Basseterre, St. Kitts, February 27, 2023 (SKNIS): As the St. Christopher and Nevis Social Security Board celebrates its 45th Anniversary, a clarion call has been made for a comprehensive reform of the Social Security Fund with a reserve size of 1.7 billion dollars to prevent the Fund from depleting in the next decade or more as expenses grow, income decreases and pensioners increase.
“We have to act sooner rather than later,” said Derek Osborne, Actuary for the Social Security Board during his presentation at a stakeholder’s breakfast meeting at the St. Kitts Marriott Resort where the 13th Actuarial Review was delivered on Tuesday, February 21, 2023, under the theme “Transform, Reform, Thrive: Social Security 45.”
Preceding Mr. Osborne’s presentation, Donovan Herbert, Resident Statistician and Manager of the Research and Statistics Department with oversight of the Data and Records Department, said that total expenses of the Social Security fund continue to significantly increase year on year and that pensioners represented approximately 70 percent of the total expenses.
“The number of contributors per pensioner gives an idea of how your funds as a contributor are supporting those persons receiving their pension benefits and as we can see that is on a significant decline,” said Mr. Donovan. “Our contribution income has now been surpassed by our total expenditure. The gravy years have gone. These are times to reform.”
Mr. Osborne, who is a Fellow of the Society of Actuaries and past President of the Caribbean Actuarial Association, said that three key areas must be taken into consideration when looking at the future of the Social Security Fund. These areas are adequate benefits to ensure that people can live, affordable contributions to ensure that employers and workers can afford what it takes to provide these benefits, and the need to have a sustainable system.
He said that there must be a comprehensive system of social protection that reflects St. Kitts and Nevis’ value system and it has to evolve with changing circumstances taking into account the economic, social, political, and good customer service.
Mr. Osborne highlighted that 16 percent of wages is being spent but only 11 percent is being collected thereby leading to total income being less than total expenditure, which requires “now dipping into our reserves, dipping into our savings.”
“We see a downward trend when we see the size of the reserve shrinking to a growing expenditure,” he said, adding that while reserves are at 1.7 billion dollars it is relative to annual payout which amounted to 140 million dollars in 2022.
“On the current trajectory as is designed today, the contribution of 11 percent and the benefit rules that we have in place today, the Fund is certainly not sustainable,” Mr. Osborne said while saying that contribution rates would have to increase to 15 percent across the OECS (Organization of Eastern Caribbean States) with the next five to ten years.
“We have to decide for St. Kitts and Nevis and whether or not the benefits need to be looked at; we take away some; we add some new ones and do things differently to ensure that what we offer is what St. Kitts and Nevis needs at this time,” he said.
Mr. Osborne said that while St. Kitts and Nevis’ situation is not unique from most Caribbean countries, we have reached a fork in the road.
“More importantly is the fact that we need to find a way to ensure that people who are supposed to pay only get a business license renewed or only get to drive taxi or get to be a doctor or lawyer in the private sector if they comply with Social Security…checks and balances must be in place. If you don’t pay on the right hand, you cannot practice on the left hand,” Mr. Osborne said.