The Tribune

By LYNAIRE MUNNINGS

Tribune Staff Reporter

lmunnings@tribunemedia.net

NATIONAL Insurance Board Director Dr Tami Francis insisted yesterday that the pension fund “is actually not in crisis” after government warnings and actuarial concerns pointed to deep long-term pressure from a shrinking workforce, rising retiree numbers and demographic decline.

Dr Francis said the fund’s position has improved since the 1.5 percentage point contribution rate increase in July 2024, which she said is generating about $4m in additional monthly income and helping to stabilise short and medium-term finances.

“This is not a full stopgap measure – no, just contribution rate is just not the only measure to put in place to help save the fund,” she said during a press conference yesterday. “So of course, we would be combining the contribution rate increase with other measures that would have been so, for example, recommendations that would have been made in successive actuarial reviews, as well as in-house recommendations being made to work in tandem with recommendations such as a contribution rate increase.”

Dr Francis said long-term sustainability depends on several measures, including actuarial recommendations, internal reforms, compliance improvements and operational efficiencies.

She said the goal is to extend the life of the fund well beyond 60 years so it can support future generations. Although she said current performance is stronger than previously projected, she acknowledged a continuing gap between contribution income and benefit expenditure and warned against complacency.

“While we may still have a slight difference in our contribution income versus our benefit expenditure, what we would have expected or predicted, we are doing a lot better than expected,” she said. “Now, that does not mean we are to rest on our laurels, but an increase of this nature would not be something that will ultimately save the fund.”

Dr Francis said National Insurance is operating in a global environment where social security systems are being affected by demographic change, including ageing populations and lower birth rates.

She noted that when the system was introduced in 1974, there were about seven workers supporting each retiree. Today, there are roughly three workers per retiree.

The system has faced mounting pressure from rising pension payouts, an ageing population and a shrinking ratio of workers to retirees, factors that have prompted repeated warnings from officials and actuarial reviews about long-term sustainability.

In October 2025, then Social Services Minister Myles Laroda warned that The Bahamas’ low birth rate poses a direct threat to NIB’s future stability, noting that the fertility rate of about 1.7 children per woman is below the replacement level of 2.1 needed to maintain population levels.

Mr Laroda said that without sufficient population growth, fewer workers will be available to support a growing number of pensioners. He said the ratio of contributors to retirees is central to the fund’s survival, describing around six workers per retiree as a healthy benchmark and warning that a drop toward three workers per retiree strains the system.

He also said that while the number of pensioners has more than tripled since the 1980s, the contributor base has not grown at the same pace, widening the gap between inflows and outflows.

Actuarial projections have previously warned that, without further reforms, the fund’s reserves could come under significant pressure in the coming years. Government figures have shown that contribution rates were increased in July 2024 from 9.8 percent to 10.3 percent, with further increases reportedly under consideration to stabilise the system.

Dr Francis said NIB has introduced operational and administrative reforms, including digital platforms such as the Employer Self Service system and the C10 Mobile App, which allow employers and self-employed contributors to make payments electronically instead of visiting offices.

She said the systems are intended to improve compliance and make payments easier and more efficient.

She also highlighted enforcement and compliance efforts, including the expansion of inspection teams by about 22 officers and the use of “boots on the ground” initiatives to engage delinquent employers.

She said the agency has implemented interest waiver programmes to encourage employers to settle outstanding debts, particularly in Grand Bahama and Abaco, where higher waiver incentives were offered.

She said NIB uses incentives, payment plans and enforcement actions, describing the strategy as a “carrot and stick” approach.

She said administrative costs have fallen from about 21 percent in 2018 to around 15 percent, though international benchmarks for social security systems are closer to ten percent.

She stressed that no social security system is immune to demographic pressure, citing declining birth rates, longer life expectancy and changing workforce patterns.

She said the system is not designed to remain static and must continue adjusting over time, while balancing benefits for current pensioners with the needs of future contributors.

“We are having less children, and we have that ageing population, so we have to come up with innovative ways to ensure that the fund is increased over the long term,” she said. “There are several things that we may do to increase it over the short and medium term, but we want that stretch, we want that 60-year, we want that 78-year, that's our ultimate goal.”