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NIB officials tell JSC: Higher retirement age by 2060
National Insurance Board (NIB) officials have been taken to task for the length of time they are projecting to increase the retirement age to 65. Before a Parliamentary Joint Select Committee (JSC) on Finance yesterday, they projected an incremental increase starting in 2025 and spanning a 35 year period to 2060.
JSC Chairman Sophia Chote, who noted that other Caribbean countries are changing the age in 8-12 years, expressed concern that based in those projections, “we are looking at 45 years to implement this part of your policy.”
She asked: “That is a lifetime. Why is it so long?”
NIC Executive Director Naila Persad-Poliah explained that the projection began in 2015 on the understanding that there will be a ten year period to allow people to plan.
“In 2025 it begins incrementally and does not go straight to 65, it goes to 61 and thereafter taking it to 65 in the year 2060, so it allows for planning,” she said.
Poliah argued that the incremental move is “about planning and allowing the population to plan their retirement” and the NIB is hoping the tenth actuarial review, which is due by June, will shorten the time for the retirement age to change. She said the NIB wants to ensure “monies will be paid for generations to come.”
Chote asked about the financial impact if the NIB used a ten year period instead of 35 years. NIB’s Fyard Khan said that is kind of information they are hoping to get from the actuarial review.
NIB Chairman Jacqueline Quamina admitted T&T is lagging behind many of its Caribbean counterparts on the retirement age but said the NIB is working with the timeline proposed by actuaries. She said the NIB is “getting less money every year and has been paying out more because people over 60 are living longer.”
The NIB currently pays a pension of $3,000 to retirees. The JSC heard that the system is designed so that that the existing pool of workers pays the benefits of past workers.
Poliah said income from contributions is no longer sufficient to cover expenses. Last year, the NIB used $700 million from its investment income to support benefit payments and for the 2018 financial year they will use $1.2 billion to support benefit expenditure.
Annually the NIB collects $4.5 billion but payments are higher than that. In 2017 they paid out $4.7 billion and this year they are projecting to pay out $4.8 billion.
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