Direct Request (CEACR) - adopted 2007, published 97th ILC session (2008)

Invalidity, Old-Age and Survivors' Benefits Convention, 1967 (No. 128) - Barbados (Ratification: 1972)

The Committee notes that the Government’s report has not been received. It hopes that a report will be supplied for examination by the Committee at its next session and that it will contain full information on the matters raised in its previous direct request, which read as follows:

With reference to its previous direct request, the Committee notes the information provided in the Government’s reply and its reports on the application of Conventions Nos. 128 and 102, as well as the attached Tenth Actuarial Report of the Operation of the Barbados National Insurance Scheme as of 31 December 1999.

Part V (Standards to be complied with by periodical payments), Article 26 of the Convention (in conjunction with Articles 10 and 17). According to the Government’s report and the National Insurance and Social Security (Benefit) Regulations, 1967, the invalidity pension is payable where the beneficiary has satisfied the contribution condition of having actually paid at least 150 weekly contributions, and the old-age pension, of having a minimum 500 contributions of which 150 must have been actually paid. 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 imply having completed a contributory period of ten years. The qualifying conditions for invalidity and old age benefits in Barbados are thus much below the qualifying period of respectively 15 and 30 years of contribution, which is taken by the Convention for the calculation of the prescribed minimum replacement level of respectively 50 per cent and 45 per cent of previous earnings. In order to assess whether this level is attained in Barbados, the calculations should be based on the increased amount of the invalidity pension, which would have been granted after 15 years, and not three years, of contribution, and of the old-age pension after 30, and not ten years of contribution.

As regards the old-age pension, after 30 years of contribution it would attain 60 per cent of previous earnings – far more than 45 per cent prescribed by the Convention. As concerns the invalidity pension, it 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, and 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, which is below the 50 per cent level prescribed by the Convention. However, taking into account that basic invalidity pension is payable already after three years of contribution, recourse may also be had to the provision of Article 11, paragraph 3, of the Convention, which requires in this case only 40 per cent level of replacement, which will be largely attained.

The Committee would like the Government to confirm this conclusion on the basis of concrete practical examples of calculations of the invalidity pension granted by the national insurance and social security scheme to the standard beneficiary whose salary at the moment of the contingency equalled the reference wage of the skilled manual male employee selected under Article 26 of the Convention (the wage of Category V skilled artisan in agriculture).

Article 29 (Adjustment of benefits). In reply to the Committee’s previous comments, the Government stated in its report on Convention No. 102 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 provision of the Convention, which obliges 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 35(1) 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 statistical information requested by the report form under Article 29 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 on Convention No. 102, at 30 June 2001 this index was 120.7).