Director’s Letter fails to address remedy for late payments by Social Security
Director of Social Security David Matthias, in a letter dated June 15 2022, confirmed the UPP’s worst fears about the parlous state of the entity and highlights the reasons why the body is cash strapped.
Repayment Terms Established
In the year 2010, a bond was issued as a mechanism of repayment of the debt owed by government to social security.
At the time, the debt to Social Security was $550 million, the vast majority of which had been accumulated during the VC Bird and Lester Bird ALP administrations, over a 28-year period.
Repayment terms set out both cash and asset swaps. Incidentally, when the Government’s indebtedness to Social Security was properly structured in 2010, $330 million of the debt was placed on a Bond, while the balance of $220 million was to be settled by way of the Government transferring land/buildings and/or shares in entities such as WIOC and State Insurance to Social Security. The Bond was only to be reduced by CASH payments which are critical to providing Social Security with the liquidity required to meet its monthly obligations on time.
According to the director, the total value of the assets that Social Security controls is $136,152,744, without saying which of the assets fulfill the $220 million asset swap to liquidate the debt.
It would have been helpful, if as was requested, he had indicated what is the value of each of these and how much cash is generated from each individually.
Matthias, in his missive, stated that the total cash payments made to Social Security in 9 years by this administration is $214,921,496 and the total dollar value in cash payment that represents regular contribution is $211,421,496 – a difference of $3.5 million.
This means that only $3.5 million dollars has been paid on a bond of $330 million in the 9 years this administration has been in office. This is contrary to Gaston Browne’s oft-repeated claim that his administration has paid well above what is due to the bond. In contrast, the UPP administration paid $30 million on the bond in just 4 years.
Social Security Is Cash Strapped
For the avoidance of doubt, $3.5 million is insufficient to cover even half of a single month’s pension payments.
Further, it was confirmed that the former US Air Station valued at $83.5 million, was applied to reduce the principal on the bond. This was not the intent of the agreement.
Also of significance is the number of properties that are owned by Social Security, few of which are cash bearing. It would have been helpful to provide information on which assets generate cash and how much.
It is noteworthy that $83.5 million dollars is the value attached to the former US Air Station, to reduce the principal on the bond. This action robs Social Security of the expected monthly cash payments required to service its beneficiaries.
Political Leader Harold Lovell has been at pains to explain that Social Security is in need of liquid cash, as only this could address late payments.
The questions to be answered are:
1. how does Social Security intend to translate fixed assets into cash?
2. how does it propose to negotiate with the administration to accelerate the interest payments on the bond?
In the current circumstances, we can only expect the chronic problems of Social Security to continue. It is doubtful that the late payments will end in “one fell swoop.”
CLICK HERE TO JOIN OUR WHATSAPP GROUP