28 June, 2010
What controls or restrictions does the Social Security Act place on the investment of the monies of the Social Security Fund by the Social Security Board and its Investment Committee? Section 13 of the Act provides that the investment of money of the Fund shall be made by the Director in accordance with the directions of the Board and the Investment Committee. The Board had long ago set investment guidelines that prohibited lending to government. The previous Board viewed lending to government as a misuse of the trust funds held in the Fund. It appears that those guidelines have been altered by the new Board.
In the absence of any restrictions in the Act, we look to the ordinary meaning of the words. To “invest” is defined by the Oxford Dictionary as meaning to employ money in the purchase of anything from which interest or profit is to be expected. The notion of investment is one of placing money into some form of profitable property. The restrictions are not set out in the Act. They are waiting to be defined by the court. Someone will have to have the impudence to bring a law suit to have them finally determined.
I venture to propose, though, that the common man would answer the question by stating that the duty of the Social Security Board is to prudently manage the Social Security Fund for the benefit of the persons who essentially own it, the contributors.
If people are dutifully paying their dues to the Board then, in return, the Board is duty-bound to apply those funds to such matters as pensions and sick leave and maternal leave payments, and nothing else. Surplus funds are expected by all of us to be profitably invested.
The implicit responsibility of the Board and its Investment Committee is to invest the funds of the Board wisely so that the contributors may receive their entitlements whenever it is necessary to claim them.
Any idea that some of us may have had, that the Social Security Board was prohibited from advancing to government the trust funds held by the Board for the working men and women of Anguilla, was misplaced. In the absence of any public disclosure or other information this is just what I understand is going on. Indeed, it may well be perfectly legal for the Board to keep on advancing to government the monies needed until the entire fund has been depleted.
That is, it would be perfectly legal so long as such advances legally qualify as an investment. It is at least questionable whether advancing $10 million a month from the Social Security Fund to government for the purpose of paying the wages of government workers from those funds are a legitimate form of investment. Especially if it is to go on for a year or more. And, especially if it is an unsecured loan. And, especially if the government has not demonstrated any possibility of paying it back.
At this rate, the total funds of the Social Security Board will have been depleted in less than a year and a half.