Social Security - G.O.B.'s private Bank
By Economic Correspondent
Despite the clarity of the language in the Social Security Act, the last
published financials of SSB were for the financial year 1997/98, and the
last annual report of SSB to its beneficiaries, was for the financial year
We have received nothing yet for 97/98 and 98/99. The report for the
financial year 1999/2000 is due in July this year.
Section 48 of the Social Security Act states that:
....the Board shall:
a) after the end of each calendar year prepare a report of its activities
during the last preceding year, and shall furnish that report to the
Minister not later than June 30.
b) submit to the Minister every account certified by the auditor, together
with the report of the auditor thereon, within one month of such
c) submit annually to the Minister an account of the securities in which
monies of the Fund is for the time being invested."
Try getting any information, any financial data at all out of the Social
Security Board, and you meet a stone wall.
"I can't give out that information," they tell you. Belizeans are required
by law to con.tribute weekly insurance premiums to the Social Security
Board. Every worker and every employer is required by law to make
contributions once a month.
Every year Belizeans put millions of dollars into the Social Security
scheme. Workers get precious little in return, but now there is growing
evidence that politicians are dipping their cups and spoons into the fund.
The Social Security Board is breaking the law with its wall of silence.
We know that at the end of March 1996, the Social Security Board had assets
amounting to $165 million. From 1991 to 1993 the trustees "milked" the
Social Security Fund for more than $20 million. The demands on the fund
were so extravagant that the cash reserves built up so carefully during the
1980s were nearly wiped out by drawings of $1.4 million the first year
(1991), $9.3 million the second year and $9.9 million in the year that
New trustees appointed in 1993 when the government changed, brought about a
recovery of sorts and cash reserves rose by $700,000 in 1994. Cash reserves
grew to more than $25 million during the next four years, so that at the
end of financial year 1997/98 deposits of the Social Security Fund stood at
If this trend had continued, we could have expected cash reserves to reach
$45 million by June this year. As far as we can determine, the cash
reserves of the Social Security Fund today is only about $16 million.
One must ask, what has caused this tremendous drain? The answer is simple.
When the government changed hands, the new Minister of Finance appointed
new trustees in September 1998 to take care of the Board's finances. A year
after these new trustees were put in charge, the reserves dipped by $3
million. At the end of the financial year in June this year, the reserves
were down by another $26 million.
Not content with these withdrawals, the masterminds behind Social Security
have now invented a scheme to move more money through the system out of the
pockets of workers and employers into what has now become the PUP's private
bank. They have a name for it. They call it the Social Security Safety net.
At every opportunity the Prime Minister and the Minister of Budget Planning
have been singing the praises of the modern safety net, which is supposed
to secure the future for Belize's working class. They claim that there is a
need to improve existing benefits which were put in place 18 years ago.
The sad truth is that the politicians are looking for a way to replenish
the Social Security Fund which has been draining away too fast.
Under the plan, insured earnings will rise from $130 a week to $320 a week,
and the present tax rate of 7 percent on gross earnings will remain unchanged.
Based on our calculations, the administration plans to siphon off an extra
$10 million a year from employers and employees. This figure of $10 million
is a conservative figure. With this in place, Social Security Fund is
getting set to take in revenues in excess of $22 million a year.
But this is just the beginning. The government has in store an even more
ambitious plan called National Health Insurance. The plan is still in
incubation, but when it hatches, the load on the taxpayer will be crushing.
Instead of 15,000 new jobs, the people of Belize are getting more promises
of the good life.
If the government's No. I priority is jobs, then the focus of economic,
fiscal and monetary policies should be single-mindedly pro-employment.
A pro-employment fiscal policy would reduce the tax on labor so that
businesses would have an incentive to use more workers. This latest scheme
for Social Security is not pro-employment because it will strongly
discourage the growth of employment. Employers will promptly look for ways
to cut down on the burden of Social Security taxes.
In the case of Social Security, it is estimated that only about 80 percent
of employers pay this tax for their workers. Self-employed people don't
pay, or pay very little, and some 20 percent of employers find ways to
dodge or reduce the payment. This creates an unfair burden on existing
This is not the only consideration that investors will be taking into
account. The fragility of the macroeconomic environment brought about by
excessive public spending, infringement of property rights, higher banking
and transportation costs, escalating costs of living and doing business in
Belize, and the government's comfort zone with monopolistic behavior all
point to troubled waters ahead.