The Antigua and Barbuda Social Security Board’s proposed $75 million investment in the defunct Jolly Beach Resort has ignited debate and deep reflection across the nation.
Critics have raised alarms over transparency and fiduciary risk, while others argue that this bold move could become a pioneering model for how pension funds support national development.
Aside from the political and trust issues, “me nah touch dem,” I am of the view that the proposed investment highlights the challenges of managing pension funds sustainably in Small Island Developing States with limited capital markets.
A Pillar Sector with Fragile Roots
Tourism is the beating heart of the Antigua and Barbuda economy, accounting for over 60% of GDP and thousands of jobs. Yet ironically, relatively few major tourism assets are locally owned.
While foreign investment has brought scale and marketing reach, it has also left Antigua and Barbuda with somewhat limited domestic control over its most vital industry.
The proposed acquisition of Jolly Beach by the Social Security Board offers a rare opportunity to change that.
Reviving Jolly Beach—a once-thriving property that drew thousands of visitors and employed hundreds—presents not just a chance for returns, but also for reclaiming local ownership in the tourism economy. That, however, demands not just ambition, but careful execution.
An Investment Constrained by a Thin Capital Market
Like most Eastern Caribbean nations, Antigua and Barbuda operates within a narrow capital market ecosystem.
Domestic stocks and bonds are limited, real estate investment trusts are virtually non-existent, hence the available pool of diversified, high-return instruments is shallow.
For pension funds with growing liabilities and an aging population, this creates a strategic dilemma: how to find adequate returns in a low-yield, low-liquidity environment?
Global Evidence: Real Estate in Pension Portfolios
Global pension fund practice provides compelling evidence for real estate investments as a strategic asset class.
According to the latest industry data, pension funds worldwide now allocate approximately 10% of their portfolios to real estate investments, with this allocation generating average returns of 8.1% in 2024, outpacing many other asset classes.
The $55.7 trillion global pension fund industry has increasingly recognized real estate as providing both diversification benefits and inflation protection essential for long-term pension obligations.
Leading institutional investors such as CalPERS in California, Canada Pension Plan Investment Board and Fortress Pension Fund in Barbados have demonstrated the strategic value of real estate investments. The key in every successful case? Professional oversight, strategic alignment, and risk management.
The Critical Importance of Cash Flow Matching
Pension Obligations Must Be Met in Cash
A fundamental principle that cannot be overlooked is that pension commitments must ultimately be met through cash payments to beneficiaries.
This creates unique liquidity management challenges that real estate investments must address through careful structuring. Leading pension fund practice emphasizes cash flow matching strategies to ensure liquidity needs are met. As demonstrated by successful implementation at major funds:
- Short-term cash flow matching earmarks the next several years of benefit payments and administrative expenses so plans do not need to sell assets during market downturns to meet liquidity obligations.
- Mature pension plans with negative cash flows (paying out more in benefits than receiving in contributions) must be particularly careful about illiquid investments.
For the Antigua and Barbuda Social Security Board, this means the Jolly Beach investment must be structured to ensure:
- Predictable cash generation through hotel operations that can contribute to meeting pension obligations.
- Liquidity buffers maintained separately from the hotel investment to meet short-term benefit payments.
- Professional cash flow forecasting to match expected hotel returns with projected pension outflows.
The evidence from successful pension fund real estate investments demonstrates several elements:
Professional Hotel Management : Jolly Beach must be operated by an international hotel management company with proven Caribbean experience, measurable performance metrics, and alignment with pension investment objectives.
Comprehensive Risk Framework : Implementation of institutional-grade risk management including stress testing, scenario analysis, and regular performance monitoring against hospitality benchmarks.
Transparent Governance : Public disclosure of all investment terms, performance metrics, and risk management procedures, following international pension fund transparency standards.
Liquidity Management Excellence : Maintenance of adequate liquid reserves, professional cash flow forecasting, and contingency planning for tourism downturns.
Portfolio Integration : Ensuring the hotel investment complements rather than concentrates the overall Social Security portfolio, with appropriate diversification safeguards.
Conclusion: Opportunity Through Excellence
The Social Security Scheme has a duty to protect contributors’ funds. But it also has an opportunity to build long-term wealth and domestic economic resilience. The proposed Jolly Beach investment can serve both ends—but only with institutional-grade governance, professional management, and comprehensive risk management.The evidence from global pension fund practice is clear: real estate can provide essential diversification, inflation protection, and attractive risk-adjusted returns when professionally managed within appropriate risk frameworks. The challenge for Antigua and Barbuda is not whether to invest in real estate, but whether to do so with the same professional standards and risk management practices that have made pension fund real estate investments successful worldwide. The stakes are too high for anything less than excellence. Contributors’ retirement security and the nation’s economic development both depend on getting this right.
Prof. C. Justin Robinson, a Vincentian and UWI graduate, holds a BSc in Management Studies, MSc in Finance and Econometrics, and PhD in Finance. With over 20 years at UWI, he has served in various leadership roles, including Dean and Pro Vice Chancellor, Board for Undergraduate Studies. A Professor of Corporate Finance with extensive research publications, he is actively involved in regional financial institutions and is currently the Principal of The UWI Five Islands Campus in Antigua and Barbuda.