Will you be ?blinging at 65??

The Department of Social Insurance (whose unfortunate acronym is DOSI), has mounted a strenuous campaign to advertise the supposed advantages of making one?s legally mandated social insurance payments. While I have no problem with meeting one?s legal obligations, the campaign is so wrong and so offensive on so many levels that I barely know where to begin.

In no particular order, here are some of the reasons why the DOSI campaign is a massive waste of public money:

1The law requires employers and the self-employed to fork over payments for social insurance. The weekly rate is $46.40, which may be split between the employer and employee. What is the possible point of advertising for people to do what the law demands, but does not enforce? As the recent debate has shown, it may be necessary to introduce new legislation to force employers to fork over the government?s money, even though we already have a law ? a $250 fine for every occasion on which payments are not made ? that could be made meaningful and enforced.

Those of us in employment have no choice; our employers deduct the payment before they cut our paycheques. Those who are not in the system and not making their payments are hardly likely to see a cheaply-made TV advertisement and repent their wicked ways.

2 No one blings at 65. By that stage of one?s life, spending money unnecessarily to impress those as dumb as you are (which is a rough and ready definition of blinging) is the farthest thing from one?s mind. Saving money for one?s retirement is the nearest thing, especially in Bermuda, where the cost of living is murderous for those on fixed incomes.

3. By the time all those portrayed in the DOSI programme reach the age of 65, the retirement age will undoubtedly have been raised. They will be ?Still paying in at 65?.

Years ago, the UBP Government decided to adopt a system known as ?Pay as you go? with the national pension. Payments made by the public were not segregated to meet future pension requirements, as prudence and common sense would require. The payments were instead simply added to the General Fund. The idea was that the payments received from future generations would be used to provide pensions for those who had earned them by paying in throughout their working lives.

That idea, which has been inherited and continued by the PLP, amounts to nothing less than theft. It assumed that the population would remain steady or grow, and that future generations of Bermudians would make sufficient payments to provide pensions for their grandparents. The decision to adopt ?pay as you go? was made when the politicians knew full well that the baby boom generation was larger than any before it, and would likely be larger than any that came after it. ?Pay as you go? was a recipe for national bankruptcy.

I have repeatedly argued this point with former Premier and financial wizard Dr. David Saul, who chafed when I pointed out in an article that Bermuda was $1 billion or more in the hole on funding its pension liabilities. Dr. Saul, who is a highly estimable economist, had no choice but to defend his position; otherwise the headline would have read: ?Bermuda will be bankrupt.?

Dr. Saul?s main argument was that everyone else does it, too. My mother used to brush aside that line with the same disdain that I do. France has now admitted that it will be actuarially bankrupt by 2020, unless it changes the rules. Germany says it will be, too, by 2035. To avoid this fate, both countries are considering raising the retirement age to 70, and then 75, and if necessary 80.

Such decisions, which Bermuda is also considering, will be the formal robbery inherent in the ?pay as you go? decision. Having been promised a pension if they made their payments, all those who die before attaining 80 will not receive one. ?Highway robbery as you go?, more likely.

The only people who will be blinging at 65 are Government employees, whose pensions are funded. Successive governments have understood the importance of not allowing themselves to fall for the ?pay as you go? argument, which reveals the bankruptcy and hypocrisy of that approach.

4 No one other than a civil servant blings on a Government pension, even if they receive one. A monthly cheque for $800 to $1,100 in Bermuda wouldn?t go very far.

5 Guess who?s paying for these advertisements? The taxpayer. That just adds insult to injury. We got mugged; now we have to pay to be told about it. In his annual report for the financial year ended March 31, 2004, the Auditor General is scathing in his criticism of the DOSI administration. How much wiser would it have been to spend money solving the Department?s internal problems, some of which he says date back to 1993?

6 Presumably, the campaign is aimed at those who do not make their payments now. This is a problem in Bermuda. The Auditor General routinely lists those employers who are seriously delinquent. Government rarely chases, let alone prosecutes, such malfeasants. One business, listed by the AG as delinquent on its social insurance payments for a number of years, has recently been extensively refurbished, using money owed to the Government. That means the taxpayer is funding criminal activity.

7 Does anyone at DOSI really think that people who are blinging at 35 by not paying their social insurance payments will see a flyer in this newspaper or a 30-second TV spot, and reform? No chance. None at all. This is money down the toilet, in the same week as the Government went out to the markets to borrow more for ?capital works?.

In reality, it is borrowing to fund the non-payment of social insurance and other employer obligations, which is a gigantic scandal that has yet to capture the public?s attention. Wait until pensions are denied to Bermudians who paid for them.

8 What?s next? Advertisements from the judiciary saying ?Free at 65?, urging us not to commit murder so that we can enjoy our old age without being locked up? There are any number of other things wrong with this campaign, but the point is made.

So, to answer the question at the head of this column: no, you won?t be blinging at 65. At best, you?ll be wringing at 65, wringing your hands and wondering how so many governments robbed you of so much of your hard-earned money.

Roger Crombie is a chartered accountant and a business journalist. He can be e-mailed at crombie@northrock.bm