Barbados unemployment fund exhausted due to pandemic pressureThursday, March 04, 2021
BRIDGETOWN, Barbados (CMC) — The National Insurance Scheme's (NIS) Unemployment Fund in Barbados has been depleted, due to the high level of payouts during the COVID-19 pandemic, but there is no need to panic as claims will still be made, Acting Director of the National Insurance Department, Jennifer Hunte said on Wednesday.
She said the NIS has “adequate reserves” to meet claims, pointing out that five of the six funds it managed were “strong”.
“The largest fund is the National Insurance Fund and [its] investment portfolio at the end of January is BDS$3.8 billion (US$1.9 million). At that same time, the Unemployment Fund has been totally exhausted. The Severance Fund, US$74.1 million (US$37.05 million), the Catastrophe Fund, BDS$41 million (US$20.5 million), Retraining Account BDS$1.6 million (US$800,000) and the Sugar Workers Provident Fund, just BDS$15,842 (US$7,921),” Hunte disclosed at a press conference.
As it relates to the Unemployment Fund, which was hardest hit due to job losses resulting from the impact of the COVID-19 pandemic on businesses, she said measures have been put in place to ensure the payment of unemployment benefits.
“In terms of what the Unemployment Fund faced last year…we paid BDS$155.5 million (US$77.75 million). To put that into perspective, the previous year, we spent BDS$49.3 million (US$24.65 million). In 2018, we spent BDS$38.1 million (US$19.05 million), and in 2017, BDS$32.8 million (US$16.4 million). So, comparatively, you can see the impact of COVID-19 on the fund in 2020,” Hunte said.
“The investment portfolio was totally exhausted and the National Insurance Board agreed to utilize a significant portion of the portfolio of the National Insurance Fund to facilitate the ongoing, uninterrupted payment of unemployment benefits. This specific source was the early redemption of Government bonds to loan the Unemployment Fund. So, that is how we were able to keep paying unemployment benefits during last year, and how we would continue to pay them this year.”
The NIS official further stated that discussions were being had with the Ministry of Finance on the repayment of monies to the National Insurance Fund and recapitalisation of the Unemployment Fund.
She also disclosed that the NIS had processed millions of dollars in severance payments last year, given the redundancy.
According to Hunte, funds in the amount of BDS$18.3 million (IS$9.65 million) were processed and paid to employees whose employers had not paid the requisite contributions.
She continued: “We also paid BDS$3 million (US$1.5 million) as rebates to employers who met their requirement, and then got the 25 per cent rebate from National Insurance. Compare that with 2019, [where] we paid BDS$21.2 million (US$10.6 million) to employees and BDS$6.5 million (US$3.25 million) in rebates, so the Severance Fund still has BDS$74.1 million (US$37.05 million) in it, and that is there in the event that we have to process more rebates and employer payments for those employees whose employers did not meet that commitment.”
The Acting NIS Director also gave the commitment that the staff would continue to work to process all claims in a timely manner.
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