After months of delayed payments to pensioners and other beneficiaries due to cash flow issues, exacerbated by a recent IT problem, there is optimism that Social Security will soon be in a better position.
Director David Matthias told Observer AM, “We have identified particular strategies which we have discussed with the government in terms of, at one fell swoop, clearing off the backlog in the short-term.
“We continue those discussions and we hope that they will materialise before the end of this month.”
In February, the government said it was hopeful that a boost in economic activity would eliminate the negative impact of the Covid-19 pandemic on contributions.
However, four months on, Matthias said that the remittances flowing to Social Security are still not enough.
“Our normal collections, inclusive of receipts from the government, have been what we have been servicing our pensions and short-term payments with throughout the year.
“Quite frankly, the situation with regard to us collecting sufficient to pay both is not there; that situation has not changed at all.
“It therefore means that we continue to experience delays with meeting our short-term benefits as we focus on our pension benefits.
“We are focused on those persons who have fixed unchanged income over the period, we have prioritised them, and the result of that has been that we were months behind, and we continue to be months behind with regard to the payment of short-term benefits,” the Social Security head stated.
On Tuesday morning, the United Progressive Party (UPP) organised a picket outside Social Security’s offices, demanding that the government remedy delays in payments.
Party leader Harold Lovell said that a UPP government would address the matter immediately, referring to a previous bond set up during the party’s time in office to aid Social Security.
“We set up a bond which was intended to replace the monies which had not been paid in and that bond came to a total of $550 million, and it was a bond spread over 20 years – $220 million of that was to be an asset swap, and $330 million was to have been in cash.
“And the first thing I would expect is that the government would be looking to see how they can accelerate payments on that bond and make sure at least that the obligations of the government to the Social Security Scheme are met, and that to me is like the first step.
“I’m not sure how much is left, but it’s probably in the region of $200 million or something like that,” Lovell added.
Matthias said that restructuring the bond forms part of ongoing talks with the government.
“Significant amounts on the bond have been paid down, so during the time of Mr Lovell, Mr Lovell would have made significant lump sum payments towards reduction of the principle.
“This administration continues to do the same, and where there is discussion currently is towards its restructuring such that it can have a much more consistent flow rather than a reduction of the principle, the realisation of flows to Social Security to meet its cash requirements,” he explained.
He went on to say that the reality of contributions falling short of expenses was always imminent, and in the absence of expected returns on investments to assist the scheme, the only way to get over the cash flow issues is to “fund the scheme”.