Social Security

Bahamas National Insurance

According to the National Insurance Board the goals of the N.I. Scheme are to:

  • provide Social Security Coverage, in the form of Benefit Payments to insured persons and their dependents, against the following contingencies:
    • Sickness, Funeral, Invalidity, Maternity, Retirement, and on the death of the family’s bread-winner Survivorship, Industrial Injury, including Disablement, Death and Medical Care
  • provide a minimum level of Social Security coverage for persons who do not qualify for such Benefits as of right
  • effectively and efficiently administer and manage the National Insurance Program and Fund in accordance with the fiduciary principles laid out in the National Insurance Act and Regulations
  • assist with the sustained, orderly socio-economic growth and development of the country.

Commentary: National Scheme or National Scam?

National insurance” is a scheme (or scam) where the government takes your money, and hopes you die before they have to give it back to you (that way they can spend it elsewhere to “buy votes”).

However, I am not sure whether it is a Pyramid Scheme like the U.S. Social Security System, or not.

From the website of D. Shane Gibson, Minister for Housing and National Insurance (PLP):

Bahamian workers can brace themselves to pay more National Insurance contributions. The Government is set to amend the National Insurance Act and Regulations to make provisions for the increase. According to the seventh actuarial review of the National Insurance Fund, which was tabled in the House of Assembly by Minister of Housing and National Insurance D. Shane Gibson, the fund could be exhausted by 2029 if it is not increased. He said the review indicated it would become necessary to increase contribution rates from 8.8 per cent to approximately 17 per cent, with additional increases to 25 per cent between 2030 and 2060.

OK, so it is a pyramid scheme.

The reserves, which stand at $1.2 billion, though considered adequately funded, are still less than the value of benefits earned by past and current contributors.

The fund has fewer assets than it needs to cover its liabilities and has seen a steadily declining rate of return over the past 20 years, Mr. Gibson said. The actuary, he said recommends a new investment policy be devised so the portfolio will be better diversified and earn higher rates of return. To achieve this, new and more imaginative avenues for investing board funds will have to be found, including the option of placing a small portion of the fund overseas, he said.

While the year 2029 may seem far away, Mr. Speaker, the stark reality is, that the longer we defer our decision to make the necessary reforms and increase the contribution rate, the more severe will be the changes needed in the long term if NIB is to continue to fulfill its mandate to contributors, Mr. Gibson said.

The actuary, he said has taken a comprehensive look at the board’s financial position, benefits provisions and operations, which led to this determination. The report contains a summary of NIB’s financial history since it inception in 1974, 60-year projections of NIB’s income, expenditure and reserves, in addition to the actuary’s recommendations on ways of securing the long-term sustainability of the fund.

We cannot afford major reductions in NIB benefits and neither will we be able to afford contributions rates that are overly excessive. To prevent these from happening, several tough decisions will be required.

Mr. Gibson said that if the current rate of 8.8 per cent is not increased, the National Insurance Fund will be exhausted in the next thirty years. [“NIB facing Cash Shortage“]

National Insurance is a bad idea, because as a Bahamian citizen I hate for Bahamian politicians to hold onto my money. They did not work for it, they do not deserve it.

Of course, the government would reply that the majority of Bahamians are too stupid, too incompetent, and just too plain dumb to save money for the future. So it is the government’s job to take care of these imbeciles (the majority of whom elected them in the first place.  However, if the government thinks voters are too stupid to save their own money for when they are old, how can those same people be smart enough to vote for someone who has the power to ruin (and even destroy) an entire country? Voting–for the right person–is a far more intellectually complex task (though physically it is quite simple, you just have to paint an X next to the guy’s name who has promised you the most “favors”) as one must decide how the politician’s policies will effect the country over the long term.