The long-awaited report on the reform of the National Insurance Scheme (NIS) is now completed and while the details of its contents are yet to be made public, some of its key recommendations – including the recommendation that the age of retirement be upped from 60 to 65 are already known. The report also contains other key recommendations relating to investments, benefits, financial management, legislation and compliance, all important issues if the NIS is to fulfil its mission.
The completion of the report is, in itself, an important development since the NIS is not only one of the key savings institutions in the country, but also a social safety net for thousands of ordinary Guyanese.
There are several things that are critical about the report in the context of the fulfilment of the NIS’s role. Among these are the part that the recommendations have to play in enabling the strengthening of the Scheme’s management and the protection of its financial viability. Another important consideration – that is linked to the first – is that of ensuring that the Scheme better serves its primary purpose, that of providing a safety net for its contributors. A third critical element – which is linked to the first two – is that of legally equipping the Scheme to better serve its substantive purpose.
What most of the recommendations will supposedly do is to proffer ways of strengthening the capacity of the NIS to fulfil its mandate in each of these areas and both the contributors and, presumably, the government will be keen to see the realization of those reforms in the shortest possible time.
Whatever else has been deficient about the way in which the NIS has functioned over the years, two things stand out. First, the system for ensuring the payment of employee contributions is seriously deficient insofar as there are hundreds of millions of dollars in such contributions that remain unpaid over several years. The available evidence suggests that delinquency in compliance is linked, in large measure, to a fundamental lack of regard for the Scheme among employers, including several prominent business houses, and deficiencies in the law that render the Scheme’s enforcement capacity ineffective.
Over time, too, there have been reports of internal ‘scams’ that have supported compliance evasion and that have allowed some major defaulters to secure Certificates of Compliance.
The second critical weakness has to do with what, far too often, are difficulties and interminable delays in the collection of benefits, a circumstance that appears to be linked to various chronic inefficiencies in the management of the Scheme. On the whole and while the NIS continues to provide an invaluable service to its contributors, aspects of the manner in which it has been administered have actually worked to the frustration of many of those contributors.
One thing that the reforms simply must accomplish, therefore, is the righting of wrongs, particularly those that have had to do with the illegal evasion of the payment of employee contributions and the often interminable delays in the payment of benefits.
It is worth repeating that the most important social purpose of the NIS is to provide a safety net for Guyanese whom, in numerous instances, have little or no savings alternatives and that unless the problems within the Scheme’s administration are remedied by the reforms then the whole exercise would have been a complete waste of time.
Enhancing the viability of the Scheme will require sound financial judgment that will include prudent investment choices both at home and overseas. It is also desirable that the present cumbersome organizational and management structure of the NIS be revamped to reduce the existing huge bureaucracy while relying far more on Information Technology-driven systems to render the administration of the Scheme more efficient. As far as personnel changes are concerned we can only hope that the rationale steers clear of the kind of nepotism and cronyism that cause the Scheme to be placed in the hands of ill-suited political appointees whose interests are at variance with those of the contributors.
Then there is the matter of legislative reform. One area in which the limitations of existing legislation has stymied the functioning of the NIS is that of compliance enforcement. Apart from the fact that the penalties for non-compliance have actually served as an incentive for defaulters, the travails of pursuing legal action against defaulters have left the NIS thoroughly frustrated. Such legal reforms as are envisaged in the recommendations must do no less than read a veritable “riot act” against defaulters – including those Members of Parliament and other well-placed persons who are in default – if the Scheme is to be provided with the legal muscle to pursue its mandate.
Of course, the completion of the recommendations mean that only half the job is done. There is now a national propensity for commissioning studies and reports – invariably at considerable cost – and making a huge fuss about the completion of reports and recommendations only to consign those reports to bottom drawers and filing cabinets. This must not be allowed to happen in this case. One must hope, therefore, that the government understands both the importance of the National Insurance Scheme as a social and financial institution and, as a corollary, the undesirability of having the institution continue to function in its present state. The second half of the job of reforming the NIS must be completed – and with a greater measure of alacrity than the first. Otherwise we may as well not have gone to the trouble and the cost of bothering about the reform exercise in the first place.
