NASSAU, BAHAMAS — A governance reformer said yesterday that the National Insurance Board (NIB) crisis is the result of “short term, painless and politically safe approaches” over the past three decades, warning that there is no more time to push the issue down the road.
Matt Aubry, the Organization for Responsible Governance’s(ORG) executive director told Eyewitness News that the ILO actuarial report has reinforced what has been known and noted regarding NIB for decades.
NIB’s 11th actuarial report has called for a two percentage point increase in contribution rates next month, with subsequent increases enacted every two years until 2036 to secure the fund’s long-term financial sustainability.
It also noted that the fund’s reserve will be exhausted by 2028.
Aubry noted that the NIB crisis isn’t unique to The Bahamas.
“Across the globe, nations are challenged with this dilemma of historic pension and benefits systems that don’t meet mid and long needs.
“Here, NIB’s current crisis is the result of short-term painless and politically safe approaches for the past three decades.
“It has been no secret that the fund in its current model has not been sustainable.
“Our current circumstances, post COVID and amidst increasing fuel costs and inflation make this a particularly hard time to deal with this issue.”
Aubry noted however that reform is required in the immediate timeline to prevent further hardship to a significant portion of the population, particularly the country’s most vulnerable citizens that depend on NIB for their basic security.
“Sustainability for social security schemes like NIB requires a long-term political and public commitment to reform and a mutual understanding between the private sector, civil society and government of what is at stake.
“This means transparency and accountability are essential for regaining the public trust that short-term pains like recurring increases in NIB contribution will lead to a real and tangible benefit for the majority of citizens.
“With increased contributions, Bahamians will want to see that government is managing these funds effectively a d efficiently toward the sustainability of NIB,” said Aubry.
He added: “Greater disclosure on NIB fund expenditures and strong laws related to pension and financial management can give reassurance.
“Additionally, broad and open consultation at the formative stages of building a plan, with the stakeholders that are most affected, namely the Bahamian people and business owners that will have to shoulder the burden of increased contribution, will be key to building cross-sector understanding and ownership.
“This is the kind of consensus-building toward actionable long-term solutions that ORG has been advocating for over the past seven years.
“There is no more time to push this issue down the road. This can be an opportunity for all of us to get back on the right path so that we plan and support the long-term security and needs of our citizens.”
Earlier this year, Prime Minister Philip Davis said on Tuesday that the government has made no determination on whether to follow the recommendation for a rate increase to save the fund from depleting in six years.
NIB and all such funds is nothing more than a ponzi scheme.