by TONY BEST

PRUDENCE, BUT CERTAINLY not "recklessness" when it comes to Barbados' National Insurance Scheme (NIS) and managing its funds.

That assurance came from Prime Minister and Minister of Finance David Thompson as he voiced concerns in New York about potential serious long-term challenges which the scheme could face, mainly because of the aging of the island's workforce and population.

"Obviously we are concerned about the potential for challenges to the National Insurance," he told a 90-minute session of the editorial board of the New York Carib News weekly newspaper in Manhattan.

"I think the National Insurance itself is beginning to make the kind of strategic investments to obviate those kinds of concerns later on. But there is no guarantee that they would have that impact. So, it is something that constantly has to be reviewed.

"The worst thing possible would be to have recklessness by the Government in relation
to the structure of the National Insurance fund and scheme in Barbados. We promised we are
going to be prudent
in that regard."

The Prime Minister, who was feted by more than 300 people at the Combermere School Alumni Association's 60th anniversary awards dinner in Brooklyn on Saturday night, was responding
to a question about the long-term financial health of the NIS and about the possibility of extending
the official retirement age to allow skilled and experienced professionals and others to remain on the job beyond the
current retirement age
of 65 to 67 years.

With Barbadians living longer, on average about 76 to 77 years, about ten years longer than when the NIS scheme was launched in the 1960s, and with women having fewer children, experts predict that Barbados' population could resemble an "old folks' home" in the 2020s, a situation which could have serious implications for the NIS.

Major concern

According to a United Nations report, in 2005 the Barbados Government had expressed "major concern" about both the aging
of the population and the fertility rate which was
1.6 children per woman. The latter was below replacement level and it was one of the lowest in the Western Hemisphere.

Sir George Alleyne,
the highly respected former director of the
Pan American Health Organisation (PAHO), recently urged Caribbean countries, Barbados included, to take a hard look at their retirement policies to see if it was feasible to extend the
age. Such a review, he said, would depend
on the results of
actuarial studies.

Thompson said Barbados had already extended its retirement age from 65 to 67 years and had in fact acted on the advice of actuaries. But, he was quick to add, "There is only so much you can do in relation to extending the retirement ages and those kinds of things. They can have a medium term impact. But obviously, there are major concerns about the
long-term viability of the National Insurance Scheme in Barbados."

Similar issues

Thompson also said that freedom of movement under the CARICOM Single Market and Economy could prove
to be a financial
challenge for Barbados and its neighbours.

"There is also the issue of obligations which arise as a result of the creation of the Single Market and Economy, which we also have to look at and what Barbados offers vis-à-vis what other countries
offer and what we are going to offer citizens
of Caricom who are given the right
of establishment in Barbados," he said.

"So, there are even greater demands which could potentially be placed on our National Insurance Scheme. So that you can understand why there is an element of reluctance by some, or caution by some in relation
to the implementation
of freedom of movement
as envisaged by the Heads
[of government] for the next couple of years."