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The Provident Fund Approach to Social Security in the Eastern Caribbean*

Published online by Cambridge University Press:  20 January 2009

Leonard P. Fletcher
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Abstract

The paper describes the introduction of National Provident Fund Schemes in the British Leeward and Windward Islands under the guidance of the British Government during the 1960s. Adopted on the recommendations of technical experts from the United Kingdom, the schemes are very similar (except for the inoperative one in one of the territories where unfavourable political developments occurred); they are funded by payroll taxes levied on both employers and employees, cover nonpensionable employees between ages 16 and 60 and make provisions for retirement and other benefits which have mostly been deferred. The operations of the schemes are discussed, with critical attention being given to the use made of the accumulated funds. Many weaknesses of the schemes are discussed, some of which make them inferior, in the writer's view, to alternate programmes suggested several years earlier. The paper concludes with the hope that in spite of the schemes' limitations, improvements will be made so as to improve the prospects for social security in the region.

Type
Articles
Information
Journal of Social Policy , Volume 5 , Issue 1 , January 1976 , pp. 1 - 17
Copyright
Copyright © Cambridge University Press 1976

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References

1 For a history of the Friendly Society Movement in the region, see , A. F. and Wells, D., Friendly Societies in the West Indies Report on a Survey, London: HMSO, 1953.Google Scholar

2 St Kitts, Nevis and Anguilla Department of Labour Annual Report, 1951, p. 19Google Scholar. It should be observed that the absence of an independent peasantry in St Kitts created a more urgent need for a pension scheme there than in the Islands where dependence upon paid employment was not as great.

3 St Kitts, Nevis and Anguilla Department of Labour Annual Report, 1953, p. 22.Google Scholar

4 Letter from the Acting Administrator to the Secretary of State for the Colonies, 19 08 1960.Google Scholar

5 The sugar workers did not co-operate fully with the Labour Department's survey, and thus the resulting data were less reliable than the census data. See letter dated 24 09 1962Google Scholar from Administrator to the Secretary of State for the Colonies.

6 In 1954 Professor J. Henry Richardson of Leeds University studied the state of social security in Barbados and proposed a Provident Fund Scheme for that territory, but this proposal had no direct influence on discussions in St Kitts. However, Richardson's proposal might have influenced the Colonial Office, which was responsible for nudging the St Kitts Government towards the Provident Fund approach.

7 Clarke, C. E., Report on Proposals for a Contributory Provident Fund for St. Kitts, Nevis and Anguilla, London: Government Actuary's Department, 1964, p. 1 (Mimeographed).Google Scholar

8 Ibid., p. 20.

9 Members representing government interests comprised a majority of the Committee, so the public sector viewpoint was bound to prevail. The following units were represented: Ministry of Finance, Sugar Producers' Association, Trade and Labour Union, Sugar Factory, Chamber of Commerce, Labour Department, Central Housing Authority, Contractors, Shipping, Agriculture, Electricity, and Public Works Department.

10 A six per cent wage increase in the Sugar Industry was also financed for the first three years (1966–8) by transfers from the Sugar Price Stabilization Fund.

11 Newton, G. G., Report on Proposal for a Contributory Provident Fund Scheme for Retirement Benefits, London: Government Actuary's Department, 1965 (Mimeographed).Google Scholar

12 The discontinuity resulting from the change in government was so great that contact was lost with the donor of technical assistance. Preparatory to launching its scheme the new government requested from St Lucia copies of its Provident Fund Ordinance and Regulations, only to be advised that (1) St Lucia did not yet enact such legislation and (2) Mr Jordan, Provident Fund Adviser to the governments of Leeward and Windward Islands, who was then in St Vincent, should be contacted.

13 See Provident Fund (Agricultural Workers) Act, 1969.Google Scholar

14 Report of Committee appointed by the Minister of Housing Community Development, Social Afairs and Labour to Study the feasibility of establishing a Contributory Fund Scheme for retirement benefits to cover all employed persons, St Lucia: Undated mimeo graphed Report.

15 Committee Report to study the Report by G. G. Newton on a Provident Fund Scheme for Dominica, p. 1 (Mimeographed).Google Scholar

16 The Grenada Law provided for a benefit named ‘loss of earnings’, the nature of which was never made clear during parliamentary debates on the Act, despite persistent demands for clarification.

17 Report by Clarke, C. E., op. cit., p. 8.Google Scholar

18 Ibid., p. 18.

19 Data supplied by Office of the St Vincent National Provident Fund.

20 First Annual Report of St Lucia National Provident Fund.

21 Data provided by the Director, National Provident Fund.

22 As of the end of July 1972, the following annual reports were not yet available: Kitts, St – Third Annual Report up to 30 06 1971Google Scholar; Vincent, St – First Annual Report up to 02 1971Google Scholar; St Lucia – First Annual Report up to 10 1971Google Scholar; Dominica – First Annual Report up to 02 1972.Google Scholar

23 The Provident Fund Acts have provided for the preservation of the pension rights of officers and employees recruited from the public services.

24 First Annual Report of the National Provident Fund (St Lucia), p. 4.Google Scholar

25 Contributors to the St Kitts scheme were credited with a nominal rate of 2½ per cent per year based on balances at the beginning of the financial year, and members of the St Lucia scheme received no interest during the first year.

26 Throne Speech by the Governor of St Vincent on 5 05 1972.Google Scholar

27 SirLewis, Arthur, ‘The Caribbean Development Bank’, Proceedings of the Seventh West Indian Agricultural Economics Conference, Trinidad: The University of the West Indies, 1972, p. 4.Google Scholar

28 This argument loses some of its force when applied to firms that are the recipients of the very liberal tax concessions associated with pioneer industry status. For arguments that the incidence of both the employer and employee portions of payroll taxes falls upon labour, see Brittain, John A., The Payroll Tax for Social Security, Washington: The Brookings Institution, 1972Google Scholar. It should be noted, however, that employees' contributions to Provident Funds are more of the nature of compulsory savings than of taxes, because of members' continuing equity in their contributions.

29 A. F. and Wells, D., op. cit., pp. 96–100.Google Scholar