Rashaed Esson
Staff Writer
The Bahamas’ National Insurance Board (NIB) is facing financial issues, at risk of being unable to pay off its debts by 2028, as revealed by Alfred M. Sears, Minister of Immigration and National Insurance in the Mid-year Budget Performance report.
This unfortunate development is according to NIB’s 11th Actuarial Report, facilitated by the International Labour Organisation (ILO) and it is calling for swift solutions to restore the capacity of the NIB fund.
Sears, in a release of the report, published on March 7th, goes into the details of the NIB’s dilemma, saying that the Board’s annual income, which includes contribution and investment earnings, is not enough to cover its expenditure fee, inclusive of benefits and administrative costs, “especially in the Long Term (Pensions) Benefits Branch.
The contributing factors to the issue take different forms, Sears highlights. He refers to the decreasing working-age population and an increase in the elderly population, there is an imbalance. The ratio of active contributors to pensioners is currently at 3 to 1, meaning that every three workers are paying for a single pensioner.
Additionally, there is the decline of compliance; benefits expenditure dominating contribution income reductions in investment income, high administrative costs, women having fewer children, and individuals living longer and this simply means a much larger and unsustainable burden for the workforce to shoulder.
If nothing is done, future generations won’t be able to benefit from the NIB as they should.
It is for this reason that reforms are recommended and will be implemented, as advised by the Actuarial Review.
“The Review recommended that a significant increase in the contribution rate is required to pay the full benefits in 2028,” Minister Sears informed.
As a result, come Monday July 1st, 2024, “the contribution rate for NIB will be increased by 1.5%, to be shared equally between the employer and the employee, and thereafter a 1.5% increase Every Two Years from July 1, 2024 to July 1, 2044.”
This, according to Sears, will ensure NIB’s continued provision of necessary services and benefits to Bahamians. A reliable support system for the archipelago.
In fact, with this development, Sears points out that NIB is projected to see a surplus after 2030, when its annual income will exceed the projected expenditure.
The National Insurance Board minister mentions that it is massively important for Bahamians, standing as the foundation of the nation’s social welfare system, providing support to Bahamians when times are hard.
“It would be true to say that if it were not for the National Insurance Board so many of our citizens would not have survived through Hurricane Dorian and COVID-19. For example, between 2019 and 2021, the Government, through NIB, provided income supplement and unemployment assistance to thousands of Bahamians totaling $120 million and NIB itself paid out unemployment benefits, during this period, of $131.5 million between 2019 and 2021,” he maintained.
With the coming increase in contributions, Sears expressed he understands that it might be of concern to Bahamians, so he assured them that it is made to be reasonable and proportionate.
“The phased approach will allow for adjustments to be made gradually, giving each person time to plan and prepare accordingly,” he said.
In continuation, there is more coming beyond the increased contribution, according to Sears.
He said there will also be a comprehensive programme of reform of NIB which will include “legislative amendments to the National Insurance Act, the National Insurance (Chronic Diseases Prescription Drug Fund) Act, the National Insurance (Benefit and Assistance) (Amendment) Regulations, and the National Insurance (Contributions)(Amendment) Regulations to strengthen financial sustainability and
accountability.”
Additionally, there will be more changes that are “a global and internal recruitment of qualified Bahamian professionals into the executive management of NIB, to bring about transformative advancements in NIB’s “digital and IT infrastructure, better customer relations, more efficient and effective Human Resource management, reduce administrative costs and improve the investment strategy to produce a better rate of return.”
