Tuesday, October 13th 2015.Richard Harrison: The Belize Social Security Board was established on June 1, 1981; shortly before Independence, with a loan of $50,000 from the Government of Belize and 26 employees.
In 2003, contributions were $41m and investment income was $15m; with benefits paid of $28.6m and operating expenses of $13.8m; resulting in income-over-expenditure of $14.6m and change-in-reserve of $251.5m.
In 2012, the last annual report published in their website, contributions were $64.5m and investment income $11.74m; with benefits paid of $60.2m and operating expenses of $19.6m; resulting in income-over-expenditures of $11.5m and change-in-reserve of $437.4m.
At the minimum contribution of BZ$13.50 per week, the contributions of $64.5m represents only 91,880 contributors, while the population between ages 15-64 totaled 191,491, or a total capture rate of 48% of the employable work force, or 64% of the employed work force of 144,000.
In 2003, private sector loans amounted to $59.6m, while in 2012 only $53.84m was reported under this category.
In 2003, total investments in private sector loans, mortgages and housing and real estate totaled $242.2m, which grew to $368.1m by 2012.
In 2003, the investment committee was comprised of Ms Lourdes Smith (Chair), Mr. Michael Polonio (Deputy chair, employers rep), Ms Narda Garcia (CEO), Mr. Hilly Martinez (Govt. rep), Mr. Antonio Gonzalez (insured persons rep) and Mr. Rolando Zetina (CFO).
The investment committee is currently comprised of Mr. Nestor Vasquez (Chair), Mr. Emil Mena (Employers rep), Ms Lorelei Westby (NTUCB rep), Mr. Norman Deuck (Govt rep), Mr. Richard Flowers (CEO) and Ms Irene Cruz (Board secretary).
The number of contributors was only 64% of the employed work force in 2012, which means that a large number of employed persons are not contributing. These will be the same ones that will benefit from non-contributory pension later in their life. The delinquents are always well rewarded in Belize.
For the 10-year period 2003 to 2012, the change-in-reserve increased from $251.5m to $437.4m, or an average of only $18.6m per year….which represents only 45% of 2003 contributions, and 29% of 2012 contributions. This shows that social security is highly inefficient, with an average of 63% of contributions being used up, and only 37% remaining in reserve for the workers who are actually making contributions these years, and who expect to receive benefits in future years.
With contributions of $64.5m in 2012, operating expenses were $19.6m or 30% of revenues. This shows that the Belize Social Security Board is a very top-heavy organization that runs on very expensive fuel.
While it costs more to run this organization every year, they actually produce less. Income-over-expenditure in 2003 was $14.6m, while in 2012, with much larger contributions, it was only $11.5m.
A lot of private sector loans, mortgages and real estate that appeared in 2003 do not appear in 2012. A deeper investigation would need to be done to know if these were paid off, or merely written off.
There is evidence of creative accounting in the reports. For example, 1000 acres in San Pedro was reported as $4m in 2003. Apparently 509 acres of it disappeared, and then in 2012 only 3,491 acres of it was reported at $10.64m, 166% the original value.
There is evidence that both political parties, when in power, uses the social security as a slush fund to finance its pet projects and those favored by the party in government.
With staff housing loans increased from $3.3m in 2003 to $4.0m in 2012….and considering the high cost of operations, mostly salaries and benefits to staff….it would appear that the staff at the BSSB is well compensated to turn a blind eye and keep silent?….perhaps so they can keep their relatively lucrative jobs?
The last annual report that is available on the Belize Social Security Board (BSSB) official website is for 2012. There is obviously a lot that has happened between then and 2015 that the general public does not need to know about.
The Border Management Agency seems to enjoy some special place in the market for BSSB financing? Perhaps this needs some explanation.
Why would the Government of Belize owe the BSSB $2.22 million in 2012?
The workers of Belize need to take special and keen interest in the affairs of the BSSB, if they expect to get fair returns from their savings in contributions over the years. All the workers unions, farmers associations and credit unions should get together to contribute towards financing an independent management and financial audit of the Belize Social Security Board, which requires the contracted party to conduct analysis and make recommendations on how to improve the efficiency and effectiveness of this important institution OWNED by all the workers of Belize.
The views expressed in this article are those of the writer and not necessarily those of the Belize Media Group.
This article was written by Richard Harrison, Belizean investor in production and services businesses in Belize. He holds a Masters in Business Administration degree from Lancaster University.
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