NIS way past target
Need for more variety in where funds are invested, says scheme chairman
Government borrowing from the National Insurance Scheme (NIS) is way past target, according to Minister of Labour and Social Security Esther Byer-Suckoo.
She made that disclosure last night as she indicated that borrowing had amounted to almost half the NIS funds available for investment, as NIS chairman Dr Justin Robinson spoke of an urgent need for more variety in where funds are invested.
Delivering opening remarks at the annual lecture of the National Insurance Scheme (NIS) entitled The Global Economic And Investment Outlook: New Frontiers in Investment Strategies, last night at Frank Collymore Hall, the minister said: “The portion [of investment funds] held in Government of Barbados debentures is 43.8 per cent, according to our last actuarial review, in excess of the 25 per cent target.”
“The funds [are] being used for major capital, hotel refurbishment, and social infrastructure projects. All of these are important considerations for any investment unit.”
Byer-Suckoo had explained that the 25 per cent “target” on Government borrowing was set by policy and was supervised by an NIS Investment Unit, that she said is managed and staffed by a specialized technical team that reviews and analyses various investments with a view to maxmising returns on the total investment in the various funds controlled by the National Insurance Department.
The minister said the Investment Unit had been instrumental in increasing NIS assets and had so far acquired an annual rate of return of six per cent.
“This is a significant achievement, providing a valuable resource which the department has been able to access in order to assist with the payments of benefits. This is key now that contributions are declining. This unit has provided very sound and comprehensive advice to the National Insurance Board since its inception and has helped in the development of a very attractive investment portfolio,” she said.
The Frank Collymore Hall presentation was made by veteran international market strategist John Stoltzfus, and formed part of the NIS Week Of Activities to observe the agency’s 47th anniversary.
Speaking immediately after Byer-Suckoo, Robinson said given Barbados’ population dynamics, income from NIS contributions is now roughly equal to what is paid out in benefits.
“So in terms of the sustainability of the NIS, the investment income is quite critical,” he said. “The investment frontier is continually changing. One of our keys and goals of the NIS is really portfolio diversification,” added Robinson, who is also Dean of faculty of Social Sciences, UWI, Cave Hill.
“We have about $180 million invested outside Barbados, and we would like to see that amount grow as we diversify. What’s happening in the global context is quite important for us as an organization.”
Last night’s lecturer Stoltzfus, chief marketing strategist for the New York-based investment firm Oppenheimer Asset Management, Inc., gave some insight into the economic standings of several countries and emerging markets across the globe.
As Barbados tries to pull itself out of economic problems, Stoltzfus said there is a “solution to every economic problem [but it requires] cooperation and hard work”.