Basseterre, St. Kitts (SKNIS): The case for urgent reforms to the Social Security structure in St. Kitts and Nevis was stressed on the radio and television programme InFocus on Wednesday, July 10, 2024, as officials undertake broad-based public education and engagement.
Director and Chief Executive Officer of the Social Security Board, Christopher Louard, told the show’s audience that the Fund reached an inflexion point in 2017 when its total expenditure surpassed contribution income.
Demographics from the recently published 2021 Housing and Population Census revealed that St. Kitts and Nevis has a declining birth rate. Further, due to improvements in healthcare, citizens and residents are also living longer. This means that more persons will be increasingly drawing from the fund while contributions will be decreased. Experts predict that the $1.7 billion that Social Security has in reserves will likely be depleted by 2040 unless urgent reforms are taken.
“The cost of the Fund in 2023, was 16 per cent – the cost of our benefit expenditure and the cost of our administrative expenditure .. So we are seeing that we are collecting in terms of contribution income at 11 per cent but because of that significant increase in age pension … you can see there is a gap,” Director Louard stated, noting that the number of persons collecting age pension was in keeping with projected figures.
“We need to make reforms that will ensure that that Fund is there in perpetuity and at least for another generation,” Director Louard stated.
Recommendations in the Actuary Report highlight three critical areas where meaningful consideration can be made. It proposes consideration for an increase in the contribution rate, amendment to the pension formula, or increasing the pension age.
Neighbouring countries including Barbados, Dominica, Saint Lucia, Grenada and St. Vincent and the Grenadines have already reformed their social security systems to ensure they remain sustainable.
“There are others that have made these changes over the years and I have seen the benefits in terms of the recalibration. … They have recalibrated their Social Security Fund over the years and what we are saying based on where we are, our demographics and our finances, we need to do that recalibration as well,” Mr. Louard stated.
Mr. Louard and other officials from the St. Christopher (St. Kitts) and Nevis Social Security Board are holding widespread consultations with stakeholder groups to raise awareness about the challenges confronting the Fund. Public consultations are also taking place. The feedback and suggestions during the meetings are collected and will help to inform reform recommendations that will ultimately be submitted to the Cabinet for consideration.