JIS News

The National Insurance Fund (NIF) will earn $1.2 billion below the projected $4 billion in interest from Government bonds for 2010/11, but Minister of Labour and Social Security, Hon Pearnel Charles, says this will not affect its ability to meet its commitments.
The reduction in income is primarily due to the Jamaica Debt Exchange (JDX) programme, but Mr. Charles said that, on the other hand, the debt exchange programme will contribute significantly to containing the fiscal deficit, “without which inflation would erode the value of the benefits paid to beneficiaries.”
“The projections based on rates applicable subsequent to the debt exchange programme will not affect the ability of the Fund to pay the benefits due to National Insurance Scheme beneficiaries, and will not preclude timely adjustments to those benefits based on actuarial review,” Mr. Charles said.
He pointed out that the Government’s economic programme, of which the debt exchange is a crucial element, projects that inflation will moderate to 5-7 per cent over the next two years, which is well within the adjustments that the Fund expects to be able to make.
He also noted that a significant portion of the NIF’s investment portfolio is held in real estate, the projected capital appreciation of which will enhance the Fund’s ability to meet future payments to beneficiaries.
Mr. Charles was responding to a question from Opposition Member of Parliament Ronald Thwaites (Central Kingston), on the effects of the JDX on the NIF.
He stated that the income is subject to fluctuations in interest rates, except where fixed rate instruments are held. He also mentioned that the NIF holds a mixture of fixed and variable rate Government of Jamaica instruments.
The NIF was formed pursuant to Section 39 of the National Insurance Act, is funded by National Insurance contributions and is the source from which pensions and other benefits under the National Insurance Scheme (NIS) are paid.

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