Having commenced on 1st February 1978, the Social Security Board celebrates its 31st Anniversary in 2009. This demands a reflection of the past, even as procedures are implemented to consolidate and ensure the long term viability of the Fund.
In this reflection, we look at the commencement of the Social Security Program, provide some information on its predecessor, the National Provident Fund (NPF), then examine the advancement in benefit disbursements and investments, then discuss some prospects for the future before concluding.
Emanating from a desire of the first Premier, Hon. Robert Llewellyn Bradshaw to eliminate poverty in St Kitts Nevis and Anguilla, the Social Security Act was passed in Parliament on 5th December 1977. The newspapers of the day brought reports that the Fund was established to provide pecuniary benefits in time of need. The report in the papers noted that the assets of the National Provident Fund would become assets of the new Social Security. Therefore at its establishment, there were assets in excess of $15million including the current Robert Llewellyn Bradshaw Building. The organisation had initiated plans to name the new building the Robert Llewellyn Bradshaw Building, but this only became a reality in 1995.
No reflection of the development of Social Security can overlook the vital foundation laid under the National Provident Fund. The NPF Program was introduced in 1968 funded by employer and employee contributions. The shared contribution of 5% by employer and employee was subject to a maximum of $3,000 per annum. Employees, including civil servants, with established and approved retirement arrangements were exempt. NPF was a type of defined contribution plan where the contributions were placed in individual accounts with annual interest payments. At exit points- age 60, invalidity or death, the balance on the account including the accrued interest was paid as a single lump sum. However, the Scheme was not effective in eliminating poverty, as the record shows that many old persons were destitute, barely eking out an existence from the generosity of family, friends or the Church. The System did not offer dignity and confidence to the aged. Therefore in 1977, the NPF Act was repealed and the Social Security Act, No. 13 of 1977, was passed. Rights under the NPF were not abrogated but maintained. Worthy of note is that persons of a certain age (52) on February 1, 1978 were allowed to transfer up to three years’ contribution to assist in qualifying for a Social Security Age Pension. That age was reduced to 42 effective January 1, 1993 to assist more persons to qualify for pensions.
Over the years, Social Security continued to settle claims made under the NPF. In 1988 the Government decided that Social Security should repay the balances on the National Provident Fund to its members. There were long queues on the first days to collect and return claim forms. By December 5th 1988, the day set to commence repayment, 2000 claims had been paid. By the end of the year $9,090,780 had been repaid to 6034 claimants.
The Social Security Bill was discussed in the House of Assembly with much support from the Ministers of Government. The members must have observed that there were many deprived old persons despite the operation of the government funded social assistance program. The Social Security Act required that the Board be established and located in the town of Basseterre. It specified the requirement for important sectors of society to be represented on the Board of Directors. Therefore, the government, employees and employers were represented on the Board.
Regulations were later passed to deal with the details of items which the Act specified including compliance, remittance of contribution, registration, benefits as well as the financial requirements. It also specified in a Schedule to the Act (not Regulations), the requirements for investments.
Hon St John Payne was assigned as the first Minister. He later appointed Hon Fitzroy Bryant, as the first Chairman of the Board. The tripartite representatives and other members were also appointed. They were Lloyd Matheson and George Gillanders - the employers’ representatives while Wilma Thompson and James Kelly were the employees’ representatives. Ismay Burt, Alman Nisbett were other members along with Douglas Richardson and another government representative Charles Mills who was the Deputy Chairman. Mrs. Thompson and Mr. Nisbett resided in Nevis. The first Board was appointed mid January 1978.
At the outset, the Fund made provision in accordance with the principles of universality. All employed persons within the age of 16 and 62, the new retirement age, were required to participate. The Law also made provision for the eventual inclusion of the self-employed. The contribution was set at 5% for both employer and employee. The ceiling on wages for contribution was initially set at $24,000 per annum but was subject to periodic reviews. The contribution rate (except with respect to the Employment Injury) has remained fixed but the ceiling increased to $48,000 in 1984, to $62,400 in 1993, to $70,200 in 1996 and to $6,500 per month in 1998.
The first Director, Mr. Robert Manning had a very formidable task. Before the sitting in Parliament, he had met with the Legal Draughtsman to assist in the drafting of the Regulations and Act. He had to research the information to advise on what was to be included but also had to obtain the concurrence of the Premier and Hon St John Payne. He met with his twenty-one staff members on February 1, 1978 to explain their formidable mandate. He himself had commenced work on December 19, 1977 but his appointment formally commenced on January 2, 1978. Among the staff members was Joseph Parry, now the Premier of Nevis, who was appointed the Manager of Nevis Branch Office. The services of staff of the NPF were not automatically retained, they were formally considered by interviews for the positions in the new organisation. While it was difficult to establish the procedures for the work required under the new Act, the real challenge was to convince the public of the value of the deduction from their wages.
Many persons did not understand the significance of the proposed Social Security Program but were concerned about a deduction of 5% from their small wages. Several employers were livid as their involvement in the Fund would inevitably result in increased cost of employment. However, the institution’s staff plodded on with their assignment.
Initially the Director and his Deputy, Mr. Stanley Amory, were engaged in regular daily and nightly town hall meetings to explain the value of the new Social Security. The inspectors were not recruited to augment the team until June 1978.
However, soon after their employment, the inspectors donned the marketing mantle and started to tout the value of the Fund to many stakeholders. While they were careful to point out the value, they sometimes had to evoke the powers conferred upon them by the Social Security Act. After all they had the authority to enter premises to examine wages record or make enquiries in respect of employment and wages.
(to be continued next week)
(This article was written by Sephlin Lawrence, Director, and first published in the 30th Anniversary Commemorative Magazine. It was adapted by Elvin Bailey)
