IMF Working Papers

National Insurance Scheme Reforms in the Caribbean

Author/Editor:

Koffie Ben Nassar ; Joel Chiedu Okwuokei ; Mike Li ; Timothy Robinson ; Saji Thomas

Publication Date:

October 17, 2016

Electronic Access:

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Summary:

Weighed down by population aging, slow economic growth, and high unemployment, National Insurance Schemes in the Caribbean are projected to run substantial deficits and deplete their assets in the next decades, raising the prospects of government intervention. With the region highly indebted, this paper quantifies the impact of three parametric reforms—freezing pension benefits for two years, raising the retirement age and increasing the contribution rate by one percentage point—that, if implemented, would put the pension schemes on a stronger financial footing. While the appropriate combination of reforms necessary to eliminate the actuarial deficits varies depending on each country’s circumstances, most countries need to undertake reforms now or risk even higher taxes, lower growth and unsustainable debt dynamics.

Series:

Working Paper No. 16/206

Subject:

Aging Antigua and Barbuda Asia and Pacific Bahamas, The Barbados Caribbean Contingent liabilities Dominica Dominican Republic Government expenditures and welfare programs Grenada Haiti Insurance Jamaica Old age pensions Pension reforms Public debt Retirement Saint Kitts and Nevis Saint Lucia Saint Vincent and the Grenadines Social security Trinidad and Tobago Western Hemisphere