By Youri Kemp

Tribune Business Reporter

ykemp@tribunemedia.net

THE National Insurance Board (NIB) must be digitised and the age of retirement raised to save the fund from collapse, a top insurance executive has warned.

Larry Gibson, chief operating officer of CG Atlantic Pensions, told Tribune Business that the problems at NIB are “no secret” and that it is time for action as he agrees with Myles Laroda, Minister of State with responsibility for the fund.

Mr Laroda told reporters on Tuesday that the fund is getting no better as each day passes by and that the government has to “make decisions” on what to do with the fund as it is projected to lose $70m this year alone.

Mr Gibson, on the other hand, said while the $70m is significant, it should not be looked at as losses in the accounting sense as they are just benefits to be paid out. These are obligations the fund has committed itself to doing, so the fund is not losing money, it just has too many people it has to pay benefits to and not downsizing the fund or raising rates to make up the deficit.

Mr Gibson also said: “We could do in terms of more digitisation in the way we deliver social insurance benefits that will certainly drive down the cost. That’s probably one of the bigger things we need to look at.

“We can also look at the level of contributions or the amount of contributions before you’re eligible for benefits, because I remember way back when people had to make 150 contributions before you were eligible and that has subsequently been adjusted, but maybe it could be adjusted again.”

The 11th actuarial review of the NIB recommended the contribution rate for the pension branch be increased immediately to a level that is at least equal to the PAYG (pay as you go) rate.

It also recommended an increase of the contribution rate by two percent on July 1, 2022, followed by increases every two years until 2036, which could restore the short and the medium-term financial sustainability of the scheme.

Mr Gibson said: “There are a lot of things they can do at NIB. I don’t want to be an alarmist because a lot of people are out there saying that NIB is going broke and all of that stuff, but I just want a social security system that’s effectively managed from top to bottom and effectively administered.”

Pointing to the US social security system where the administration is just five percent of the total fund, but in The Bahamas the administration of NIB sucks up over 20 percent of the fund’s resources. “You’ve got to look at the investment returns and the way we go about that whole investment policy and implementing it. We have to look at the retirement age. Many countries are putting up their retirement age. That certainly would help the long-term sustainability of the fund. Those are just a few things that that come to mind. So yes, we can, we can make the fund sustainable, but changes, changes clearly have to be made,” Mr Gibson said.

Mr Gibson added about Mr Laroda’s comments: “I believe they are sober and forward looking, but that’s not supported by comments you would have from other cabinet ministers. His comments seem at times, whilst they are spot on, to be at odds with the broader policymaking body.”