The National Insurance System pension to which all employed people must compulsorily contribute is the sole income source for many elderly people in TT. It was never intended to be so back in 1971 when the law was passed and the system was being set up.
I was on the board of directors and it was an enormous responsibility. Although guided by the International Labour Organisation (ILO), it is a tripartite board, and decisions made at every meeting of the board were the result of a compromise negotiated between the employers’ representatives and the trade union representatives.
It was acknowledged, in order that pensions would be provided to contributors who were past 65, the NIS had to be able to pay for itself. Funds had to be obtained, saved and wisely invested so that the sad state then being witnessed daily, of elderly people literally impoverished and ill, dying of malnourishment for lack of money, would not happen in the future.
In order to ensure that the National Insurance Board (NIB) became and remained viable, it had to be run in a business-like manner. It had to spend less that it earned to provide for the future, in other words. Earnings came through contributions from employees and employers and through wise investments. You learn this in fourth form budgeting class.
The board made mistakes sometimes from misjudgements. That happens to everyone except Warren Buffet apparently. Does anyone remember the Varinstall plan? All investments carry an element of risk, which is why investors are warned against making investments on the basis of emotion, not reason and recorded experience.
At the time it began, only the public service and a few foreign-based private companies had pension schemes for their employees. When the NIS pension benefit was conceived it was not intended to be the sole support of the aged. It was intended to supplement individuals’ own savings which all people were expected to put aside for their later years.
Those who could not do so were expected to have children who would look after them. That was the way it was. If you did not have the foresight to have had children, there were few resources to help you survive other than your family or yourself.
The national pension scheme required employees to contribute on a monthly basis to fund their old age. It was a benefit that saved whole segments of the elderly population from a painful and penurious old age and a sad death from hunger and shame.
It was not perfect or universal. It did not cover the self-employed, nor allowed them to contribute. It provided income for the spouses of male employees, who had contributed, after they died (until they remarried, as, apparently, the NIB expected them to do) but did not give the same benefit to the spouse of a woman contributor who died, which was sexist but considered normal at the time, but it was a beginning. And it provided some support and dignity in their declining years to those that had given their lives in building this country.
Now, we understand from official notices in the press over the last week, and by the Ministry of Finance and the Prime Minister, the NIS pension is in danger of failure. People are living longer than expected. There are not enough young, employed people contributing, and unless more Venezuelans are employed and contribute to the NIS, or our medical system fails, and people stop living so long, there won’t be enough contribution money to invest to sustain the pension system in the next 15 years.
The government finances are either in good shape, according to Minister Imbert or declining steadily according to his ministry when asked for subsidies to help the recently laid off. If the latter is true, one cannot help but wonder if it could have something to do with to the fact, as publicly stated in the budget, that every year for the past five or six years, government has had to borrow money to pay the overstaffed public service?
Even a first year domestic economics lesson in secondary school knows that you never borrow money to pay recurrent expenditure unless it will produce a reasonable and foreseeable return on what was borrowed, or that it can be repaid within another pay period. No one expects the public service to earn money. Licensing fees, fines and duties don’t even pay for the stationery costs of the forms they use. We are told that many public service units cannot even pay their public utility bills much less answer their own phones.
Finance houses will lend money if they are confident that the debt will be repaid. That is what they are in business for. They charge you interest. You know that before you borrow. But where is the logic that approves increased government borrowing piled on to last year’s, year after year, to pay a growing number of staff that even the Prime Minister and the President acknowledge are unproductive? Where 3,000 WASA employees who are being paid cannot even be found? Is this good money management?
If government as an organisation is not prudent with its own income and expenditure, why can it expect the public to accept a reduction in benefits they have already paid for when the Ministry of Finance will not accept the recommendations made as long as 10 years ago by its actuaries to increase the pensionable age to 67 as prudent Barbados did? Or to establish a severance pay scheme as prudent Barbados did so that money would be available for the new jobless as so many businesses, one by one are laying off staff, being forced to close by government’s pandemic restrictions.