There exists several discrepancies in old age pension eligibility requirements as expressed in the Old Age Pension Act as against the regulations of the Ministry of Social Protection (formerly Ministry of Labour, Human Services and Social Security), according to a forensic audit and review of the Old Age Pension (OAP) Scheme.
The audit and review, which was conducted by Nizam Ali and Company, noted that contrary to the Act, which requires that a person be resident in Guyana for 20 years immediately preceding application, the ministry’s policy prescribes that the person reside in Guyana for two years preceding application.
Additionally, while the act disqualifies persons who are inmates of any public or charitable institution, the ministry’s policy is not to exclude such persons as ineligible and while the Act calls for a means assessment to decide the eligibility of an applicant, the ministry has no such stipulation.
The report, which details findings in relation to the operations of the OAP from January to May 2015, noted ten instances where payments were made to persons who are inmate at public charitable institutions.
It said Section 4(d) of the Act requires that a person must satisfy the appropriate authority that his/her monthly income, as calculated under the Act, does not exceed such amounts as may by order be prescribed by the minister. The auditors concluded that this section suggests that the granting of pension is premised on a means test, a practice which was not followed during the period under review. This requirement was also not included in the ministry’s policy governing the pension application and approval process.
As a consequence, the auditor has recommended that efforts should be made to ensure that the policies of the ministry are aligned with the Act or if it is intended that the ministry’s policies suffice then the Act should be amended accordingly.
‘Ghost pensioners’
The audit also raised questions about non-existent or ‘ghost’ pensioners receiving pensions.
During the five-month period under review, auditors were able to identify 27 instances where unqualified persons collected pension books.
Additionally, the report states that “no evidence” exists to support the existence of these 27 persons who had collected pension books on behalf of eligible pensioners.
Non-existent persons may also be receiving pension in hinterland areas where toshaos and village councillors are empowered to both distribute pension books and encash vouchers.
Pensioners in these areas are not required to sign distribution sheets when they uplift pension books, which are distributed during the months of November and December.
According to the ministry, councillors and toshaos are solicited to facilitate the process, which would otherwise prove to be both difficult and costly because of the remoteness of the hinterland regions.
It defends entrusting these officials which such powers by stating, “These persons, by virtue of their office and status, are legally and culturally responsible for the welfare and well-being of the people they serve.”
The auditors have recommended that the ministry, in the first instance, carry out a detailed census to determine whether persons living in the hinterland are alive and eligible for pension and later develop a policy whereby social workers accompany the toshaos for distribution of OAP to pensioners in these communities.
During the 2011 budget debate, the late AFC MP Sheila Holder had accused the previous administration of paying “phantom pensioners.”
In her presentation, Holder had noted that there had been a sharp increase in the number of Old Age Pensioners in the period 2002 to 2010. Using a self-compiled document to make her case, Holder said that between 2002 and 2006, data from the Human Services Ministry indicated that the number of pensioners was somewhere between 33,000 and 34,000. However, this number increased significantly, with the figure moving to 36,813 in 2007 and 40,389 in 2008. There was an estimated 44,000 pensioners in 2010, she said.
Holder had challenged the recorded increase in pensioners, while noting that the 2002 census had identified 32,000 pensioners with that number having risen proportionately from 3.9 per cent of the population in 1980 to 4.3 per cent at that time.
In dollar terms, this indicated a monthly difference of over $68 million and an annual difference in excess of $824 million that appeared to have been diverted from the system, Holder had said. She had charged too that the number of “phantom pensioners” increased to 17,640 and she alleged that “the monthly haemorrhage from the Old Age Pension fund is over $116 million or $1.3 billion annually.”
Discrepancy in eligible pensioners
Meanwhile, the report said the auditor was presented with two incorrect lists of total eligible pensioners.
“After providing us with two incorrect lists showing total eligible pensioners of 64,001 and 51,915 respectively, a revised list was provided to us six weeks after commencement of the audit (September 30, 2015). That list contained 46,976 pensioners,” the auditors stated.
A conclusion was therefore drawn that the department responsible for maintaining the database is not capable of compiling an accurate list of eligible pensioners on a real-time basis.
It further noted that while the OAP database as of May 31, 2015 contained 46,976 pensioners, on average 42,744 pensioners encashed their vouchers. The discrepancy pointed to an “urgent need to have the information on the database sanitised to accurately reflect the list of eligible pensioners,” the report said.
This process is expected to be supported by a complete database listing of pensioners reconciled to the serial number of pension books issued for 2015. Such a listing is currently not available.
Further, 280 applications were requested, but could not be provided, thus it could not be determined whether the approval process for these persons was adhered to. A request for a reconciliation of actual books printed versus books distributed for the years 2012, to 2015 could not be provided. However, an independent reconciliation done by the auditors found that based on the number of vouchers encashed, it was likely that all pension books given to social workers for distribution were not actually distributed.
However there was no evidence that unused books were returned by the social workers.
The auditors were therefore unable to assess the extent to which OAP books printed were legitimately distributed and whether unused books were returned to the stores.
The report also highlighted that during the period of January to May, 2015, the Ministry of Human Services reimbursement from the Ministry of Finance was $1 million less than those sums paid out by the ministry.
This was the result of seven payment vouchers being reimbursed at $415,000 less than the amounts stated and one voucher worth $590,625 not being reimbursed as of October 5, 2015. An investigation has been recommended to clarify these issues.
The Old Age Pension in Guyana came into effect through the passing of the Old Age Pensions Act 17 of 1944, which sets out the eligibility criteria for the payment of Old Age Pension, administered by the Ministry of Social Protection.
