By Sue-Ann Wayow
THE aging population in Trinidad and Tobago is of major concern for the National Insurance Board of Trinidad and Tobago (NIBTT) and recommendations will be reviewed in charting a way forward.
Finance Minister Colm Imbert on Friday in Parliament read the Annual Report of the National Insurance Board for the year ended June 30, 2020.
According to information from the Central Statistical Office, Trinidad and Tobago was being classified as an aging society with 13.4% of the population being 60 years and over.
Imbert said, “This dynamic is represented by a decrease in the number of births resulting in a decline in the working population and a sharp increase in the number of NIS pensioners. Furthermore, since 2010, the number of pensioners has increased by over 50%, with the number of pensioners projected to increase again by as much as 40% in the next 10 years. This huge increase will put a strain on the system, as a shrinking contributory base is required to support a growing number of beneficiaries.”
The recommendations made in the 10th Actuarial Review of the National Insurance System, laid in Parliament in March 2019 must be reviewed he said.
These included increasing the retirement age to 65, increasing NIS contributions and including the Self-Employed and Migrants in the NIS system.
“I wish to make it clear that contrary to rumour, under this Government, NIS pensions will continue to be paid as and when required, in accordance with established procedures and in accordance with the law,” Imbert added.
He said consultations will be conducted with all involved before any final decisions were made.
The minister who highlighted the economic challenges faced during the pandemic said, “Notwithstanding the challenges, the NIBTT has been able to meet its overall Contribution Income target for fiscal year 2020 on the strength of arrears collected, inter alia, while it observed a decline on the level of regular Contribution Income as a result of depressed economic conditions due to the Covid-19 pandemic.”
Monies recovered
The NIBTT continued to utilise all legal measures to ensure the recovery of monies owed. Through court agreements, promissory notes as well as litigation actions, the NIBTT recovered a total of $128.6 million in contribution arrears, penalties and interest from 22 non-compliant employers. In addition, two judgements were obtained against employers and or directors for arrears of contribution, penalties and interest payments in the amount of $1.9 million, Imbert stated.
Payments and Revenue
Imbert said beneficiaries received approximately $5.4 billion total, which represented an increase in expenditure of 4.1% over the $5.1 billion recorded in the previous period.
The number of long-term beneficiaries increased by 2.7% to 177,410 persons in 2020, from 172,703 persons 2019. Payments to this group totalled roughly $5.1billion and accounted for 94.7% of total benefit expenditure.
Payments to short-term beneficiaries totalled $204 million, a decrease of about 11% from around $230 million in 2019.
For employment injury, the number of beneficiaries decreased by 5% to 4,759 persons in 2020, from 4,985 persons in 2019. Payments to this group totalled $79.7 million and accounted for 1.5% of total benefit expenditure.
Imbert said that for 2020, 154 appeal notices were received by the Appeals Tribunal, of which 171 were issued responses by the NIBTT. This figure includes some appeal matters from the last financial year.
The minster said, “ In the area of revenue, during the 2020 financial year, Contribution Income of the NIS was recorded at approximately $4,686 million, a total of $68 million above the budgeted estimate of $4,618 million. Income from penalties and interest for the review period amounted to close to $34.6 million, more than double the $15.3 million collected in the previous year.”
As at June 30, 2020, the market value of the investment portfolio of the NIBTT decreased by 0.44% to around $27.7 billion, from $27.9 billion in 2019.
“This decrease was mainly attributable to approximately $120 million in unrealised losses with equity and fixed income portfolios accounting for $10 million and $87 million respectively of these unrealised losses,” Imbert said.
With reference to equities, Imbert said the Equity Portfolio, which accounted for the largest asset class of the total fund, currently stands at $14.6 billion, reflecting an increase of approximately 0.8% or $120 million, while the Fixed Income portfolio decreased by 6.1% or $605.7 million to approximately $9.4 billion and had a purchased yield to maturity of 5.2%.
He said, “The worldwide pandemic significantly affected global markets in 2020, as equities in particular experienced the steepest declines since the global financial crisis. As such, the NIBTT’s net investment yield experienced a decline from 8.1% in fiscal year 2019 to 4.4% in fiscal year 2020.”
The decrease in the NIBTT’s portfolio was further impacted by withdrawals of $950 million from the Investments Cash Account to support the shortfall between expenditure and Contribution Income he added.
Contributions
The number of contributors in the National Insurance System (NIS) decreased by 4% but the number of beneficiaries increased by .9%.
Contributors for 2020 was recorded at 404,197, declining from 420,638 in 2019, while the number of beneficiaries increased to 204,613 from 202,800 last year.
The contribution income collected amounted to approximately $4.69 billion, decreasing by 0.44% from $4.71 billion earned in 2019.
The administrative cost for the 2020 period was recorded at $251.2 million, increasing by 14.3% from $219.7 million in 2019 and also increased as a percentage of contribution income, from 4.7% in 2019 to 5.4% in 2020. The net yield of the investment portfolio for the 2020 period was 4.4%, compared to 8.1% in 2019, the minister said.
And for reciprocal agreements, during the financial year 2020, 225 of 534 backlog applications made by persons in Canada/CARICOM accessing Trinidad and Tobago benefits through their relevant Social Insurance Partners were authorised and payments finalised Imbert stated.
