Executive director of the National Insurance Board (NIB) Niala Persad-Poliah yesterday warned that the country’s ageing population will have a negative effect on the national insurance system
“Over the course of a 50-year horizon, we anticipate that the number of persons of working age in our society will more than double, while the number of working age persons will decline by almost a quarter—this will give rise to a dependency ratio of 1.6, that is, we can expect at that time to have just about two persons of working age supporting the pension of one person in retirement,” she said.
Persad-Poliah spoke about the sustainability of the national insurance system at the seminar at the University of the West Indies (UWI), St Augustine.
She said the NIB, T&T’s sole provider of social insurance coverage, currently manages about $26.61 billion worth of assets.
For the 2017 financial year, the NIB collected contributions from 479,036 workers about 78 per cent of all the people with jobs in the country.
Total expenditure on benefits for the same period was $4.75 billion, with approximately $4 billion spent on retirement benefits alone, both pensions and grants.
As a result, Persad-Poliah said the increasing number of long- term NIS benefit recipients “has gone hand in hand with increasing—and I may add—spiralling benefit payments under the system.”
She said there is a need to develop strategies to address barriers which exclude older people from participation in the labour market.
“Formulation of policies that address reform and adjustments to the retirement age are critical and perhaps even contentious matters that require national dialogue to determine the way forward,”Persad-Poliah said.
She added that one of the key recommendations coming out of the Ninth Actuarial Review of the NIS was to increase the qualifying age for an unreduced National Insurance pension from 60 to 65 years over a 36-year period starting in 2025 and ending in 2060. That works out to an increase of one year every seven years over a 36-year period.
“I want to emphasise that the recommendation is not to increase the compulsory retirement age to 65 years. Rather it is to increase the age for receiving an unreduced pension—that is, people will still have the option of retiring at age 60, however we are proposing that they be paid an actuarially reduced pension in such an instance,” she said.
