Direct Request (CEACR) - adopted 2003, published 92nd ILC session (2004)

Social Security (Minimum Standards) Convention, 1952 (No. 102) - Barbados (Ratification: 1972)

1. The Committee notes the Government’s detailed report for the period ending December 2001, which contains a list of legislation amending the National Insurance and Social Security Act and Regulations. As this legislation has not been attached to the report, the Committee would like the Government to supply the latest edition of the above Act and Regulations incorporating these amendments at its earliest convenience. Meanwhile, the Committee is basing its comments on the explanations provided in the Government’s report, as well as in the attached Tenth Actuarial Report of the Operation of the Barbados National Insurance Scheme as at 31 December 1999.

2. Part X (Survivors’ benefit). Article 60, paragraph 1, of the Convention. In reply to the Committee’s previous comments concerning the provision of benefits to widows of under 50 years of age caring for dependent children of the deceased and incapable of self-support, the Government indicated that the National Insurance Board was considering the feasibility of extending the survivors’ benefit for this category of persons, and that in December 2000, there were 78 widows under 50 years of age who were in receipt of the survivors’ benefit provided for the period of one year. Those widows who will remain unemployed and incapable of self-support upon expiry of this period could be granted assistance by the Welfare Department detailed in the previous report of the Government. The Committee hopes that, taking into account the relatively small number of potential beneficiaries and the cost of the benefits and assistance already provided to them, the Government will be able to find the resources necessary to extend the survivors’ benefit to the abovementioned category of widows with dependent children, so as to give full application to this Article of the Convention. The Committee wishes to point out that this measure will also permit the Government to consider the ratification of Part IV (Survivors’ benefit) of the Invalidity, Old-Age and Survivors’ Benefits Convention, 1967 (No. 128), of which Parts II (Invalidity benefit) and III (Old-age benefit) have been already ratified by Barbados. The attention of the Government is furthermore drawn to the possibility of requesting the necessary technical assistance from the International Labour Office in assessing the financial burden on the national insurance scheme and in drafting the necessary legislation.

3. Part XI (Standards to be complied with by periodical payments), Article 65 (in conjunction with Articles 62 and 63). According to the Government’s report and section 36(1) of the National Insurance and Social Security (Benefit) Regulations, 1967, a survivors’ pension is payable where the breadwinner has satisfied the contribution conditions for the invalidity pension (having actually paid at least 150 weekly contributions), if he dies before the age of 65 years, or for the old-age pension (having a minimum 500 contributions of which 150 must have been actually paid), if he dies after the age of 65 years. Taking as the basis 50 weekly contributions per year, the contribution condition of having actually paid at least 150 weekly contributions would correspond, in terms of the Convention, to having completed a qualifying period of three years of contributions, while the condition of having 500 credited contributions would correspond to having completed a contributory period of ten years. Both qualifying conditions for survivors’ benefit in Barbados are thus much below the qualifying period of 15 years of contribution, which is required by Article 65 of the Convention for the calculation of the prescribed minimum replacement level of 40 per cent of previous earnings of the deceased breadwinner to be attained by the survivors’ benefit. In order to assess whether this level is attained in Barbados, the calculations should be based on the increased amount of the pension, which would have been granted to the breadwinner after 15 years, and not 10 years, of contributions, and the corresponding percentage of it paid to his surviving widow with two children representing a standard beneficiary for the survivors’ benefit branch. However, taking into account that survivors’ benefit equal to basic invalidity pension is payable already after three years of contribution, recourse may also be had to the provision of Article 63, paragraph 3, of the Convention, which requires only 30 per cent level of replacement.

According to the Government’s report, a basic invalidity pension is paid to a beneficiary who has between 150 and 500 weekly contributions at the rate of 40 per cent of the average annual insurable earnings in the best three contribution years. A basic pension is increased by 1 per cent for each 50 weekly contributions in excess of the first 500 contributions. The contributory period of 15 years would thus bring 250 weekly contributions in excess of the first 500 and result in the pension attaining 45 per cent of the average annual earnings. Being equal to the invalidity or old-age pension to which the deceased breadwinner would have been entitled at the moment of death, the maximum survivors’ pension corresponding to 15 years of contributions would attain the replacement level of 45 per cent. As this maximum benefit is divided between the surviving dependants (50 per cent of the pension is payable to the surviving spouse and one-sixth to each child), the standard beneficiary (widow with two children) would receive 83.3 per cent of the maximum benefit, which would correspond to the replacement level of 37.5 per cent of the breadwinner’s previous average earnings below the 40 per cent level prescribed by the Convention. However, if recourse were had to Article 63, paragraph 3, the resulting survivors’ benefit would attain the level of replacement of 33.3 per cent, thus surpassing the 30 per cent level required by this Article. The Committee would like the Government to confirm this conclusion on the basis of concrete examples of calculations of the survivors’ pension granted by the national insurance and social security scheme to the widow with two children whose breadwinner’s salary at the moment of death equalled the reference wage of the skilled manual male employee selected in accordance with Article 65, paragraph 6(b), of the Convention (the wage of Category V skilled artisan in agriculture). Please provide also updated statistics on the maximum and minimum amounts of survivors’ benefit.

4. Article 65, paragraph 10 (review of long-term benefits). In reply to the Committee’s previous comments, the Government stated that the increase in pension was not tied directly to the cost-of-living index, but reviewed on an ad hoc basis; minimum invalidity, old-age and survivors’ pensions were increased in September 1998 and October 2001. Similarly, wages in Barbados were not indexed but negotiated by trade unions and no information on the index of earnings was available. However, the Government added that consideration is being given to the method of indexation as a means used to increase periodical payments. The Committee notes that the Tenth Actuarial Report of the Operation of the Barbados National Insurance Scheme published in July 2001, has considered the effect of two different indexation policies: uprating only minimum benefits and earnings limits and uprating all benefits in payment and earnings limits in line with future increases in prices, and concluded that "if upratings are confined to increases in the minimum benefit levels rather than increases to all benefits in payment, the standard of living of the elderly will decrease relative to prices after their pensions come into payment. Their standard of living would also decrease relative to that of the working population. However, in the long term full uprating of all benefits in payment appears too expensive to contemplate without other further significant changes to the scheme" (page 3).

The Committee would like to recall in this respect that ad hoc uprating of the minimum benefit only, which is the current practice of the national insurance scheme, is not sufficient to give full effect to the abovementioned provisions of the Convention, which oblige the Government to establish a review mechanism for all long-term benefits in payment. The Convention does not require, however, the introduction of the automatic indexation of benefits, though it may be the most advanced method of adjusting the rates of the benefits to inflation and the cost of living. The ratifying States have full discretion in choosing the method of benefits adjustment most suitable to their economic system, provided that it safeguards the standard of living of the beneficiaries. The Committee would therefore urge the Government, in accordance with its obligations under Article 70(3) of the Convention, to include in the next actuarial review of the national insurance scheme, a study of different methods of adjusting all long-term benefits in payment to substantial changes in the general level of earnings and in the cost of living, with a view to giving full effect to the Convention on this point. Meanwhile, it would like the Government to supply the information requested by the report form under Title VI of Article 65 on the increases of the cost-of-living index and the amount of the minimum (and, if available, other) benefits for the whole period starting with the base year for which the retail price index equals 100 per cent (according to the report, at 30 June 2001 this index was 120.7).