BPSU: Time not right for NIB rate hike

Bahamians ‘too challenged’  to pay any more

Bahamas Public Services Union (BPSU) President Kimsley Ferguson said yesterday, now is not the right time to increase the contribution rate at the National Insurance Board (NIB) nor should the retirement age be increased from 65 to 67.

“We know that one of the major means by which the government is able to carry out its agenda is taxing its citizenry,” said Ferguson, who was asked about the recommendations contained in the 11th actuarial review of NIB.

“At this particular time, I don’t support an increase in NIB contributions. We’ve been challenged with [Hurricane] Dorian, we’ve been challenged with COVID-19 and Bahamians are struggling.

“There are still some family members who are still unemployed. … So no, I do not support an increase at this time.”

Many Bahamians are still recovering from Dorian, which devastated communities on Abaco and Grand Bahama. Others are reeling from the global shutdown triggered by the COVID-19 pandemic in 2020, and record inflation in 2022.

Asked when may be an appropriate time for an increase, Ferguson said, “There needs to be a recovery, a general recovery, not only in the economy of The Bahamas but also in the lives of the Bahamians themselves, who have been challenged in every regard with Dorian, COVID-19.

“We need some level of buoyancy in relation to the local economy before we consider that.”

The report, which was obtained by The Nassau Guardian, recommends the contribution rate be increased immediately, noting that on the current path, NIB’s reserve for the Pensions Branch will be exhausted in 2028.

The report noted that a significant increase in the contribution rate from 9.8 percent to 16.9 percent would be required to pay the full benefits in 2029.

The report added that the required contribution rate to pay all expenditures of all branches during the next 60 years is 22.55 percent.

When asked about the report, Prime Minister Philip “Brave” Davis said on Monday his administration hasn’t made a decision yet on whether to increase the contribution rate.

“The recommendation has been made. It doesn’t come off the table until we decide whether or not to accept that recommendation. We have not yet done that, as I indicated,” Davis said.

“We have to assess all of our other fiscal issues, i.e. how the economy is going to be growing, where we are going to be obtaining new revenues, how effective are our collection efforts … to determine how we address that.

“And if we can find ways and means to alleviate the burden on the poor Bahamians or the Bahamian worker, we will do so.”

Ferguson said, “We know that the inevitable is an increase in NIB contributions, however, the concern for public servants is that they have not actually been given an increase in a number of years.

“So, what is it you are going to take from if you haven’t given them anything?”

In his budget communication in May, the prime minister announced that pay raises are on the way for most public officers in the new fiscal year.

An increase in the minimum wage was also promised.

Regarding NIB, Ferguson said the government needs to get more creative.

“Everything is not about placing the burden on the taxpayers of this country who are not receiving income or increases consistent with the cost of living,” he said.

The report also recommended that the retirement age be increased from 65 to 67.

It noted that a new retirement age could reduce NIB’s short-term financial pressure.

The report said that such an increase should be normally planned over a long period to not affect the current population which is close to retirement and acquired rights.

But Ferguson said many public servants may not even live to see 67.

“The average lifespan of the average public servant is basically 65, maybe 70 if you are in extremely good health,” he said.

“So in my view … the recommendation to move the retirement age to 67 will actually be disadvantaging some people because they may not necessarily live to see 67. What it does then, it places the government in a position where it doesn’t meet its obligations.

“I think 65 is fine. I think the government needs to find some other ways or means to sustain the National Insurance entity.”

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Travis Cartwright-Carroll

Travis Cartwright-Carroll is the assistant editor. He covers a wide range of national issues. He joined The Nassau Guardian in 2011 as a copy editor before shifting to reporting. He was promoted to assistant news editor in December 2018.

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