Minister of Labour and Social Security, Pearnel Charles, says the NIF could go bankrupt in 20 years if outpayments continue to outpace inpayments. - File

The National Insurance Fund, the more than $50 billion of pooled savings from which government pays National Insurance Scheme benefits to over 90,000 pensioners, suffered a more than $1-billion decline since the local stock market went into freefall last year.

A list of the NIF quoted equity portfolio and its valuation, among documents secured by the Financial Gleaner under the Access to Information Act, shows the fund holding $4.57 billion worth of listed shares at March 31 this year, down $1.2 billion from the $5.76 billion exactly one year before.

Over the year from March 2008, the Jamaica Stock Exchange (JSE) index suffered a more than 26 per cent decline falling from 107,439 points to 79,022 points.

This 24 per cent decline in the NIF holdings in listed companies followed a near 16 per cent gain from $4.9 billion in 2007 to $5.7 billion earlier this year.

Near wipe out

The Government reported in June that the NIF stood at $52.47 billion at the end of March 2009. This was down from $54.2 billion last year, but more than $49.8 billion in March 2007.

At the same time, over the two years from March 2007, NIF investments in unlisted shares reflected a near wipe-out, falling by 98.7 per cent - from $191.3 million to a mere $2.4 million this year.

The list equity figures reflected no significant change in the fund's equity portfolio over the two years, although it marginally increased its holdings in a few companies in the financial services sector and in Caribbean Cement Company between 2007 and 2008, and the NIF said it did not sell any private shareholdings.

"There have been no changes within the fund's portfolio through sale, divestment, encashment, etc over the period in question," the Ministry of Labour and Social Security's ATI unit said in response to questions from the Financial Gleaner.

The fund suffered its biggest decline on its JSE listed shareholdings in trading companies, where its roughly one million units each in Goodyear Jamaica and Hardware and Lumber plunged from $19 million last year to just $7.6 million this year, a more than 60 per cent drop.

Goodyear delisted in July.

NIF's stock in property firms Pan-Jamaican Investment Trust and its subsidiary, First Jamaica Investment, also saw a huge value decline averaging 50 per cent over the year.

Holdings in companies in the services and communications sector such as Cable and Wireless Jamaica/LIME, Gleaner, Supreme Ventures and Radio Jamaica had a 48 per cent drop in value to about $113 million.

Among its biggest holdings in value - conglomerates GraceKennedy (more than nine million shares), Jamaica Producers (almost seven million units) and Lascelles (1.4 million) - the NIF portfolio fell almost 47 per cent from $1.67 billion to $892 million.

Its banking and manufacturing equities, which were among the fund's most valuable equity holdings up to last year together worth more than $2.4 billion fell 21 per cent and 24 per cent respectively to $998 million and $926 million.

Top performers

The only category of listed shares that appreciated over the year was the NIF's holdings in investment service companies Capital and Credit Financial Group, Scotia DBG, Jamaica Money Market Brokers and Pan Caribbean Financial Services - which grew 114 per cent, from 437.9 million last year to $939.7 million.

But even as the NIF saw huge declines in its equity portfolio, it registered appreciable growth in its money market investments which rose from $28.9 billion in 2007 to $30 billion in 2008 and reaching $31.3 billion at March 2009.

Its investment properties appreciated by roughly half a billion dollars over the last two years, with much of that gain coming between 2007 and 2008.

Burt said the NIF also lent more money, with its balance sheet showing loan receivables growing to $2.5 billion at March this year from under $750 million in March 2007.

NIF officials were not available to comment on the figures.

In June, labour and social security minister Pearnel Charles announced an actuarial review of the fund, which he said at the time was projected to run out of money in 20 years if the current rate of outpayments of $8.5 billion a year against inflows of $5.5 billion continued.

For fiscal year 2008-2009, Charles said the Fund earned net investment income of $5.251 billion.

Government is said to be currently considering either increasing the wage ceiling for NIS contributions or hiking the 2.5 per cent rate.

huntley.medley@gleanerjm.com

NIF STOCK PORTFOLIO

at March 2009

Investment services 20.5%

Banking 21.8%

Manufacturing 20.2%

Conglomerates 19.5%

Insurance 8.2%

Property 6.9%

Services/Communication 2.5%

Trading/Retail 0.17%