IN 2005, there were some six people between the ages of
16-59 for every single over-60 person in Trinidad and Tobago.
By the much-vaunted 2020, there will be fewer than four such
people for each over-60 citizen, and this ratio is projected
to fall to two such working age people for every one over
60 by 2045.
These cited projections come from the recent seventh Actuarial
Review of the National Insurance Board, which also notes that
currently, for every one person benefiting from an NIB pension,
there are a little over four contributing employees.
By 2020, it is anticipated that there will be fewer than three
contributors to every one NIS pensioner. By 2044, this ratio
is projected to fall to below two employed contributors to
every one NIB beneficiary.
The reality facing Trinidad and Tobago is the ageing of the
population. Already the under 14 and 59 age groups are in
decline, relative to the over 60.
The T&T population is anticipated to peak at 1.5 million
in 2035 and then to decrease to 1.4 million by 2055: by which
time the number of pension-age people would have tripled.
It is anticipated, in fact, that there will be more pension-age
people than children as soon as 2025.
There are two main reasons for these population ageing trends.
First, people are living longer. Second, women are having
few children.
Will the NIB go bust?
The projections are that by 2037 the NIB’s income will
be less than its total expenditure. The seventh Actuarial
Report suggests that this deficit could be financed for a
time by divestment and liquidation of the NIB’s assets.
Eventually, by 2048, the fund would be completely depleted:
ie the NIB would go bust by mid-century.
There are a number of assumptions that have been made in the
seventh Actuarial Report, including no net out-migration.
Given other trends in the society (including a probable third
economic bust within a decade), this may prove to be incorrect,
and the result could be an earlier than expected lowering
of the working age population, thereby accelerating the day
of NIS reckoning.
Policy implications
What, then, are the implications of these actuarial projections,
including less optimistic scenarios in terms of the working
age population?
There is no cause for panic, but there certainly is reason
for early, anticipatory action.
In last week’s column, I suggested that T&T should
save at least 20 per cent of the more than likely $300-350
billion windfall income over the coming five years (Potentially
higher if there are revisions to over-generous current tax
concessions).
One use of such savings would be to buttress the country’s
NIB system, given the projected trends.
It would be in the collective longer-run self-interest of
the current working population to seek to augment national
savings by “fattening” the NIS pension fund via
savings from the hydrocarbon windfall.
Who will bell the cat?
Many who are in key positions to influence the avoidance of
an NIS crisis looming in the not so distant future will not
anticipate personal dependence on State pensions in their
old age, as opposed to private insurance and other investments.
They are, therefore, likely to be as dismissive of these concerns
as they were shortsighted about crime, when it seemed to be
concentrated in a few areas and affecting only “them,”
not “us.”
For most, including public servants, it is likely to be disastrous
to make any such assumption.
The challenge, therefore, is for institutions that represent
the majority target groups in the population to become active
on this question NOW!
I refer to trade and credit unions, non-governmental organisations
and (Oh! I almost forgot) political parties, which, in theory,
ought to have a life of their own beyond general elections
and to represent, in particular, the cheering masses whom
they clothed, so generously plied with food and drink and
with party jerseys a mere month ago.
