Eastern Caribbean Central Bank Social Security Systems in

Eastern Caribbean Central Bank Social Security Systems in CARICOM: Some Imperatives for Sustainability 29 th Meeting of the CARICOM Heads of Social Security 6 – 8 June 2018 St Kitts Marriott Resort 6/20/2018 Transforming The ECCU 1

Eastern Caribbean Central Bank Roadmap • Key Messages • The Criticality of Social Security and the Link with Governments’ Fiscal Situation • Global Trends and Regional Challenges Impacting Sustainability • The Way Forward: Some Recommendations 6/20/2018 Transforming The ECCU 2

Eastern Caribbean Central Bank Key Messages of fiscal resilience frameworks by governments is critical to help safeguard the of Social Security sustainability Systems. The adoption 6/20/2018 Transforming The ECCU 3

Eastern Caribbean Central Bank Key Messages Governments and Social Security Boards ought to adopt a sense of urgency about implementation of key reforms. 6/20/2018 Transforming The ECCU 4

Eastern Caribbean Central Bank Key Messages Caribbean Community 6/20/2018 Collective action, as a region, is essential to manage risks and seize opportunities that confront Social Security Systems. Transforming The ECCU 5

Eastern Caribbean Central Bank Social Security: Stylised Facts ECCU Indicators % Reserves to GDP (as at 2015) 33. 3 Deposits to GDP (as at 2017) 9. 5 RGSM Participation (value of Bids % GDP) 9. 3 Source: ECCB Statistics Department 6/20/2018 • Size of sector is significant • Major source of regional savings and liquidity for commercial banks • Major Investors on the Regional Government Securities Market (RGSM) • Finances social development Transforming The ECCU and economic 6

Eastern Caribbean Central Bank Social Security: Stylised Facts CARICOM Indicators Reserves to GDP (as at 2014) Pension Benefits: Replacement Rates (as at 2014) Eligibility: 60 – 70 years (Average 63) % 24. 0 33. 5 - 70 • Size of sector is significant • Relatively high replacement rates • Rising retirement age Source: 2016 IMF Working Paper 6/20/2018 Transforming The ECCU 7

Eastern Caribbean Central Bank Key Global Challenges and Responses (ISSA) C H A L L E N G E S Coverage is improving globally but there is room for improvement Ageing Population High Levels of Unemployment and Underemployment, especially among youths 6/20/2018 R E S P O N S E S Use of bilateral/multilateral social security agreements. Use of both tax-financed and contributory mechanisms to extend coverage Increases in retirement age and use of benefit programmes to support efforts to increase birth rates Unemployment protection programme using social security and tax-financed income support Transforming The ECCU 8

Eastern Caribbean Central Bank Key Global Challenges and Responses (ISSA) C A L E N G E S Transitioning to the H Digital Economy and Changing Labour L Markets New Risks and Shocks from Extreme Events 6/20/2018 R E S P O N S E S Extend legal coverage to new categories of workers Use new technologies to improve delivery of services Demand new innovative and fastfocusing on risk response solutions management and business continuity planning Transforming The ECCU 9

Eastern Caribbean Central Bank Be Warned “If the rate of change outside is faster than the rate of change inside, the end is in sight”. ~ Jack Welch 6/20/2018 Transforming The ECCU 10

Eastern Caribbean Central Bank Key Recommendations (Parametric) • Raise the statutory retirement age in line with life expectancy (typically 65) • Increase contribution rates (via gradual automatic adjustments) • Broaden coverage through compliance and incentives regimes (especially for the self-employed) • Introduce a modest unemployment benefit (with an appropriate contribution rate) 6/20/2018 Transforming The ECCU 11

Eastern Caribbean Central Bank Key Recommendations (General) • Governments ought to adopt fiscal resilience frameworks via legislation. • Each country ought to publish a timeline for implementing parametric reforms (with automatic adjustments) to ensure solvency of the Systems. • Improve timeliness of disclosure of financial statements and actuarial reports to Parliament and the public. 6/20/2018 Transforming The ECCU 12

Eastern Caribbean Central Bank Key Recommendations (General) • Pursue more functional cooperation among Social Security Systems in areas such as corporate governance, research and development and investment. 6/20/2018 Transforming The ECCU 13

Eastern Caribbean Central Bank Something to Ponder “if we don’t change direction, we are likely to end up where we are headed”. ~ Chinese Proverb 6/20/2018 Transforming The ECCU 14

Eastern Caribbean Central Bank Final Word Fiscal Resilience Framework Sense of Urgency Collective Action Now 6/20/2018 Transforming The ECCU 15

Eastern Caribbean Central Bank Thank You Eastern Caribbean Central Bank P O Box 89, Basseterre, St Kitts Tel. No: (869) 465 -2537 Fax No. (869) 465 -9562 Email: info@eccb-centralbank. org Website: www. eccb-centralbank. org 6/20/2018 Transforming The ECCU 16