By Elvin Bailey

Last article, we examined some of the links that has made your Social Security as strong as it is. I ended by identifying several factors which augur well for the Fund in the future. This week, I expand and explain.

i) Social Security is, among other things, a mechanism for transferring wealth (and liabilities) from one generation to another. Those who are on pensions now would have paid dues so their predecessors can benefit, we are paying now so that our elders can benefit and the succeeding generation, children and the unborn will pay for us when our turn comes. Thus, we rejoice when we see a fecund female, gravid with child or children.  That tells us that the future can be bright if we raise them well. That is also why we give a maternity grant – it is really a gift to the infant child! Having learnt the significance of pregnancy to the life of Social Security, I recognize now why the Prime Minister of Australia made the comment that he was alleged to have made to encourage all women of childbearing age in his country to have at least 3 children.

I must warn though, that as happy as we are about pregnancy, we are equally abhorrent about child pregnancy. It defiles more than it procreates.

Sadly though, our fertility rate, reported at 1.6 children per childbearing female for the Federation in 2004, is not sufficient to regenerate our population. We really do need more or else we will have to stay in the workforce for longer.

ii) There are two aspects to compliance: that all employers and self employed persons pay their dues on time, and that all employers pay for all of their employees in the correct amounts and on time. In other words, there is an honesty factor. Most of the times, however, we use compliance to refer to the number of employers who are paid up on time, and we have never ended a year on less than 80%. For the self employed, we hover around the international average of 30%. If these rates continue, better yet, if they are improved, then we expect the future to be bright. In a conversation with a friend who had lived abroad, he said he never had to check to find out if his employer paid his social security. He was confident that it was paid because it was a must in the country where he lived or else…That is the stage we need to get to.

If we consider compliance as collecting all the money that we know about, then we stand at 99.56% lifetime compliance rate. This means that almost everybody who should be paying us is doing so in the amounts that they should except for the 0.44% outstanding (for employed persons). Sadly, this 0.44% of the $901,752,000 translates to EC$4,000,000.00. That is too much!

iii) A learned public understand the implications of the information at its disposal and takes action when it needs to. It is different from an educated public - that is, one in which the information simply exists but for whom it means nothing. Thankfully, our population is showing signs of transitioning from educated to being learned. 

iv) In the business of advertising, it is generally acknowledged that a satisfied customer is the best advertisement. Surely then, Social Security is well advertised by the thousands of persons who are and have been in receipt of benefits. By now every home in the Federation has had a benefit of some sort from us. By now everybody in this country must know someone who has had a benefit from Social Security. Indeed, during our public meetings, whenever we were “attacked”, it was a member of the audience who defended us. Here’s why. From the beginning of the Fund up to May 2009, we have paid 9,275 pensioners (of all kinds), have paid for 119,000 bouts of sickness and injury, have paid medical expenses for 3,800 persons and have helped 340 persons with overseas medical treatment; and the list goes on. Social Security works! (data supplied by staff of the Research Dept.)

Furthermore, there are 141 persons whose secondary schooling was funded by Social Security through its Susanna Lee High School Scholarships and 22 adults whose university degree was assisted by Social Security through its Stanley Amory and Robert Manning University Scholarship Programmes. Now students can expect even more, according to Hon. S. Condor, Minister with responsibility for Social Security.

Sports complexes, houses, roads, airports and seaports, health institutions, schools, Project Strong, National Festivals: they all testify to our assistance to this country. Truly this is a partnership that is of great benefit to the entire country!

v) Space. We have created space where none existed before. As a result of our existence, as a result of our prudence, as a result of our vision, as a result of our efficiency, we have created fiscal space for the Federation. How else would over $900million of ‘we money’ savings been achieved? Which agency, however generous, would have poured $350million into this small country? How many persons can breathe a little easier when the vicissitudes of life strike at them?

Space gives all of us room to grow and develop. We are human, so as we grow mistakes will occasionally be made. But as a farmer said to me once, when he loses a crop, he gains an experience. Thus, once again, I must commend our authorities for having the good sense to intervene without interference in the workings of your social security. The important thing is that we have learnt from any and every faux pas over the years, and we have learnt from sister institutions all over the world. It is not by accident that our Social Security was labeled as one of the best in the Caribbean by Actuary Derek Osborne, nor is it by accident that we won recognition in an international ISSA sponsored contest for best management practices!

The maintenance of a healthy reserve expenditure ratio has also helped to define our space. (The reserve to expenditure ratio is a measure of how long we would be able to meet our obligations if we received no more income). Our reserves would allow us to pay out for another 20 years or so, which is more than enough time for us to recover. That is another way of saying that we are fine. And indeed, despite anything you may hear to the contrary, and especially after we have reformed Social Security using the boundaries that were established in consultation with the people, everything will be alright!