Economist warns NIB shortfalls require broader reforms

GEISHA KOW­LESSAR-ALON­ZO

Se­nior Re­porter

geisha.kow­[email protected]

Econ­o­mist Dr Vaalmik­ki Ar­joon has warned that sim­ply in­creas­ing con­tri­bu­tions will not be enough to sus­tain the Na­tion­al In­sur­ance Fund, call­ing for broad­er re­forms such as grad­u­al­ly rais­ing the re­tire­ment age to re­flect longer life ex­pectan­cy.

Ar­joon al­so rec­om­mend­ed in­creas­ing the fund’s in­vest­ment al­lo­ca­tion to in­ter­na­tion­al mar­kets to strength­en its long-term vi­a­bil­i­ty.

“A high­er al­lo­ca­tion to glob­al mar­kets could in­crease fund val­ue over time, as in­ter­na­tion­al eq­ui­ties may bring stronger re­turns than do­mes­tic as­sets, par­tic­u­lar­ly giv­en deep­er liq­uid­i­ty, broad­er sec­tor ex­po­sure—like tech­nol­o­gy, health­care, AI—and stronger long-term growth trends in de­vel­oped mar­kets,” he ex­plained.

His com­ments came fol­low­ing the pre­sen­ta­tion of the 2025 cor­po­rate an­nu­al re­port on the op­er­a­tions of the Na­tion­al In­sur­ance Board (NIB) of Trinidad and To­ba­go in Par­lia­ment on Fri­day.

Ar­joon not­ed that the re­port high­lights pro­longed an­nu­al short­falls since 2021, with ben­e­fits con­sis­tent­ly ex­ceed­ing con­tri­bu­tions de­spite an in­crease in con­tri­bu­tions from $4.5 bil­lion in 2021 to $5.0 bil­lion in 2025. While this jus­ti­fied the re­cent rate in­crease, he said it un­der­scores the ur­gent need for broad­er re­forms to se­cure the fund’s sus­tain­abil­i­ty.

In 2025, to­tal ben­e­fit pay­ments reached $6.63 bil­lion, up from $6.50 bil­lion in 2024 and $5.54 bil­lion in 2021.

“This means that in 2025 con­tri­bu­tions fell short of ben­e­fit pay­ments by ap­prox­i­mate­ly $1.63 bil­lion. Im­por­tant­ly, this is not a one-off oc­cur­rence. The sys­tem has record­ed an­nu­al short­falls every year from 2021 to 2025, with a to­tal short­fall of rough­ly $6.96 bil­lion over this pe­ri­od.

“Over the past five years, near­ly $7 bil­lion more was paid in ben­e­fits than col­lect­ed in con­tri­bu­tions, re­quir­ing re­liance on in­vest­ment as­sets to cov­er the gap. In fact, since 2013, the cu­mu­la­tive short­fall has reached about $9.18 bil­lion, with most of that oc­cur­ring in the last five years,” Ar­joon said.

He stressed that this struc­tur­al im­bal­ance high­lights the im­por­tance of re­forms and the jus­ti­fi­ca­tion for in­creas­ing con­tri­bu­tion rates. “Grad­ual con­tri­bu­tion ad­just­ments in­tro­duced years ago could have re­duced the need for an in­crease of this ex­tent, un­der­scor­ing the im­por­tance of time­ly pol­i­cy ac­tion to safe­guard the fund’s sus­tain­abil­i­ty,” he added.

Ar­joon al­so at­trib­uted the con­sis­tent short­falls to an age­ing pop­u­la­tion, with more peo­ple re­tir­ing and draw­ing pen­sions while the growth in ac­tive con­trib­u­tors re­mains com­par­a­tive­ly slow­er. He not­ed that long-term ben­e­fi­cia­ries rose to over 207,000 peo­ple in 2025, a 5.8 per cent in­crease since 2023.

“This di­rect­ly feeds in­to ris­ing ben­e­fit pay­ments, par­tic­u­lar­ly re­tire­ment pen­sions, which now ac­count for the largest share of long-term ben­e­fits paid—ap­prox­i­mate­ly $5.41 bil­lion. This re­flects de­mo­graph­ic pres­sure: as more per­sons re­tire and live longer, pen­sion pay­ments in­crease. In sim­ple terms, the sys­tem is ma­tur­ing, and more peo­ple are draw­ing pen­sions rel­a­tive to those con­tribut­ing,” Ar­joon stat­ed.