National Insurance Scheme (NIS) General Manager Doreen Nelson says the Scheme faces a projected deficit of $713M this year and debt and data management efforts over the last two years have not resulted in the expected broader coverage and better compliance.
In a message on Sunday to mark the Scheme’s 45th anniversary, she said the efforts have however helped to meet benefit obligations to claimants in a more timely and efficient manner.
She lamented that the structured workforce continues to decline “as more employers are seeking to try to evade their legal obligations to their em-ployees and the Scheme”.
Nelson, whose message appeared only in the PPP-aligned Mirror newspaper, added that many self-employed persons are still reluctant to register and make contributions to the Scheme as required by the law.
“These together with an ever aging population, increased claims and a reduction in funds available for investments are causes for concern about the future of the Scheme”, Nelson warned.
Having suffered a historic deficit of income over expenditure, the situation continued in 2013 with a deficit of $16m, Nelson reported. She said a brief review of this year’s accounts shows the problem continuing. For the period, January to August 2014, contributions totalled $9.012b while total expenditure was $9.823b, a deficit of 811m. Projec-tions to the end of the year show income from contributions at approximately $15.035b and projected expenditure at $15.748b, a deficit of $713m.
Nelson further said that the amount disbursed as benefits in 2013 was $12.6b and this figure is projected to be $14b this year. The pension branch: old age, invalidity and survivors accounts for roughly 89% of this.
The General Manager noted that from January 1 this year, the minimum rate for old age and invalidity pension was upped from $18,829 to 19,770 per month while the insurance income ceiling was hiked from $150,628 to 158,159 per month.
“It is hoped that recommendations in respect to pension management and reform as made in the last actuarial review would be seriously considered so as to provide the necessary interventions that would ensure the sustainability of the Scheme”, Nelson stated.
The government has been criticised for its sloth over addressing the recommendations of the actuarial report. In 2012 Derek Osborne of Horizonow in his Eighth Actuarial Review was blunt in his assessment, declaring that the scheme was nearing a crisis and immediate steps were required to pull it back from the brink including raising the contribution rate from 13% to 15% no later than January 2013, hiking the wage ceiling to $200,000 per month, freezing pension increases and raising in a phased manner the pensionable age from 60 to 65.
A raft of other issues was enunciated in the report such as an unbalanced investment portfolio and a low number of contributors. Further, it is now more than five years since a committee appointed by a PPP/C government produced a comprehensive report with sweeping recommendations which are still to be acted on.
In her message yesterday, Nelson said that much investment has been made in improving its record-keeping system. The records system has been a longstanding concern of the private sector. Nelson said there has also been significant investment in the aggressive monitoring of employers, the self-employed and the quality of service offered by staff.
While Nelson painted a bleak picture of the Scheme, its long-serving Chairman, Dr Roger Luncheon offered a more optimistic perspective. In his message, he said he was dispelling media information that the Scheme is insolvent or “financially challenged”. He did however acknowledge that actuarial reports have cited the unmatched growth in expenditure compared to income but assured that the Scheme was here to stay.
He argued that the Scheme reliably meets its over $1b monthly benefits expenditure and it was addressing the backlog and its repercussions in the computerization of contributions records. He said this backlog prevents timely and accurate calculating of benefits and the situation has been unacceptably prolonged.
“By December 31st, 2014, the Cabinet of Guyana mandated exercise should see the backlog eliminated and all outstanding contribution records being entered and verified on the Scheme’s official electronic database and made available for use in benefit computation”, Luncheon, also Cabinet Secretary, said.
The Chairman also said that the Scheme has over decades failed to enforce the laws on registration of the self-employed and has not been sufficiently robust on the question of debt collection. He noted that a debt management unit has been set up.
In his statement on the occasion, Finance Minister Dr Ashni Singh called on the private sector to help ensure that the self-employed are registered with the Scheme. He said that closing the gap between revenue and expenditure continues to be a priority concern and added that the administration is still considering the recommendations of the 8th actuarial review.
