By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

The government has yet to decide whether National Insurance Board (NIB) contribution rates will increase to safeguard its financial sustainability, a Cabinet minister said yesterday.

Brensil Rolle, pictured, minister for the public service and National Insurance, said it was awaiting completion of the latest actuarial study on the social security system before deciding if such action was warranted.

"I have not yet had an opportunity to speak to my colleagues about it, so I cannot tell you that it's going to increase. There was a preliminary report which has suggested that there needs to be an increase, but that has happened every year since probably five years ago. That is a decision that will be made by the government," Mr Rolle said.

He first indicated last June that NIB contributions may rise in the near future given that "benefits have gone up tremendously while contributions have gone down", and the government has to "make some judgements" on how to regain that balance.

"The critical issue is what benefits you want to get, and if the actuaries are saying that the fund is going to run out or the fund is going to have some issues, then that possibility exists," Mr Rolle added of higher contribution rates. "But, again, I don't want to jump the gun because I have not seen the report and I cannot say anything about that until the government has an opportunity to look at it."

He said the actuarial report would be released to the Bahamian people "within the next two or three months". NIB contributions, which take the form of a payroll tax, are currently split 3.9 percent/5.9 percent between employee and employer, respectively.

Numerous previous actuarial reviews have called for contribution rates to increase as one element of a strategy to sustain NIB given projections that its $1.6bn reserve fund will be exhausted by 2030. Successive governments have elected to "kick the can down the road" on any increase, meaning the magnitude of any correction will be much greater than if corrective action had been taken earlier.

Mr Rolle's indication that NIB benefits payouts are now exceeding contribution income suggests a tipping point has been reached, with working Bahamians no longer able to support an increasingly elderly population that is living longer.

The Inter-American Development Bank (IDB) has even gone so far as to suggest NIB contribution rates will have to increase to 20 percent - a 10.2 percentage point increase - to fully fund the social security system's pension and other liabilities.