Home' Trinidad and Tobago Guardian : May 25th 2017 Contents The National Insurance Board estimates that
more than 99,000 pensioners received $1.6
billion in "system" subsidies in its 2016 fiscal
year and $10.7 billion in "top ups" in the 13
years between 2003 and 2016, the institution's
executive director Niala Persad-Poliah con-
firmed on Wednesday.
Persad-Poliah was clarifying remarks made by NIB's ac-
tuarial manager, Feyaad Khan, at a seminar organised by the
Chamber of Commerce on Monday.
In expanding on Khan's comments, Persad-Poliah said: "At
the end of fiscal year 2016, only 3,141 pensioners were in receipt
of a retirement benefit in excess of $3,000. This was out of a
total number of pensioners of 102,454 and thus accounted for
approximately three per cent of all pensioners at that time.
"The remaining 97 per cent of pensioners earned a pension
below $3,000 when their contribution history was applied to
the pension formula. These 99,313 pensioners were then paid
a "subsidy" or "top-up" from the system in order to meet the
minimum pension requirement."
The NIB executive director said if the subsidy for fiscal year
2016 was estimated at $1.6 billion and is included in the total
long-term benefit expenditure of $4.2 billion, "this means that
about 38 per cent of the system's long-term benefit payments
were as a result of "topping-up" 99,313 people who earned
less than $3,000."
She said that this subsidy was "a strong indication of the
strain being placed on the system," a point that was emphasised
at the seminar, when it was noted that the NIB's assets would
be exhausted in 13 years if the National Insurance System (NIS)
is not reformed.
Already, the NIB says the system's expenditure exceeded its
contributions in the 2013-2014 fiscal year with the NIB being
kept afloat by the investment income from its $25.5 billion
portfolio. The NIB's realised investment income in 2016 was
But in his presentation, Khan estimated that the NIB's total
expenditure will exceed its contributions plus its investment
income by the 2019-2020 fiscal year, at which point the na-
tional insurance provider will start to eat into its investment
portfolio's assets, if the system is not reformed.
Khan also noted that the NIB's standard $3,000 per month
pension represents 115 per cent of T&T's minimum wage, while
the international range is between 40 and 80 per cent of min-
imum wage of countries.
At the seminar NIB chairman Michael Toney said T&T's
increasingly ageing population has caused the cost of main-
taining the National Insurance System (NIS) to balloon over
the last 40 years.
Toney pointed out that a society is considered to be aging
when at least 10 per cent of its population is over 60 years.
"In the case of T&T, the data indicate that in 1975, 7.5 per
cent of the population were over age 60, by mid 2015 it had
increased to 13 per cent. It almost doubled. The trend is clear
as we are now an ageing society."
Toney said this trend has impacted on NIB's finances and
he gave figures to show how payments over the last 40 years
"In 1977 we were spending $2 million in retirement pen-
sions, by 1987 this figure grew to over $69 million, in 1997 it
was approximately $139 million. For the financial year ended
June 30 2016, NIB paid approximately $4.2 billion to more
than 135,000 long-term beneficiaries," he said.
A steady rise
Toney said, according to NIB's most recent actuarial review
of the national insurance pension plan, retirement pensioners
are projected to steadily increase in the future. For the sus-
tainability of the system it is important to have an increasing
number of people of working age and productive employment
He gave statistics to show that right now four working per-
sons' contributions support the pension of one pensioner.
"Given this aging society trend, it is estimated that in 50
years' time, one pensioner's pension will be supported by only
one working person. Just think about the burden that will be
transferred to future generations and what the typical person
will be required to pay in contributions at that time to ensure
the relevance of the National Insurance System."
He said whenever the topic is brought up, people say that
it is a worldwide problem.
"We all agree that it is a worldwide problem, but saying so
does not solve the problem. It is one that we here in our space
have to confront and resolve and we have to face the funda-
mental question as to the relevance of the NIS as it is presently
configured in the light of this ageing population."
He concluded: "The national insurance is truly national in its
reach and affects and will affect everyone as long as we remain
in T&T as an employer, an employee and other beneficiaries."
Toney spoke on Monday at a seminar on pension reform
as it relates to the NIS at the T&T Chamber of Industry and
According to information provided by Khan, the executive
manager, actuarial services, NIB, "the old pension is $3,000
which represents 115 percent of the minimum wage; 97 per
cent of existing pensioners receive a subsidy and the cost borne
by employees and employers is 13.2 per cent vs 8.5 per cent.
BG4 | COVER STORY
BUSINESS GUARDIAN guardian.co.tt MAY 25 • 2017
= $1.6 billion
In delivering an address on January 31, 2017,
at the formal opening ceremony for NIB's new
corporate headquarters at Queen's Park Sa-
vannah East, Finance Minister Colm Imbert
addressed the issue of the NIB's assets being
completely depleted by 2030, if contributions
were not increased.
"As such, in order to protect and preserve
the National Insurance system, the actuaries
recommended that the Government examine
the possibility of an increase in the retirement
age from age 60 to age 65 over the period 2025
to 2060. While I must stress that no decision
has been taken on this matter by the present
Government, and it is not current Government
policy, it is in my view an important matter that
requires careful consideration and discussion,
since many other countries have gone this way
in order to protect the viability their national
The finance minister also addressed the
performance of the NIB's investment portfo-
lio, which yielded a return on its investments
of less than 2.0 per cent in 2016 and 2.6 per
cent in 2015.
He said when compared to the return of the
Heritage and Stabilisation Fund, which earned
a return of 5.8 per cent in 2016, this level of
income is not acceptable.
"This is especially important, since the NIB
is now drawing down on its investment fund
to pay benefits.
"As Minister of Finance, I therefore intend
to actively work with and support the Board
in 2017 to see what can be done to assist the
NIB to improve its income from investments,
including further increasing the limit on indi-
vidual investments and increasing the limit on
Imbert pledges to support reforms
PHOTOS: ABRAHAM DIAZ
NIALA PERSAD POLIAH,
NIB's executive director
Continued on Page 5
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