Admitting that he had not yet read the latest National Insurance Board (NIB) actuarial review, which is dated January 2022, Prime Minister Philip Davis said yesterday the government has made no determination on whether to follow the recommendation for a rate increase to save the fund from depleting in six years.
“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.”
The report, completed by the International Labour Organization, has not yet been formally released by the government, but was reported on extensively by The Nassau Guardian yesterday.
It recommended that the contribution rate be increased immediately.
“Under the current parameters, the reserve for the Pensions Branch will be exhausted in 2028, one year earlier than in the previous actuarial review,” the report noted.
“Immediate actions are needed to restore not only the long-term financial sustainability of the scheme but, most importantly, the short-term.”
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.
Despite the grim outlook, and despite stating he had not yet read the report, the prime minister said yesterday it is “nothing new”.
He said the government “expected the same report”.
“They are the technocrats who are advising us,” Davis said.
“We are the political directorate. We have to find ways and means of softening any increases that are put on the backs of the Bahamian people. I have not seen the latest report nor am I surprised by it.
“But upon reviewing it and having regard to all the other initiatives that we have in growing the economy and seeking other means of revenues for the country, we will take that into account to determine … how best to deal with the national insurance issues.”
In April, Minister of State in the Office of the Prime Minister Myles LaRoda, who has responsibility for NIB, said he expected NIB contributions to increase by 1.5 to two percent in the next year.
LaRoda also pointed to the fact that there has only been one rate increase — the rate increased from 8.8 percent to 9.8 percent in 2010 — since the NIB started in 1974.
However, the prime minister quickly dismissed the idea of a rate increase after the minister spoke to reporters.
“The actuaries over the last 10, 15 years have been predicting that the fund is jeopardized because of us not having raised the contributions at NIB,” Davis said.
“Recommendations have been made since 2003, , that we should raise the contributions.
“Yes, we are at that watershed moment, but I am not going to at this time put any further burden on the Bahamian people. We will see how we could be innovative and creative to ensure that we do not do or embrace such an initiative until we have brought the relief that is necessary to allow that to happen.”
That was in April.
The prime minister’s latest comment on the matter came at Lynden Pindling International Airport yesterday after arriving in the country from attending the Commonwealth Heads of Government Meeting in Rwanda.
He was asked whether his view on the recommended rate increase was unchanged in light of the report being made public through the Guardian’s reporting.