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LARODA WARNS NIB RUNNING ON FUMES: He adds 'the first rate increase is not going to save the fund'

Thu, Apr 27th 2023, 08:53 AM
Politics Tribune Stories

MYLES Laroda said the National Insurance Board fund is "basically running on fumes" and can only be stabilised when the contribution rate is increased by 1.5 per cent for the third or fourth time in the future.

He said extending the retirement age, cutting benefits, or combining these two options would not address the problem.
#His comments came during a Progressive Liberal Party Elizabeth constituency branch meeting on Tuesday night.
#“When (NIB) started out, you were collecting benefits on $400 a week; now it’s almost $700 a week,” he said. “You were paid out to a few thousand pensioners; now you’re paying out to 43,000 pensioners. We’re paying benefits even though you did not increase the amount that was due into the fund. And so the reality is something has to be done if this is going to be saved.”
#Mr Laroda said some recommendations for saving the fund would not suffice. 
#“We can extend the retirement age. You could cut some of the benefits. You could do a combination of both, and you know, once you give Bahamians things, you can’t just go and take it back. But that won’t be addressing the problem either, so the government has made a decision, and that decision will be in shortly,” he said.
#“The reality is that the rate increase that was proposed by the National Insurance Board — the first rate increase is not going to save the fund. The second one isn’t going to save the fund. It won’t be until about the third to fourth increase at 1.5 per cent per year (that NIB would be stabilised).”
#“Steps have to be made now. Like I said, the bleeding is not going to stop with the first rate increase. The bleeding is not going to stop. We’ll be bleeding less but we’re talking about looking at around the third increase which will be six years from now where we’re looking for things to stabilize.”
#Recommendations for a rate hike were outlined in the 11th actuarial review of the National Insurance Board, which predicted the fund could be depleted by 2028.
#Mr Laroda referred to the actuaries as “professionals who have no ties in The Bahamas and who (are) just looking at the facts of saying we should do two per cent per year for 20 years. So that’s actually ten increases”.
# Mr Laroda, a State Minister in the Office of the Prime Minister responsible for the National Insurance Board, said the can has been kicked down the road for too long on NIB.
# “We’re taking in around $23 (or) $24m a month, and we’re paying around $28m a month,” he said. “That creates a deficit of $4m per month on the pension side alone and in the 49 years of the fund, we have had one rate in increase. That was in 2010.”
# Mr Laroda has repeatedly warned about the NIB fund.
# The Nassau Guardian reported earlier this year that Cabinet had approved a 1.5 per cent rate increase which would take effect on July 1.
#  Asked about this, Mr Davis told reporters: “As is my mandate, I continue to say that I’m going to try to resist putting more burden on our poor working class. We have looked at the matter.”
#“We understand that we have to do something, and we are trying to identify exactly what to do, and increasing the rate is one of the options that we are looking at.”
#The Davis administration has yet to confirm any future contribution rate increases.

He said extending the retirement age, cutting benefits, or combining these two options would not address the problem.

His comments came during a Progressive Liberal Party Elizabeth constituency branch meeting on Tuesday night.

“When (NIB) started out, you were collecting benefits on $400 a week; now it’s almost $700 a week,” he said. “You were paid out to a few thousand pensioners; now you’re paying out to 43,000 pensioners. We’re paying benefits even though you did not increase the amount that was due into the fund. And so the reality is something has to be done if this is going to be saved.”

Mr Laroda said some recommendations for saving the fund would not suffice. 

“We can extend the retirement age. You could cut some of the benefits. You could do a combination of both, and you know, once you give Bahamians things, you can’t just go and take it back. But that won’t be addressing the problem either, so the government has made a decision, and that decision will be in shortly,” he said.

“The reality is that the rate increase that was proposed by the National Insurance Board — the first rate increase is not going to save the fund. The second one isn’t going to save the fund. It won’t be until about the third to fourth increase at 1.5 per cent per year (that NIB would be stabilised).”

“Steps have to be made now. Like I said, the bleeding is not going to stop with the first rate increase. The bleeding is not going to stop. We’ll be bleeding less but we’re talking about looking at around the third increase which will be six years from now where we’re looking for things to stabilize.”

Recommendations for a rate hike were outlined in the 11th actuarial review of the National Insurance Board, which predicted the fund could be depleted by 2028.

Mr Laroda referred to the actuaries as “professionals who have no ties in The Bahamas and who (are) just looking at the facts of saying we should do two per cent per year for 20 years. So that’s actually ten increases”.

Mr Laroda, a State Minister in the Office of the Prime Minister responsible for the National Insurance Board, said the can has been kicked down the road for too long on NIB.

“We’re taking in around $23 (or) $24m a month, and we’re paying around $28m a month,” he said. “That creates a deficit of $4m per month on the pension side alone and in the 49 years of the fund, we have had one rate in increase. That was in 2010.”

Mr Laroda has repeatedly warned about the NIB fund.

The Nassau Guardian reported earlier this year that Cabinet had approved a 1.5 per cent rate increase which would take effect on July 1.

Asked about this, Mr Davis told reporters: “As is my mandate, I continue to say that I’m going to try to resist putting more burden on our poor working class. We have looked at the matter.”

“We understand that we have to do something, and we are trying to identify exactly what to do, and increasing the rate is one of the options that we are looking at.”

The Davis administration has yet to confirm any future contribution rate increases.

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