon the average citizen.
Reality_Check 1 year, 10 months ago
LMAO. Gibson wants to make the National Insurance Fund solvent by increasing the retirement age to collect benefits above the average age of most Bahamians when they meet their maker. Talk about a doofus of the highest order!
TalRussell 1 year, 10 months ago
What the ever is true intent, still won't change a damn thing whether or not the National Insurance Board (NIB) digitizes or manually raises the age of retirement, it still won't protect the pension fund from corruption, waste, abuse and political mismanagement.
It goin' cost the working Womans' to lose $30,000+ more than the Mans' and will result in both the Mans' and the Womans' being forced to work well into their 80s.
And, tokening into account all the increases of the contribution rate by 2++ percent every two years until 2036, the clerks at NIB, goin' digitize a way to forward many of the pension cheques c/o da cemetery.
And with all their digitizing, age and payroll deduction increases they are still **only hoping at best to restore the funding of pensions in the short-term.
Think about what is like in 2022/2023 when seniors are/will go without their 3 daily meals and their doctor's unfilled prescriptions — Yes?
ted4bz 1 year, 10 months ago
If you do not get your money now (at 60 or so) the way things are going, perhaps you never will. If you do, soon they'll set out to give you even less.
bahamianson 1 year, 10 months ago
So NIB wants to increase the age of retirement to prevent anyone from collecting? That sounds like income tax, to me. If Bahamian men are dying before the age of 60 then their chance of collecting is impossible, same with women. What is the point? If No one collects, whom uses the money...the politicians ?
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