On June 15 this year in a column in Stabroek Business, commentator Mr Christopher Ram reflected on the perils facing the National Insurance Scheme (NIS) and emphasized the need for swift action.
He noted that the reform that was now being discussed stemmed from the Actuarial Review for 2001, the next actuarial review had been due in 2004 and that there was a great danger that by the time the board of the NIS acted upon the report of the review committee the 2007 actuarial review would have become necessary.
He added “The actuary predicts that under the optimistic scenario the Scheme would experience its first cash flow deficit in 2019 and depletion in 2028 while under the pessimistic scenario the Scheme would experience its first cash flow deficit in 2009 and depletion in 2019. Under the intermediate scenario the Scheme would experience its first cash flow deficit in 2013 and the reserves depleted by 2022. Even the best case scenario must therefore be of concern.”
Mr Ram also argued that “The problems of the NIS are greater and deeper than record-keeping. It is one of governance including all levels of management, organizational structure, the legal framework, loss of focus and poor execution.”
It is not known how much work has been done by the Reform Committee since June as there has been no public presentation on this. A report is to be submitted by the Reform Committee later this month. What new information is known about the condition of the Scheme came on Monday from its long-serving Head, Mr Patrick Martinborough at the celebration of the Scheme’s 38th anniversary. Mr Martinborough, who has hinted that he may not renew his contract after it ends this month, also made the urgency of addressing the Scheme’s problems clear.
“I think [2008] would be one of the most challenging years in our history,” he told the gathering. Actual receipts by the Scheme this year between January and August totalled $5.6B while expenditure was $5.3B – cutting it close for an entity with significant contingent liabilities and an aging population. In his address, Mr Martinborough said “it would appear at present that the Scheme has reached an equilibrium point. That is a point when the contribution rate is equal to the expenditure rate”. As a result of this, he said that intervention measures are necessary. “I don’t know what they will be
