By Elvin Bailey
I have been writing to you for almost a year now, and did not properly introduce myself. Excuse my manners - and I will introduce myself now.
Social Security was established by law in 1977 (No. 13 of 1977) and became operational on February 1, 1978. It was structured to have a Board of not more than nine members drawn from workers, employers and government. It is a statutory body and its Board of Directors reports on its performance directly to the Cabinet Minister who holds the relevant portfolio. The Board, in turn, is reported to by an [Executive] Director. Currently, the Minister responsible for Social Security is the Hon. Terrence Sam Condor; its Board of Directors are Mr. Halva Hendrickson (Chair), Mr. Stanley Franks (Dep Chair), Ms. Eslyn Swanston, Mr. Claudius Delaney, Mr. Leonard Williams, Mrs. Vancelyn Williams, Mr. Scott Caines, Mr. Frank Farrell, Ms. Myrna Liburd and Ms. Sandra Daveron as Secretary. Two of these members specifically represent employees (Franks, Farrell), two represent employers (Caines, Williams, L) and Ms. Liburd comes through the Nevis Island Administration. The [Executive] Director is Mrs. Sephlin Lawrence with Mr. Steve Wrensford as her Deputy.
Members of the Board are appointed for a three-year term except for the Chairman who is appointed for a four-year term in the first instance and three years thereafter. This is done to ensure continuity. There are no limits to the number of terms to which a member can be appointed.
To keep pace with the operations of your Social Security, there are several sub committees, namely Investment, Scholarship, Compliance, Property and Staff. Recently, an Audit and a Donations Committee were established. Of these committees, the Investment Committee is mandated by Law; the others are established by the Board. Each Committee is comprised of at least two Board Members, one of whom serves as Chair of the Committee, and members of the general public are co-opted who are considered knowledgeable in the particular area.
The Institution employs 104 persons, 17 on Nevis and the remainder in St Kitts. This figure is inclusive of our temporary workers and our ancillary staff – Cleaners, Delivery persons and Security Guards. Twenty percent of staff is educated at Bachelors level or higher.
For administrative convenience, there are five departments: Finance & Investments; Compliance and Benefits; Internal Audit; Human Resources and Administration and Research, Statistics and Public Relations. The latter is the department for which I carry responsibility.
Our mission is to provide the best possible benefits to all eligible persons, guaranteed by sound financial management and efficient administration. The values by which we operate include confidentiality, honesty and integrity, team productivity, commitment/dedication, efficiency, motivation and accountability.
To perform our mission, we collect 5% of the wages of each employed person along with 6% from the employer, up to a ceiling of EC$6,500.00. Anyone working for higher than that amount do not contribute to Social Security on that portion of salary higher than the EC$6,500.00. They will see deductions from the entire wage, but all of the deductions on the $6501.00 and upwards go to the Government. Self employed persons pay 10% of their appropriate income, again subject to the EC$6,500.00 ceiling, and voluntary contributions are set at 5% (but do not allow access to the full package of benefits). I have already reported on the size of the eleven cents empire, but for emphasis, as at December ’07, total assets were EC$910,736,568
In addition to collecting and investing your contributions, payment of benefits, staff salary, and other administrative expenses, Social Security collects funds on behalf of Inland Revenue and the Labour Department. The former receives the Housing and Social Development Levy and the latter receives the Severance Fund contributions. We are paid commission fees for these services. Thus, do not come to Social Security when seeking Severance Payment – go directly to the Labour Department.
In addition to what the law mandates that we do, we also do voluntary work in the community (much of this was reported on in the article entitled Goodwill).
We have been advised by our Actuary to keep administrative costs to 13% of contribution income. We have not exactly matched that benchmark, but have not deviated too much from it. The highest that we have been is 14.88% in 2003. But that was when we made a major capital investment and charged all of it to that year’s accounts. In 2005, we stood at 13.36 %. Few other Social Security institutions, if any, have ever managed to maintain their benchmark figure.
Two other interesting ways of measuring our performance is to i) compare the value of benefits to the cost of administration and ii) to compare the cost of administration to the investment returns. I am unaware of the specific benchmarks for these parameters, but for our system within the past five years, administrative costs have ranged from 31% – 35% of benefits expenditure; and 18% - 23% of investment income.
Each triennium, we are required by law to conduct an Actuarial Review to assess the state of health of our Fund and to project forwards. Eight studies have been conducted so far, and all have indicated that we have been well managed and that we are financially strong. The 9th study will be conducted this year (2009) and will review the period 2005 – 2007. We will share details of the review with our members in due course as has been the practice for the last few studies.
We must re-assure readers, insured persons, that we are still one of the best run Social Security Systems in the CARICOM region. Our Reform Project is also geared towards maintaining our health; we will find out soon what adjustments will have to be made in order to ensure our longevity. Meanwhile, we pledge to continue to collect funds on your behalf and to continue to pay benefits during those times when our members are unable to work. As we like to remind ourselves, Social Security takes care of you from the cradle to the grave; and we keep looking up for your benefits!
Social Security is an important element in this nation’s development. Now, more than ever, we must ensure that we remain the glue of “a nation bound together with a common destiny”.
