National Insurance Scheme Reforms in the Caribbean

IMF Working Papers, October 17, 2016

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National Insurance Scheme Reforms in the Caribbean

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Bibliographic details

• Authors: Koffie Ben Nassar, Joel Chiedu Okwuokei, Mike Li, Timothy Robinson, Saji Thomas
• Published: October 17, 2016
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781475545432.001

Summary and context

• Authors: Koffie Ben Nassar, Joel Chiedu Okwuokei, Mike Li, Timothy Robinson, Saji Thomas
• Date: October 17, 2016
• Core problem: National Insurance Schemes in the Caribbean are weighed down by population aging, slow economic growth, and high unemployment, and are projected to run substantial deficits and deplete their assets in the next decades, raising the prospects of government intervention.
• Fiscal context: The region is described as highly indebted, increasing the cost and difficulty of government support for insurance scheme shortfalls.

Main reforms analyzed

• The paper quantifies the impact of three parametric reforms:
  • freezing pension benefits for two years
  • raising the retirement age
  • increasing the contribution rate by one percentage point

Findings and projections

• The three parametric reforms, if implemented, would put the pension schemes on a stronger financial footing.
• 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
  • unsustainable debt dynamics

Policy implications and recommendations

• Implement parametric reforms (as defined above) to strengthen pension scheme finances.
• Tailor the combination of reforms to each country’s specific circumstances to eliminate actuarial deficits.
• Act promptly to avoid more severe fiscal consequences (higher taxes, lower growth, unsustainable debt dynamics).

Subject classifications and keywords (as listed)

• Subject: Aging; Expenditure; Income; Labor; National accounts; Pension spending; Pensions; Population and demographics; Retirement
• Keywords: Aging, Asia and Pacific, Caribbean, Contingent Liabilities, contribution income, contribution rate, economic growth, Europe, Global, Income, Jamaica, Jamaica NIS, NIS viability, Old Age Pensions, pension scheme, Pension spending, Pensions, Public Debt, rate, Retirement, retirement age, Social Security, WP

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