Barbados’ rebranded National Insurance and Social Security Service (NISSS) has stepped up its online and social media presence, and while this is great for engagement and sensitisation, there is much to be done by way of easy access to critical information.
We speak specifically about public education on the most pressing matter of pensions. The NISSS is like the air Barbadians breathe; it does not factor in people’s consciousness until it is needed during some emergency or as people approach retirement age.
Though the average person does not regard it as such, the NISS is essentially the country’s largest financial institution, with the biggest customer base.
If the NISSS falls on hard times, or falters as a result of some extreme circumstance, fails and becomes insolvent, the event could reduce a sizable portion of the island’s citizens to poverty and destitution.
This is not hyperbole or an attempt to panic a population but simply to raise awareness of the significant role this institution plays in the lives of citizens from birth to death.
Serious challenges with the NISSS’ ability to sustain the quantum and depth of social security coverage to which Barbadians have been accustomed, were the basis for the unpopular reforms that were introduced – namely the increase in the retirement age from 65 to 67.
The rising cost of living is an undeniable headache for lower and middle-income earners, but for those dependent on NISSS contributory and non-contributory pensions, making that fixed income stretch becomes a feat of tremendous magnitude.
The adjustments that were instituted by government – mainly the removal of the NIS from state operations to a quasi-commercial entity requires much more explanation to citizens of the pros and cons of the move. For most people, it was simply a name change, for others, the political apparatus still has too much say, specifically in the investment policy decisions of the NISSS.
In the 2023 National Insurance Board’s Principal Recommendations for the Revitalisation of the National Insurance Scheme, it was outlined that 80 percent of the NISSS benefit expenditure was for old-age pensions and so any meaningful reform would naturally be centred in this area.
They included increasing the pensionable age from 67 to 68, increasing the age from which persons can apply for early pension from age 60 to 63; changing the “best five years” to the “best 10 years” of wages for calculating pensions; and increasing the eligibility from 10 years of contributions to 15 years of contributions.
“An increasing number of elderly persons without a reliable source of income in old age is not good for families and not good for Barbados. Self-employed persons need an easy, flexible, and convenient way to contribute for benefits they understand and value,” the report outlined.
More important, with so many Barbadians operating in the informal economy either as the main source of income or as a supplemental, it is a staggering piece of information that only one in eight self-employed persons regularly contributed to the social security scheme.
While it is understandable the level of concern and the need for urgent reform, the NISSS needs to make it clear to citizens that while, the NISSS may provide some level of support during the retirement years, it is a mistake to believe that a state pension, whether contributory or non-contributory will be enough to adequately survive on, given the rising inflation and general cost of living.
It is for this reason that the demand for government and the NISSS to promote and incentivise people to save more for their retirement is a most urgent and necessary step.
There was once a time when year-end approached, people would rush to top up their mutual funds, registered retirement saving plans (RRSPs), and credit union savings in order to benefit from those deductibles when filing their annual tax returns.
Alas, administration after administration has failed to undo these disincentives to future financial planning. Instead of a strong three-legged support plan for retirement, through NISSS, individual savings, and RRSPs, too much of the burden is currently falling on the NISSS.
This is an unsustainable approach and will possibly doom too many Barbadians, a sizable percentage who are approaching retirement, to difficult financial times.
There is an obvious role for personal responsibility in retirement planning, but there is much more that government and the NISS can do to encourage citizens to ensure they are prepared financially for the time when their work life comes to an end.
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