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Social Security was earning 6% at the Central Bank, not 10%. That's according to board member Mark Lizarraga who made the clarification after 7NEWS obtained a copy of his internal e-mail to the Chamber Board.
Typically, the Central Bank does not pay interest, but Social Security negotiated the 6% yield after the government on the IMF's recommendation ordered Social Security to take its money out of the banks, where it was earning 8%, to create less liquidity in the commercial banking system.
The matter arises because Home Affairs Minister Ralph Fonseca has publicly stated that the $10 million loaned to Sunshine was sitting at the Central Bank earning no interest. 6% on $10 million a year, would have earned Social Security $600,000 per annum which is less than it would get at any commercial bank.
The principle is that Social Security funds should be managed in the most prudential, highest yield format which gives greatest benefit to the fund and its contributors. But, in this case, these funds are being wielded as an instrument of fiscal policy and private profit, with diminishing regard for the fund's long-term sustainability.
