If Cabinet approves the National Insurance Scheme’s (NIS) Reform Committee’s report, then the pensionable age will increase from 60 to 65 years old.
The report, completed late last year, has made a number of recommendations with regard to benefits, investments and financial management, legislation and compliance and human resources and communication.
The report urges that the NIS moves aggressively to insure self-employed persons, who are thought to make up half of this country’s labour force.
The Reform Committee has recommended that the NIS change the definition of ‘Relevant Wage’ from “the three years which gave the highest average insurable earnings within the last five years to the person attaining the age of 60 years”, to the total of the indexed insurable earnings during the period the person contributed divided by the number of years of contribution.
It also recommended that the Scheme reduce the average weight allocated to the accumulation of the total percentage of the pension from 1.7 per cent to 1.5 per cent over a ten-year period.
The committee has recommended that there be benefits for age-related ailments and a new category of beneficiaries called “temporary invalids”. It has been recommended that discrimination based on age and sex be removed from survivors’ benefit and that there be an increase in funeral benefits.
The committee has recommended that the peculiarities of seasonal employment be taken into account in awarding sickness and medical care benefits. It has also recommended that maternity benefit and dental care grants be increased as well as disablement benefit.
The report said the Depen-dant’s Pension Fund should be absorbed into the NIS and the process in so doing be refined with the assistance of the Guyana Consumers Association, the Actuary and other stakeholders.
The Reform Committee was working with the basic assumption that the finances of the NIS were in an impending crisis and that in about five years expenditure would begin to exceed total income. “It is estimated that in 2013 the reserves would begin decreasing and be depleted by 2022. An indication of this disastrous scenario was that already in the year 2006, annual expenditure had exceeded contribution income,” the report said.
The report said a comprehensive and continuous campaign should be conducted to inform the self-employed of the Scheme’s portfolio of benefits and to allow the self-employed and certain seasonal workers to pay their contributions at any time in the year. It said that domestic workers serving with private households or persons should be permitted to register among the self-employed, adding that injury benefit, medical care and disablement benefits should be extended to the self-employed.
On investment, the report said the NIS should target a real rate of return of three per cent or an amount advised by the Actuary on its investment with an appropriate mix of short, medium and long-term investments. The report said too that the portfolio mix should be correlated with the expenditures for the payment of benefits.
It said that the NIS being an important institutional investor could help to improve the competitiveness of Guyana’s money and bonds market “that can issue commercial paper for investment”.
But it said the constraints need to be removed while the regulations on the equity markets that will improve disclosures and corporate governance, need to be strengthened to improve domestic investments.
The Committee recommended that an investment manager be appointed by the minister of finance and this person should report to the NIS Board. It said the investment committee should comprise four persons, also appointed by the minister, who have the appropriate skills and representation of the major stakeholders.
