A Pillar of National Security

The Social Security Scheme is one of Antigua and Barbuda’s most critical national institutions. Its long-term survival is beyond mere policy; it is a matter of national security. For pensioners, it represents dignity and security in retirement. For today’s workers and future generations, it promises basic protection against hard times and stability in an uncertain world.

Lessons from the Past

The history of the Scheme’s investments provides both lessons and caution. Over the years, substantial sums were channelled into loans to the central government for capital development and budget support. These sums proved pivotal in the overall national development of a small island dependency without the legislative means to borrow externally to support its socio-economic goals.

The Social Security funds were “invested” in jump-starting the tourism industry, in transforming the housing stock in many villages, and to supplement limited revenues to provide employment. The sums collected in the early years were, in large measure, utilised to lift residents out of indigence by improving the social infrastructure (housing stock, for example) and providing desperately needed employment. The case could be made that the use of the funds laid the basis to protect citizens from hard times by providing dignity during an era when it was desperately needed.

Settlements and Strains

Notwithstanding the goodness and mercy behind the use of the funds, which continued for much of the life of the fund: loans for hurricane recovery support, loans for budget support, loans for infrastructure development, loans for capital development, loans for national security, a most critical element was overlooked. These often justified dual-purpose assistance met vital socio-economic objectives supporting national development, but generated no financial returns for the scheme.

In fulfilment of its legal mandate as the financier of last resort, the central government would make various settlement arrangements over time. Land transfers would inject some resources through direct sale or as housing projects, with spillover social benefits contributing to improved housing stock and economic growth. There would also be other transfers of illiquid assets into Social Security’s investment portfolio that could not easily be converted into steady income streams.

Five decades later, the long-term survival of the national pension fund is far from assured. Antigua and Barbuda’s Social Security Scheme faces mounting challenges. In addition to the arrears in payment, there is a declining contributor-to-beneficiary ratio, and the unrelenting pressure of sustaining benefits in a small, vulnerable, open economy.

Social Security statistics show that fewer than 12,000 pensioners are supported by contributions from 47,000 contributors, a ratio of about four to one. This is well below the international benchmark of ten to one needed for sustainable social security systems. Despite an increase in the workforce from imported adult labour across various sectors due to sustained positive economic growth, the outlook for improving the contributor-to-beneficiary ratio remains grim, given declining birth rates and steady out-migration.

Central governments have a significant influence on the growth rate of most economies worldwide. Small economies, in particular, respond strongly to critical government intervention. In Antigua and Barbuda, the central government and related statutory bodies are the largest employers, the largest demanders of services, and the most prominent vendors in the economy. The government funds and maintains most critical infrastructure, including airports, seaports, utilities, and educational and health facilities. Therefore, an often overlooked and understated factor is that taxpayers form the foundation of the nation and drive economic growth. Consequently, taxes are a vital yet often overlooked component of the social security system, especially when the investment portfolio underperforms.

The Scheme’s uninterrupted pension payments during the Covid years, when contributions slowed to a trickle, serve as a powerful reminder of the role of the central government as social security’s financier of last resort. The funds to pay pensions had to be directed to the social security from whatever means.

The Investment Dilemma

Returning to the fundamental question of the future of a viable scheme that does not rely on regular government intervention: how should the scheme invest its resources to generate returns without undermining its primary obligation to contributors?

At the heart of its survival is one word: investment. How the scheme manages and grows its funds will determine whether pensions remain viable or crumble under the weight of obligations requiring direct government intervention. Any investment policy must strike a balance between prudence and growth, security and opportunity.

Jolly Beach: Risk and Reward

That is why the current hot topic, the decision to channel Social Security funds into ventures such as the Jolly Beach Hotel, raises questions that demand serious reflection.

On the one hand, investment in tourism infrastructure can generate returns, create jobs, and contribute to the broader economy—outcomes that indirectly strengthen the very contributions on which the scheme depends. Antigua and Barbuda is not new to the tourism business, and indirectly, neither is the Social Security Scheme. Today’s Royalton Chic, formerly Halcyon, one of the earliest successful hotel properties in Antigua, was financed with resources from the Scheme, albeit through a loan. A review of Cabinet decisions for loans from Social Security will no doubt reflect other ‘loans’ to support the development of aspects of tourism.

Jolly Beach, though characterised by mixed fortunes in its latter years, was once a flagship in the national tourism inventory. A revitalized Jolly Beach Hotel has the potential to be a revenue-generating asset, a boost to the sector, and a symbol of sustainable risk-taking. Any investment in the Jolly Beach Hotel must be understood in this light. The revitalization holds strong prospects for job creation, attracting foreign investment, and bolstering the broader economy. If it succeeds, the project could help reposition the scheme’s investment portfolio toward productive assets with tangible returns.

On the other hand, the stakes are enormous, the risks significant. Tourism remains vulnerable to external shocks, climate-related events such as hurricanes, global recessions, policy shifts from major source markets, and pandemics. For a pension fund, such exposure must be carefully balanced.

In recognition of the high stakes, Prime Minister Browne made it clear that the government’s legal responsibility is to support the scheme. He stated that the government would cover any losses incurred after a two-year review of the investment, including a buy-back. His statement was no doubt meant to reassure. However, it also highlights the fragility of the scheme’s financial base. It also reminds that it is taxpayers who shoulder the risk.

At Its Core: Trust

At its core, this is about trust. Workers contribute to Social Security with the expectation that their pensions will be safeguarded, not wagered. Government must therefore ensure that every investment decision strengthens, rather than threatens, that covenant of trust. For if that covenant is broken, the consequences will reverberate across generations.

A Test Case for the Future

The question, then, is not whether investments should be made; of course, they must. The question is whether they are the right kind of investments, guided by transparent and professional policy rather than political expediency. The Social Security Scheme’s survival depends on a disciplined portfolio that prioritizes safe, steady returns, coupled with strong governance and accountability.

The Jolly Beach experiment is a test case. If it succeeds, it could demonstrate how targeted investments can benefit both the economy and the fund. If it fails, it risks becoming a cautionary tale about overreach, eroding public confidence in a system that must above all else be trusted.

The government’s role is pivotal, ensuring that the nation’s pension lifeline is protected by sound policy, rigorous oversight, and a transparent firewall between development ambitions and social security obligations.

The survival of Antigua and Barbuda’s Social Security Scheme will not rest on the success of Jolly Beach or any single investment. It will rest on whether leaders have the discipline to separate political ambition from fiduciary responsibility, and the vision to craft an investment policy grounded in transparency, diversification, and accountability.

The real measure of success will not be the occupancy rates at Jolly Beach, but whether pensioners decades from now can count on the scheme to deliver pensions as scheduled. Only then can workers and pensioners be assured and join the refrain: “promise made, promise kept.”