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Social Security counts political cost of new contribution scheme

Posted: Wednesday, June 19, 2019. 9:07 am CST.

By Aaron Humes: Sometimes, the right thing to do isn’t necessarily what is popular.

 That, in essence, is the basis of a three-page Cabinet memo written by former Government C.E.O. Dr. Colin Young, in his capacity with the Social Security Board, as he sought to sell the Executive on revamping the Social Security contribution scheme just eighteen months before elections are due.

 The Opposition People’s United Party has tried to spin it as the United Democratic Party and the Government trying to claim an advantage from an unpopular decision, and directly interfering in the affairs of a statutory board stacked with their cronies and lackeys against the Belizean people.

The last time rates were increased, from 7 to 8 percent, was in 2001, while actual contributions were last increased in 2003.Already having the backing of the business community and trade unions which are represented on the SSB, all that remained was to convince the Prime Minister and Minister of Finance Dean Barrow – and Dr. Young said it was hardly easy.

   “…what I did is I pointed out to the Prime Minister that yes, you will have some impacts of this, but the right thing to do, despite the political fallout that will come from it, is to do what it will take to safeguard SSB. That is what occurred. There was no sinister motive here. Too often, I have seen, in my capacity as [former] CEO, in the Government of Belize, where sometimes decisions are not made because of the political calculus. In this case, I am pleased that I was able to convince the Government to do what is absolutely necessary to safeguard the fund,” Dr. Young said.

 He had the backing of board chairman Doug Singh, a former Cabinet Minister, and UDP chairman who also heads the Election and Boundaries Commission. “The memo essentially said that there are political costs to this decision, and the memo suggested that there is an even greater cost if you don’t make it. So, it was not about providing to the party in government any advantage. It was actually reducing the disadvantage. So, it’s a complete different optics, from what is being purported in the (People’s United Party’s) release,” Singh said.

 Singh could not resist pointing out that the P.U.P. had its role to play in the current state of affairs: “The investments have been prudently down, reviewed, managed and implemented. So much so that today the investment portfolio at the Social Security is at ninety-nine point four percent performing. This growth is in spite of the hits that have been taken at Social Security on program and projects such as the mortgage securitization, the Galleria Maya, the Intelco. So despite these hits that have been taken on the books at S.S.B. most of which were taken during that period there still has been this level of growth. I need to point out that those hits were not under a U.D.P. administration. It was under the P.U.P.’s administration. Of all the parties that have something to lose in making this kind of noise, the People United Party [has the most to lose] because all the losses that were made as a result of bad investments happened under their administration. So they do not have the moral conviction to be making these kinds of statements.”

 According to Singh the Fund is estimated at a healthy $459 million, 70% more than in 2008.

 Singh also said the P.U.P., whom they met with last year during consultations, were essentially warned about making politics of the issue, as if the Government had deferred and they were to form the next Government, “this could end up being your harness, your yoke to bear.”

But the fact remains that even after the current round of increases finishes in 2021, the Board will need to come back for more as early as 2024 or 2025.

To help forestall that, the Board has been implementing its own internal reforms, including closing several sub-offices countrywide; making Social Security cards renewable one time only for a fee of $26; implementing energy efficiency; moving to direct deposit of funds instead of cheque cashing, and convincing Government to fully take on the National Health Insurance scheme and in two years, the non-contributory pension scheme.

 

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