MYLES Laroda, the minister of state with responsibility for the National Insurance Board, says he anticipates that NIB contribution rates will increase within the next year given the unsustainability of the social agency's fund.

However, he said, a decision on the matter has not been made as yet.

Mr Laroda made the revelation to reporters a day after he had exclusively told The Tribune that the NIB fund could be depleted by 2028 if the government failed to take urgent action.

According to the minister, the situation was predicted by a new actuarial review of NIB, which reduced the fund’s potential depletion timeline by one year, as the previous review had made a prediction of 2029.

The report, which is the 11th of its kind, was received by the Davis administration about three weeks ago.

Asked about potential contribution rate increases in view of the report, the minister told reporters it was very likely to happen this year.

Mr Laroda also said there have been recommendations for the Cabinet to impose a 1.5 percent to two percent rate increase incrementally given concerns about NIB’s financial situation.

“Yes,” he said about a possible rate increase before going to a Cabinet meeting, “I will temper that by saying that we haven’t voted on that yet, but a decision is being prepared and I will not be surprised if that happens for the mere fact that we are in this unsustainable position.”

According to Mr Laroda, the current size of the NIB fund is around $1.6 billion.

However, he said the fund’s size isn’t the issue, but rather the fact that social benefits have “far outpaced” contributions. At the peak of the COVID-19 pandemic, NIB administered unemployment assistance to 22,000 people. That number has now decreased to around 8,000.

“The issue isn’t the current size of the fund but the issue is that benefits far outpace the contributions. In the (1980s), I think the contribution was around $12m a year, the benefits. Now, the benefit payouts are north of $100m a year. That’s just not sustainable,” he said.

The situation, he added, is also compounded by deficit spending.

“The reality is the National Insurance Board has been running deficits for the past six years so this pre-dated COVID. This can was kicked down the road too many times. From the fund was established, there has been one rate increase and that was in 2010 from 8.8 percent and 9.8 percent. And you take all of what has been going, we are where we are.”

Because of these financial concerns, Mr Laroda said tough decisions will have to be made, adding the Davis administration is prepared to do what is necessary.

He said: “The prime minister has made statements in public and to his Cabinet colleagues. We have tough decisions to make and we are prepared to make those decisions. We are talking about tens of thousands of NIB individuals who have contributed, some of them for decades. It will be a shame for those who would’ve paid in not to be able to receive their benefits at their time and so we are prepared and willing and able to address this concern.”

As for proposed rate hikes, the minister said: “Anywhere from 1.5 to two percent annually (or) biannually so it’s not just going to be one. We could expect numerous increases. That hasn’t been decided by Cabinet as yet but it will be fair that an increase would be coming.”

Numerous previous actuarial reviews have called for contribution rates to increase, citing the proposed measure as just one of many to help sustain NIB.

However, successive governments have often elected out of taking such action, with one former minister saying last year no government has been bold enough to implement the recommended increase.

Asked when the government will make a decision on the proposed rate increase, Mr Laroda said “soon.”

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