The commission will make recommendations to the government for future funding options.
Minister of Housing and National Insurance Shane Gibson pointed out at the appointment of the commission at the National Insurance Board’s Baillou Hill Road head office that the challenges facing the NIB are so severe because worker contributions are not sufficient to fund the programme.
“The recent Actuarial Review of the National Insurance Fund highlighted several financial challenges that lie ahead for National Insurance,” Mr. Gibson said, “specifically, long-term projections suggest that if no change is made to the contribution rate, or to the way benefits are awarded and calculated, the National Insurance Fund could be exhausted by 2029.”
He continued, “Such a scenario is due directly to the ageing of our population and the fact that the contribution rate, now 8.8 percent, is below the true cost of the National Insurance benefits package.”
Notwithstanding the possible funding shortfall of the social security programme, the 14-member commission would also be required to explore the possibility of increasing benefits available to Bahamians, Minister Gibson said.
He explained that the government is concerned about the lack of an unemployment benefit in NIB’s benefits package.
“We want to see more people working, and working for larger incomes. But there are often circumstances over which we have no control that will lead to short-term periods of unemployment for workers,” Mr. Gibson said.
“And just as NIB provides for partial income replacement in times of sickness, injury and maternity, we also want to provide a benefit during times of involuntary unemployment. As a result, you will be expected to recommend a suitable programme of unemployment insurance for The Bahamas and a timeframe for implementation,” he added.
In addition, commission members were mandated to explore the feasibility of creating a disaster fund to assist persons who experience an interruption in income due to a catastrophe or disaster.
Minister Gibson noted, however, that even with additional funding the national insurance programme would not be able to provide all the social assistance needs of Bahamians.
He admonished residents to secure private sources of pension and other benefits.
“We need to find feasible ways of encouraging employers to create pension plans for their employees and for individuals to establish long-term saving arrangements for themselves,” he said.
“As part of your mandate, therefore, you will be expected to recommend ways to government on how best formal private sector pension arrangements can be administered, invested and regulated,” he added.
Board executives pointed out that the appointment of the commission came as a result of a specific requirement of the 7th Actuarial Review submitted to the government last September. As a prerequisite to making any change to the national social security system, Mr. Gibson said, the report suggested that widespread consultation be held on the best way forward for National Insurance.
He explained that the 14 members appointed represented the first stage in that consultation process.
Appointed as chairman of the commission was insurance executive Alfred Stewart. Ernest Cambridge, Vice President of VIP Services at Atlantis International was named as the commission’s deputy chairman.
Also appointed to the commission were Tanya Wright, an executive with the Bank of the Bahamas; attorney Milton Evans; Bank of Nova Scotia executive Clement Foster; insurance veteran Keith Major; and Family Island representative Bert Deveaux.
Accountant James Gomez; retirees representative Roscoe Davies; Straw Vendors Association member Telator Strachan; Taxi Cab Union member Terrance Carmichael Brown; Trade Union Congress President Obie Ferguson; and a National Congress of Trade Unions representative were also appointed to the commission.
By Darrin Culmer, The Bahama Journal
