The COVID-19 pandemic has wiped out the National Insurance Scheme’s (NIS) unemployment fund, the social security fund’s chief declared Wednesday but she sought to assure that Barbadians who qualify for the benefit won’t be adversely affected.
Jennifer Hunte, the NIS’s acting director, said money has been drawn from the mainline NIS fund to allow it to pay jobless claims.
Chairman of the National Insurance Board Leslie Haynes, QC, revealed that the NIS had paid out over $155 million in claims last year.
The NIS had received 50,000 unemployment claims from 38,000 people, he told journalists.
Haynes said 4,000 of those did not qualify, resulting in around 34 000 people receiving unemployment benefits.
Hunte disclosed that unemployment benefit payouts rose from $32.8 million in 2017 to $38.1 million in 2018 and in 2019, $49.3 million.
Hunte explained that the unemployment fund was the only one of the six funds managed by the NIS that had been exhausted, the others being the NIS fund, severance fund, catastrophe fund, retraining account and the Sugar Workers’ Provident fund.
She explained that the NIS fund was the largest with an investment portfolio of $3.8 billion as of the end of January, while the severance fund was $74.1 million; catastrophe fund $41 million, retraining account $1.6 million and the Sugar Workers’ Provident Fund stood at $15,842.
NIS took the decision to cash bonds from the NIS fund to ensure it could continue to pay unemployment benefits, the NIS acting director added.
Hunte told journalists: “The investment portfolio of the Unemployment fund has been totally exhausted…the fund has been severely tested and the other overall portfolio of funds remains strong. The reserves of the NIS are strong, we have adequate reserves to meet claims we are required to pay.
“The portfolio, as I advised, was totally exhausted and the NIS board agreed to utilize a specific portion of the portfolio of the NIS fund to facilitate the ongoing, uninterrupted payment of unemployment benefits. Now, this specific source was the early redemption of some 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 will continue to pay them this year.
“The unemployment fund will need to be recapitalized, the NIS fund will need to be repaid. Both of those matters are under discussion and the figures are being finalized in conjunction with the Ministry of Finance.”
Hunte said while the NIS paid out over $20 million from the severance fund in 2020, it still remained healthy.
She said: “A number of persons were made redundant and the NIS fund processed funds in the amount of $18.3 million to those employees whose employers had not paid and we also paid $3 million as rebates to employers who met their requirements and then got the 25 per cent rebate from NIS.”
Comparatively, in 2019, the NIS paid $21.2 million to employees in severance and $6.5 million in rebates to employers, Hunte said.