NIS officials describe a declining fertility rate as one of the most significant demographic challenges facing the National Insurance Services (NIS) today.
Officials explained that a fertility rate of 2.1 babies per childbearing woman is necessary for the natural replacement of a population. In St. Vincent, the current rate is approximately 1.9.
Not only is the rate currently below the replacement level, but it is also projected to continue declining in the future.
This decline creates a “demographic challenge” because the NIS operates on a partially funded system, where the contributions from current workers are used to pay the benefits of current retirees.
When the birth rate drops, there are fewer future workers to support the growing number of pensioners.
The low fertility rate is compounded by two other factors: increased life expectancy (people living longer and collecting pensions for more years) and the migration of young people of working age out of the country.
Due to these trends—fewer babies being born and people living longer—the NIS has had to implement reforms, such as gradually increasing the pensionable age from 60 to 65 to ensure the fund remains sustainable until at least 2060.