The raft of recommendations contained in the recently completed report on the reform of the National Insurance Scheme (NIS) can only be effectively implemented if they are energetically supported by the political administration including President Bharrat Jagdeo according to an informed NIS source.
Speaking with Stabroek Business late last week the source, who declined to be identified, said that it could not be taken for granted that the implementation of the recommended NIS reforms will be implemented with the sense of urgency that it warrants. “Ideally, what we need is for President Jagdeo and the relevant cabinet ministers and officials to throw their weight behind NIS reforms in the same way that the government threw its weight behind the implementation of the Value Added Tax,” the source told this newspaper.
Stabroek Business understands that the Committee on NIS reform which began its work in 2006 completed its report late last year. And according to the source it is in the interest of the Scheme that progress towards the implementation of the reform recommendations proceed with due haste. “If we accept that there are problems with the Scheme that are sufficiently in need of fixing to have warranted such an elaborate exercise then there is little sense in unduly delaying the implementation of the recommendations.
Stabroek Business understands that the report still remains accessible only to senior managers of the Scheme though some of its recommendations, including those relating to investments and the adjustment of the retirement age from 60 to 65 have already appeared in the media.
The source told Stabroek Business that while several of the recommendations contained in the report sought to address “critical challenges” facing the Scheme others were likely to be frowned upon by some contributors, “Conceivably, we can anticipate, for example, that contributors who are approaching age 60 and who may have been anticipating receipt of their pensions in a few months or even a few years time are likely to be disappointed over the fact that once the recommendations are implemented they will now have to wait quite a few more years before they can access their NIS pensions,” the source said.
The NIS has come into sharp focus in recent years over what its critics say is a compliance regime that has been less than successful in securing the timely remittance of employee contributions and contributions from self-employed persons. This newspaper has published the names of a number of business houses that are indebted to the Scheme to the tune of tens of millions of dollars. The source told Stabroek Business that apart from the fact that the resort to litigation had “accomplished little,” major defaulters in the business
community had not been brought under any real pressure by the government to liquidate their debts to the NIS. “One of the reasons for the high VAT collection rate since is implementation is the fact that businesses are aware that Guyana Revenue Authority has the full and absolute backing of the President. Quite apart from the reform measures contained in the report, remittances by businesses would increase dramatically if the owners were aware that the weight of state authority is behind efforts to recover those sums,” the source said. Outstanding NIS contributions for employed and self-employed persons currently stand at around $500m.
The source noted that while the recommendations contained in the report envisaged legal reforms that sought to impose harsher penalties for transgression of NIS regulations these could only be successfully implemented if the relevant enforcement tools were made available to the NIS. In this regard the source noted that the legal reform recommendations needed to take account of “a cumbersome judicial process” which, even making allowances for legal reforms,” could continue to frustrate the Scheme in its efforts to secure judgment against defaulters. “Personally, I believe that recovering the huge outstanding amounts is sufficiently important to the solvency of the Scheme to warrant the setting up of a special court to address NIS litigation,” the source said.
Concerns have arisen over the solvency of the Scheme since 2006, when receipts began to roughly equal benefits and operating costs. The source explained that this has been due to several factors including increased levels of pension and other benefit payouts. “Ideally, if the solvency of the Scheme is to be protected the Scheme needs to have a cushion. All the more reason why the reform recommendations regarding contribution payments and prudent investments are so important,” the source said. Asked whether the reform recommendations envisaged a reduction in the Scheme’s 700-odd employees the source said that it was reasonable to anticipate that a reformed NIS would place greater emphasis on the use of information technology. The source added that since the contents of the report were still to be shared with the vast majority of the Scheme’s employees some degree of speculation had already arisen regarding the likelihood of job losses.
Meanwhile the source is contending that “the widespread and meaningful consultations with stakeholders,” which had been promised prior to the start of the exercise never really materialized. “Whether or not the consultations were as widespread as we were led to believe they would be is questionable and, certainly, many of the sessions can hardly be said to have been constructive.” The source said that some of groups that participated in the reform consultative sessions were so ill-prepared for the exercise that there were cases in which persons attending the sessions used those fora to seek responses to their personal NIS queries. “In some cases when contributors were told by the panels that their queries could not be entertained at those meetings things turned quite sour,” the source said.
