NASSAU, BAHAMAS — A well-known financial executive said yesterday that the government can not bury its head in the sand regarding the fate of the National Insurance Board (NIB) long standing deficit, noting that the need for necessary changes has been known for at least a decade.
Gowon Bowe, chief executive officer of the Fidelity Group of Companies, said: “It’s important that we put this issue in its proper context and appreciate that the Blue Ribbon Commission – more than 15 years ago already noted that based on the actuarial studies at that point the fund was going to be depleted sometime around 2031 or 2035 and there needed to be a comprehensive review of the contribution rate, the rate ceiling, the retirement age and the administrative costs associated with NIB.”
Bowe said: “The necessary changes at NIB have been known for at least 10 years. There have been minor efforts at it in terms of adjustment to the wage ceiling, having hotel workers pay on their gratuities as a means of maximizing the income being subject to the contribution rate and there were attempts to right size NIB maybe 10 years ago.”
National Insurance Board contributions could increase by up to two percent within the next year as the government seeks to address the fund’s long-standing deficit with payouts outpacing contributions for the past six years according to the Minister of State in the Office of the Prime Minister Myles LaRoda.
LaRoda said earlier this week that Cabinet has yet to make a decision on the recommendation to increase NIB contributions, but believes the increase will be implemented.
Prime Minister Philip Davis said yesterday that he knows what the Bahamian people are facing and it will be a last resort for his administration to put anymore burden on their backs with an increase in NIB contributions. He said that while recommendations have been made to raise NIB contributions, he will see how the government can be innovative and creative to hold off on an increase until relief is brought to the Bahamian public.
Bowe noted that The Bahamas does not have pension legislation or a 401k as in the case of the United States, with NIB providing unemployment and health benefits for employees. Bowe noted that while the fund was able to grow in its early years due to a large number of contributors and small number of claimants, that has since reversed. Bowe also noted that the fund has been used as an alternate treasury by multiple administrations.
