Social Security In The CARICOM Single Market

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Social Security In The CARICOM Single Market
EconomyA Current Assessment And A Road Map For
Achieving Future Financial Sustainability
Income Security Derek Osborne

• Caribbean Actuarial Association
• 14th Annual Conference
• Dec 3, 2004
• Port of Spain, Trinidad

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Report Outline

• Social Security Today
• Country-specific comparative analysis
• Strengthening Social Security
• The Road Map
• Appendices

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Pictures Tell Almost The Whole Story
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Private Sector Contribution Rates, May 04
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Expenditure Rate, 2003
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Contribution Expenditure Rates, 2003
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Surplus Rate, 2003
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Reserve-Expenditure Ratio, 2003
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Funding Levels Surplus Rates, 2003
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of Active Contributors As of Employed
Population, 2003
British Virgin Islands, St. Kitts-Nevis, Turks
Caicos Islands gt100
Anguilla, Antigua-Barbuda, Barbados, Montserrat,
St. Vincent The Grenadines 85 to 100
Bahamas, Belize, Dominica, Grenada 70 to 85
Guyana, St. Lucia, Trinidad Tobago 50 to 70
Jamaica 20 to 25
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Ratio of Wage Ceiling To Insurable Wages, 2003
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Benefit Exp. As Of GDP, 2003
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Reserves As Of GDP, 2003
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Min. Ret/Age Pension As Of Avg. Ins. Wages, 2003
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Avg. Ret/Age Pension As Of Avg. Ins. Wages, 2003
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Of Contributors Per Pensioner, 2003
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Pension Expenditure (Paygo) Rate

• Pension Total Pension Exp.
• Exp. rate Total Ins. Earnings
• Pensioners x Avg. Pension
• Workers x Avg. Ins. Wage
• Pensioners x Avg. Pension
• Workers Avg. Ins. Wage
• or Aged Dependency Ratio x
  Replacement Rate

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Cont. Exp. Rates NIB TT
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How Much Will SS Benefits Cost in Barbados?
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Effect of Barbados Reforms on Projected Reserves
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Caribbean NI/SS Investments, December 2003
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Caribbean NI/SS Investments, December 2003
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10-year Avg. Nominal Rate of Return On Reserves
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10-year Avg. Real Rate of Return On Reserves
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Avg. Admin. Expenses As Of Contributions,
2001-03
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Individual Country Ratings
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Rating Categories

• Benefits Package
• Scope of coverage, qualifying rules pension
  equity
• Actual coverage benefit relevance
• Administrative efficiency
• Investments
• Long-term sustainability at current rules and
  contribution rates

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The Ratings
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Securing The Future of Caribbean Social Security
Schemes Both Socially Financially The Four
Ingredients
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Ingredient 1

• Healthy growing economies
• Positive real GDP growth
• Productivity growth
• Stable and moderate inflation rates
• Strong public finances

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Ingredient 2

• Well designed systems
• Relevant, equitable affordable pensions
• Coverage benefit rules with explicit objectives
  
• Contribution flexibility for the self-employed
• Equitable CARICOM Social Security Agreement
• Financially sustainable systems

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Ingredient 3

• Accurate efficient records administrative
  system
• Low cost administration
• Quality customer service care
• Benefit payment accuracy
• Data integrity
• Timely accurate reporting

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Ingredient 4

• Honest Responsible Government
• As policy maker
• As employer
• As borrower
• As tenant
• As legislator
• Selecting boards
• Transparency disclosure
• Defined roles for Minister, Board CEO

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One Regional Social Security System
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Levels of Potential Integration

• Level 1. Administrative Integration
• Level 2. One pension system
• Level 3. One social security system

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Social Security in CSME

• Most systems get a passing grade
• Most meeting social objectives
• None in financial crisis
• Improvements needed to
• Governance, investments, administration
• Policy reforms needed soon
• Financing pensions
• Broadening SSs scope
• Health care unemployment benefits

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Social Security In The CARICOM Single Market
EconomyA Current Assessment And A Road Map For
Achieving Future Financial Sustainability
Income Security