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PM: NIB RATE TO RISE – BUT NOT FOR A YEAR: Davis announces July 2024 date but not size of increase

Prime Minister Philip “Brave” Davis.

Prime Minister Philip “Brave” Davis.

By LETRE SWEETING

Tribune Staff Reporter

lsweeting@tribunemedia.net

THE National Insurance Board may lose nearly $100m this year now that Prime Minister Philip “Brave” Davis confirmed there would be no contribution rate increase until July 1st, 2024, deepening the fund’s woes.

Myles Laroda, State Minister in the Office of the Prime Minister responsible for NIB, said during a communication in the House of Assembly in March that the fund was projected to lose $98m in 2023 if contribution rates did not increase.

Yesterday, Mr Davis cited the strain of the global inflation crisis when explaining why the recommended rate increase would not happen this year.

“We do not wish to impose any additional burden,” he said. “We hope that a full year’s advance notice will allow all impacted the time to plan to accommodate the increase.”

 Mr Davis said there would not be a significant rate increase next year to make up for not raising rates this year.

 “We can assure you that will not be the case,” he said.

 Mr Laroda, who has repeatedly warned of NIB’s dire state, said in April that the contribution rate must be increased by 1.5 per cent three or four times in the near future to stabilise the fund. He said extending the retirement age, cutting benefits or combining these two options would not solve the problems.

 Similarly, the latest actuarial valuation of NIB said immediate and recurrent increases in the contribution rate were necessary to save the fund, warning that the fund could otherwise be depleted by 2028.

 “It is important that Bahamians know that we will use the year to come to implement significant reform at NIB,” Mr Davis said yesterday. “We intend to make our system more efficient and more user-friendly. Bahamians deserve a simple and transparent process. We will continue to scrutinise claims to prevent fraudulent activities and ensure that those who contribute are the ones who benefit.

 “The rate increase beginning in July 2024 will therefore be accompanied by enhancements to NIB’s service delivery, accountability, compliance efforts, and sustainability. Our goal is not merely to ensure the longevity of the NIB but to create a system that truly serves its purpose: to support Bahamians when they need it most.”

 Critics will be eager to learn how the government could delay increasing contribution rates and avoid increasing rates by more than 1.5 or two per cent next year.

 In 2022, NIB contributions totalled $280m while benefit expenditures totalled $355m –– a $78m shortfall, according to Mr Laroda, who said NIB had not turned a profit since 2016.

 After the NIB announcement yesterday, Mr Davis and Free National Movement Leader Michael Pintard traded volleys.

 “For at least a year,” Mr Pintard said, “the public has been subjected to the circus of conflicting statements by the minister of state with responsibility for NIB (who forecasted the necessity of an increase) and the prime minister (who told a different story) on whether NIB rates would be increased. Yet, no significant action or reform was taken to address NIB’s challenges. So uncommitted to correcting their non-compliance, the government has hired persons and rented facilities from entities that owe a staggering amount of funds to NIB.”

 In response, Mr Davis noted NIB’s issues are not recent and that the FNM did nothing to solve the problem.

 “The FNM chairman Dr Duane Sands,” he said, “previously stated that NIB’s fund has been in a precarious position for many years, suggesting its projected six-year depletion timeframe unsurprising. This frank admission from the chairman of the FNM underscores the importance of the measure we are taking. It also highlights the failure of the Free National Movement to act when they had the chance.”

Comments

moncurcool 1 year, 1 month ago

This country is going to the dogs. By the time of the election, who will want to be in The Bahamas, the way this New Day government is just taxing the hell out of people.

You would think these brain dead politicians would first start with paying what the government owes NIB from raiding it for their slush projects that give no return.

DEDDIE 1 year, 1 month ago

NIB don't have an income problem but an expense problem. Stop using the Bahamians pension fund for pet projects.

Well_mudda_take_sic 1 year, 1 month ago

WRONG. The root causes of the National Insurance Fund's failure are the massive amounts of corruption, fraud, outright theft and waste it has been subjected to ever since its founding by one government after another, with the current government certainly being no exception.

whogothere 1 year, 1 month ago

Like he said - an expense problem..

Dawes 1 year, 1 month ago

"To those who worry that a delay will make the eventual increase larger than it otherwise would have been, we can assure you that will not be the case," Mr Davis said in a statement.

Umm what sort of economics is this? If the increase is now you will have a years worth of increase as extra funds which means you would be in a better position. If that's not the case then why can't it wait for two years?

bcitizen 1 year, 1 month ago

Just a tax called something else. 1.5% three of 4 times? Just shut it down now. That would make NIB 16%. How much more are they collecting because of the recent minimum wage increase? Why are the rich paying less of their income to NIB because of the max limit?

Well_mudda_take_sic 1 year, 1 month ago

A friend of mind who is a qualified actuary and is familiar with NIB's financial situation, believes working Bahamians today between the ages of 45 and 60 will never receive retirement and other benefits from NIB anywhere near what they will have paid into the national insurance fund by the time they retire. He also believes honest and hard working Bahamians today under age 45 will never receive a penny of the contributions they continue to be forced to make to the collapsing NIB Ponzi scheme by government and their employers.

LastManStanding 1 year, 1 month ago

I would be inclined to agree with your friend and would add that NIB is doomed to collapse simply due to the demographic situation of this country. The only way it could ever be theoretically retained in the long term is through exorbitant rate increases to be shouldered by the young working class Bahamians, a cut in payments, and the raising of the collection age. We have a TFR below replacement rate, with a large number of young Bahamians leaving the country if they have the opportunity, it is simply impossible to maintain this program no matter what bandaid solution you try IMO. This is not a problem unique to this country, virtually all developed nations are in a similar boat.

TalRussell 1 year, 1 month ago

Think about it: ---- How National Insurance (NIB) losing nearly $100 million would stackup, if ---- Certain Freeport workers payroll contributions ---- Didn't fall under the --- Special made in Freeport NIB 'Sixty Percent Exemption Rule.' – "Aye." "Nay?"

realfreethinker 1 year, 1 month ago

There is no exemption from NIB in Freeport

TalRussell 1 year, 1 month ago

Shouldn't trigger an attack without you leaving evidence!

hrysippus 1 year, 1 month ago

My father spent his life as an actuary in a significant British insurance company; the nib is unsustainable and that has been obvious since the latter half of the 1980's. Over 40 years of malfeasance and mismanagement by government appointed lackeys. I just regret that prominent member of Rotary was involved in this debacle.

whogothere 1 year, 1 month ago

I guess they have to pay for dat vat decrease somehow.. corporate income tax.. and NIB is personal income tax by another name simple facts…

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