BASSETERRE, St. Kitts -- WITH growing concerns that the Social Security Fund could become insolvent by 2040, the Social Security Board has begun discussions on potential reforms to ensure the Fund's long-term viability.
The Fund, a lifeline for many, currently provides Aged Pension to more than 8,000 beneficiaries. However, significant changes are necessary, and several were outlined at a press conference on Wednesday.
Over the past year, Social Security paid out more than it received in revenues, resulting in the Fund tapping into its investment returns to make necessary payments. According to provided data, the Fund has EC$1.7 billion in assets, making it solvent. However, since 2017, payouts have exceeded revenues, with some instances reaching EC$160 million.
““I take this moment to emphasize that the Social Security Fund is solvent and can meet its financial obligations to the over 8,000 pensioners and to the insured persons who make claims to the various benefits offered by Social Security…However, as a mature fund it would be irresponsible as administrators to not assess the current and future demands of the fund and at the same time consider a recalibration of Social Security structures in line with what is required,” said Janet Harris, Chair of the Board, at Social Security Headquarters in Basseterre.
She acknowledged that times have changed, and so must the agency to meet future liabilities. “The time is now to review the fund and look towards implementing sustainability measures that would serve the contributors well into another 46 years and beyond.”
Derek Osbourne, who is currently on the island, has been working with the Social Security Board to assist with implementing changes and reforms. During his presentation, he provided a stark reality of the state of the Social Security Fund.
According to Osbourne, the old age pension accounts for 82 percent of all contributions paid out by the fund and also consumes all the revenue earned, necessitating investment returns to assist with payouts. This will create future problems, according to Osbourne.
“That means we’re collecting from workers and employers 11% of total wages but spending over 16% of total wages,” he explained.
Compounding the problem for the Federation is the declining birth rate and longer life expectancy of retirees, which consistently increase payout rates.
As part of the reform proposals, there is consideration of increasing the age of eligibility, increasing the deduction rate, or decreasing the payout for those qualifying.
