With more than 20% of National Insurance Scheme (NIS) monies ensnared in the CLICO debacle and not earning income, the Scheme is in trouble and needs an urgent solution, Minister of Finance Winston Jordan says.
“With respect to the NIS, this organization is beset with a number of problems. It has investments amounting to $5.2 billion that are ensnared in the CLICO debacle. That represents more than 20 percent of its assets that is not earning income. The actuaries have projected that the Scheme is in trouble and something has to be done urgently to address the problem,” he told the National Assembly in his Budget 2015 presentation on Monday.
He recalled Resolution No. 82 of 2009 which was passed by the National Assembly “call[ing] upon the Government to take all possible actions to secure the investments made in CLICO (Guyana) by the NIS on behalf of contributors and beneficiaries of the Scheme to prevent any consequential loss in benefits to them.”
“Sadly, the PPP/C Government did nothing on that Resolution, resulting in a persistent deterioration in the Scheme’s financial position. A new Board of Directors has been appointed. I will, shortly, be meeting with that Board and charging them with the responsibility, after consultation with the Actuary, to come up with solutions to address the underlying problems of the Scheme,” Jordan told the House.
Clico collapsed in 2009. Clico (Guyana) had invested $6.9 billion (US$34 million) in Clico (Bahamas) which represented 53% of the local company’s assets. Although this investment was liquid on paper, subsequent investigations revealed that this sum was tied up in real estate investments that Clico (Bahamas) had in Florida through subsidiaries. When Clico (Bahamas) was ordered liquidated, the local company was subsequently placed under judicial management. After a review of the company’s affairs, the then judicial manager Maria van Beek recommended that the company be wound up but this was subsequently challenged by directors.
The NIS is now facing annual deficits as expenditure has begun to exceed intake.
