Pension no problem for NIB, says chairman

THE National Insurance Board (NIB) is well positioned to honour the expected increasing pension obligations, which is expected to increase annually to approximately US$154 million in ten years.

That was the assurance given by the NIB’s chairman Kenneth Henry yesterday when he addressed an insurance seminar at the Hilton Trinidad entitled “Advanced Pension for the 21st Century.” Henry told his audience that in its 32-year history, the NIB, through prudent management, had built an asset base of TT$10.7 billion or US$1,700 million. He said by 2025, pension obligations is expected to reach US$473 million annually, since many of the persons born during the baby boom era would attain retirement age. He said the trend of increasing pension obligations was a global one, since “people were living longer, while falling birth rates reduced the level at which the retiring workforce and indeed prospective pension contributors, are being replaced.” Henry said as a result, financial strain will be placed on the pension system.

Therefore, he said, “prudent management of Social Security funds” was essential for the viability of the insurance system and the falling ratio of contributors to beneficiaries mandated that close attention be paid to the investment of pension funds and the principles that govern such investments. To that end, Henry said a seminar will be hosted in April with a focus on investment of pension funds. Government has already taken steps to improve the benefits and funding of the insurance scheme.

Junior Minister of Finance Conrad Enill, also addressing the seminar, reminded participants of the increases — $1,000 monthly pensions, child benefit of $300 monthly, $2,000 maternity grants and $4,000 funeral grants. He reiterated that the cost of the improved benefits to be financed by employers and employees would not be immediate and the burden would be eased over a period of three years. As of March 1, 2004, the contribution rate will increase from 8.4 percent to 8.7 percent, on January 3, 2005 it will move to 9.3 percent and on January 2, 2006 it will settle at 9.9 percent. The seminar continues at the Hilton Trinidad today.