By Spokesman Newsroom
BASSETERRE, St. Kitts (Thursday 20th June 2024)-The St. Christopher and Nevis Social Security Board has announced its ongoing actuarial exercise to ensure the sustainability and protection of the Social Security fund geared towards avoiding challenges 15 to 20 years from now so as to keep the benefit promises.
Such details were disclosed at a Social Security Reform media press conference held on Wednesday 19th June 2024, at the Social Security headquarters located at the E. St. John Payne Annex, Robert L. Bradshaw Building, Bay Road, Basseterre, St.
Kitts. “Today’s press conference aims to bring attention to the importance of maintaining a strong, and resilient Social Security fund and to begin discussions relative to the implementation of social security reform measures,” stated Chairperson of the Social Security Board of Directors Janet Harris.
Assuring the public of the fund’s current solvency, she explained, “The Social Security fund is solvent and can meet its financial obligations to over 8,000 pensioners and to the insured persons who make claims for the various benefits offered by Social Security.” However, Harris stressed the need for proactive measures to ensure future sustainability. “As a mature fund, it would be irresponsible as administrators to not assess the current and future demands of the fund and at the same time consider a recalibration of social security structures in line with what is required.” In reflecting on the 46-year history of Social Security since its inception in 1978, she also emphasized its role in providing both short-term and long-term benefits to insured persons during periods of illness, invalidity and old age to name a few.
“Social Security today continues to be a fortified pillar of our economy,” Harris stated. She highlighted the fund’s contributions not only to beneficiaries but also through its corporate social responsibility portfolio with major injections to health, education, national security, and other sectors of the economy “all of which contribute to a dignified standard of living across our federation.” Meanwhile, Actuary of the Social Security Board Derek Osborne, who arrived in the Federation this week for such preparatory work and engagement, including the media conference, explained the critical role of actuarial reviews.
“I’m here in St. Kitts Nevis to talk about social security and to share with you the past, but more certainly the future. The actuary’s role, as the chairperson said, is to assess whether the contributions that have been made are able to sustain the promises that have been made to those people who have already gone before us and are now getting a pension, and those who are still working and look forward to benefits while they’re working and pensions when they stop working.” Osborne illustrated the importance of long-term objective of the fund with an example.
“If you think about a 20- – LOCAL NEWS – year-old who’s going to leave school this year or this month and start looking for a job, when they find that job, they’re going to expect that for the next 42 years, social security will be there to provide them with a short-term benefit…maternity…sickness…and if they become injured there’s a benefit for that as well; that is the 3
promise we’re making to them but the bigger promise, however, is when they turn 62, which is 42 years from now, that the fund will still be there, and whatever promise we make to them as a benefit for life is going to be payable on time every month until they die.” He added during his presentation: “So if you look at this picture, it’s a balancing act that we have to play between having benefits that are adequate, contributions being affordable, and a long-term sustainable fund so that that person that they spoke about, and maybe even his or her child 60 years later, is still able to benefit from a social security fund. And that’s the main reason why the actuary has to come in every three years.
We are trained in modeling and making assumptions for protecting the population, the economy, and social security fund to advise government in terms of reforms, to ensure that the promises you’re making are still going to be met 30, 40 years from now.” Highlighting the financial trends, Osborne pointed out, “In the last three years, 2021, 2022, and 2023, age pension alone exceeded contribution income. So the other benefits had to come from investment income.
This year, total contributions and investment income are less than expenditure. So we’ve reached a point where we’re tapping into investments made over the last 40 years to help pay benefits.” He further explained the urgency of the situation: “As the chairlady said, $1.7 billion we have in assets right now; the fund is solvent.
There’s no challenge paying benefits. This year, next year, and the year after. The challenge could be, however, 15, 20 years from now.” Osborne emphasized the need for reforms to avoid fund depletion. “Now, as I said, for the first 35 years of the fund’s history, the contributions exceeded expenses and therefore we had savings that were invested in different opportunities, deposits, bonds, loans ,a little property and some overseas, and those reserves have now almost capped out.
You see the trend; they were increasing…reached about $1.7 billion some three, four years ago have remained pretty steady since then, and actually now starting to go down. An indication that the maturing fund have reached a point where change is required if you want to avoid that fund being depleted in the not the distant future.” As understood, a series of public engagements are expected to take place on topic including town hall meetings.
The various published actuarial reports can be reviewed at www. socialsecurity. kn. Front Page Photo: A look at a ‘balancing scale’ graphic as it relates to sustaining the social security fund as shared by Actuary of the Social Security Board Derek Osborne during his presentation a the Social Security Reform media press conference held on Wednesday 19th June 2024 (SKNIS Photo) affected by this unfortunate event.
