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LaRoda: NIB is in disinvestment mode

Board’s investments are being liquidated in order to pay expenditure, revealed minister of state

Despite the recommendation in the National Insurance Board’s (NIB) latest actuarial review for the board to diversify its investments, it will not at this time because it is currently in disinvesting mode to meet expenditure obligations, Minister of State in the Office of the Prime Minister Myles LaRoda said yesterday.

NIB’s eleventh actuarial valuation as of December 31, 2018 urged its board to expand its investment portfolio beyond government securities and foreign bonds, which make up the majority of NIB’s assets.

LaRoda, who tabled the 10th and 11th actuarial valuations of the National Insurance Board in the House of Assembly yesterday, said drastic changes are needed to arrest the critical financial state of the fund.

“Income exceeded expenditure in 2013, 2014 and 2015, however expenditures exceeding income in each of the financial years starting in 2016. This trend will continue and the deficit will become larger. Regarding funding policy, it is relevant only if sustained contribution rates increases are implemented,” he said.

“Investment diversification is needed, but NIB is currently in a disinvesting mode as investments are being liquidated in order to pay expenditure. In order to adequately finance the long-term pension branch, in order to make the scheme sustainable in the short term, an increase in contributions is necessary and that should start now.

“Once the short-term sustainability of the National Insurance Board is fixed, other recommendations could be applied to make the scheme more comprehensive and sustainable over the long term.”

As at December 2018, around seven percent of NIB’s investments were in outside bonds, notes and equities. The actuarial report said the low figure shows that there is room to invest overseas in private equities, real estate, infrastructure investments and emerging markets.

The report also recommended that NIB develop clear financing and funding objectives in order to ensure the sustainability of the fund and its obligations to deliver benefits.

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Paige McCartney

Paige joined The Nassau Guardian in 2010 as a television news reporter and anchor. She has covered countless political and social events that have impacted the lives of Bahamians and changed the trajectory of The Bahamas. Paige started working as a business reporter in August 2016. Education: Palm Beach Atlantic University in 2006 with a BA in Radio and Television News

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