Government Defends Gradual Retirement Age Hike To Save NIS
Minister of Planning, Economic Affairs and Development and Minister in the Ministry of Finance, Dr. Kennedy Swaratsingh, says the National Insurance Board (NIB) Fund would have become defunct by 2033 if the Government had failed to take action.
Speaking at a post-budget discussion on Tuesday, he defended the move by the Government to take action to gradually increase the retirement age, along with increasing contributions, revealing that the National Insurance Board is facing a financial crisis.
He said failure to take action would have resulted in an unwanted outcome.
« The budget would have pointed to a number of things, would have tried to resolve some things that have been outstanding, NIB is one of them. That actual report has been sitting in the Ministry of Finance since probably 2019. And that actual report spoke to the fact that the NIB fund would have become defunct by 2033 if we didn’t take action. »
Minister Swaratsingh pointed to an ageing population and a widening financial gap as key contributors to the crisis.
« One is that we are living in a population that is ageing. And so it is costing NIB now currently $2 billion annually more than they’re taking in. So you have to address that disparity. The other thing of course that it points to is that is that people can be productive long after they come like me and we turn 60. And therefore we have to talk about how we can move the retirement age to where people can be more productive in their later life. »
Finance Minister Davendranath Tancoo also emphasised this during his budget presentation on Monday, noting the weakened integrity of the NIB Fund.
He stated: « Since 2020, benefit payouts have consistently exceeded contributions, forcing the NIB to liquidate its assets to meet its obligations. The 11th Actuarial Review projects that if nothing is done, the Fund will be depleted by 2033 to 2034. »
Minister Swaratsingh stressed the need for the Government to gradually raise the retirement age, pointing out that even other regional territories have started the process.
« Barbados is 67. We are now moving gradually, so by 2028, 61 will be the retirement age and gradually move up over 10 years until 2036. So there are a couple of things that the budget is beginning to address. The budget, of course, looked at other philosophical issues that as a country we have to look at. But the budget obviously can’t solve everything. »
Minister Tancoo announced during the budget that starting in January 2028, the age for a full NIS pension will increase by one year every two years, until it reaches age 65 in 2036.
