Anguilla’s Director of Social Security Mr. Timothy Hodge has called for the country’s Social Security System to be proactive in the challenging times which confront us as the global economic crisis begins to impact Anguilla. He issued this call as he presented the Social Security Board’s 2009 Programme of Activities and Budget last Thursday at the Teachers’ Resource Centre Auditorium. Noting that this was the second such public presentation, the Director stated “as fiduciaries we owe a duty of care and loyalty to our contributors whose funds we hold in trust. Our values driver ACTIVE starts with Accountability, and so in this environment where corporate governance must be more than a catchy phrase or buzz word, we are doing our part to be accountable - open and transparent.”

Director of Social Security, Mr. Timothy Hodge delivering address

Explaining the business plan’s theme, he said “surely no time in my lifetime, save perhaps those heady days of the Anguilla Revolution when I was but a child, was more challenging than the present and it is times like these which test our mettle and, as it were, make us “back our chat” as to relevance and high performance.” However, he stated that in these times the Social Security System must be proactive and not just react to circumstances. “Indeed,” he continued, “to be proactive should be our rallying cry as we face these challenges head-on as our fore-bears have done through the centuries in times which must have been many times more challenging than even these”. In referring to the newly launched book God Bless Our Forebears by Mr. Colville Petty, Mr. Hodge reminded the listening and viewing audience that Anguillians have always faced and overcome challenges and that this generation of Anguillians must do no less, whether the challenges are economic or social in nature.

He noted that by adding to ACTIVE (the mnemonic for the System’s values – Accountability, Customer-focus, Teamwork, Integrity, Visionary-leadership, and Excellence) the letters PRO (standing for People and Results Oriented) the word PROACTIVE is formed. Thus proactivity, focused on people and performance results, will be the System’s focus in 2009 as it pursues its overarching goal of improving the quality of life for all.

Under People, the System must communicate mission clarity. This was the major

Ministry and Board Officials and staff

finding of the surveys conducted during 2008 under the guidance of Mrs. Melinda Goddard of ClienTell Consulting LLC, that people are unclear as to what Social Security can legitimately do and therefore have different perceptions as to what they think it should be doing. “We must proactively change this, and then do our best to meet and exceed those expectations which are legitimate,” he stated.

Continuing, he said the System must continue to focus on being Results oriented, and referred to the recently completed actuarial review as the best indicator of its results to date. Its major findings are that the Social Security System in the period 2005-2007 exceeded most key performance indicators anticipated in the preceding valuation three years ago. The Fund Ratio and Cost Ratio of the two benefit branches were more favorable than expected, the relative cost of administration expenditure declined steadily, and demand indicators showed significant improvements. …. As a result, at 31 December 2007 the System was in a stronger actuarial situation, with an expected operational surplus of the short-term branch in the period 2008-2010, accumulation of long-term branch reserves for a longer period than previously anticipated, and lower rates of administrative expenditure.

Looking back at 2008, he stated “it will go down in history as the year that the world went into an economic tailspin and just when it seemed that things would improve as the huge increases in oil prices were reversed, the global financial system began to unwind as the effects of the sub-prime market in the US began to mushroom there and internationally. Here in Anguilla we went from the giddy heights of unprecedented economic activity with high numbers of imported labourers and massive inflows of foreign direct investment in tourism-related construction and the growth of support services to closure of the Flag property and other severe impacts in that sector. For the Social Security System, 2008 was … bitter-sweet I guess would be a good term .. as we saw the positive effects of the increased employment and economic activity with record contribution income, and the negative effects of the financial crisis as the element of our funds exposed to those US and international markets began to suffer rapid decline”.

Contribution income reached $32.6 million, a record in spite of the layoffs and closures which occurred towards the end of the year. In addressing investment performance, he stated that the Board’s diversified portfolio of $173.8 million at the beginning of the year was invested in fixed deposits in banks locally, in fixed securities regionally, in regional equities or shares, in regional equities, and in US and international equities. However in November, the Board in consultation with the Investment Committee took a decision to close out its US and International equity portfolios as significant losses were being realized. By year-end most of the funds had been returned to Anguilla and reinvested. Before the Board sought to repatriate the funds, just over 13% of its total investments were in the US and international markets. The Director stated that losses on that portion of the funds were less than the gains from the remainder of the Board’s investments, and investment income is projected at $4 million. Other Income was $0.43 million, and total income was projected at about $37 million. Benefit expenditure totaled $7.4 million, and administrative expenditure and other expenditure totaled $6.1 million. This left a surplus of income over expenditure of $24.8 million, and took the Board’s reserves at year-end 2008 to $208.8 million. The Director noted that these figures were unaudited and the 2008 accounts would shortly be audited by KPMG and signed off by the National Audit Office, UK.

In looking forward to 2009, the Director projected Contribution income to fall to 2007 levels at $27.44 million, with the performance of the Social Security Fund being strongly linked to that of the national economy and the prognosis not being as bullish as last year. The area of investments in a challenging international environment requires an integral re-assessment of the asset allocation strategy. The asset allocation and the management of the investment portfolio, including offshore investments, will continue to be one of the main challenges for the System in the near future. The recommended portfolio should include investments in domestic projects meeting specific criteria of safety, profitability and liquidity, in addition to aiding the socio-economic development of Anguilla as a subsidiary objective. In this regard, the proposed subsidiary Investment and Development Corporation would have a critical role in productive investments which will both benefit the Fund and the economy in general.

Returning to the presentation’s theme “Being Proactive In Challenging Times”, the Director spoke of proposed activities under each of the Board’s strategic objectives, and concluded by revealing that there will shortly be increases to some benefits in payment to help people deal with the increasing cost of living. He also indicated that the Board would be financing, from its Social Security Development Fund, a modular dialysis unit for the Health Authority of Anguilla which would be mutually beneficial as it would help to keep dialysis patients as healthy and contributing workers rather than as early recipients of social security benefits.

Among those in attendance were the Minister for Social Security Honourable Victor Banks, Minister of Social Development Honourable Evans Rogers, members of the Social Security Board and Investment Committee, the Board’s staff, and members of the press and of the general public. The presentation was broadcast live on Klass FM and Radio Anguilla, and later on KCN TV.

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