The National Insurance Scheme (NIS) is projecting a deficit of $546.7 million, a major departure from a budgeted surplus of $469.3 million.
This is according to the Ministry of Finance’s Mid-Year report on the economy.
It said that the projected deficit was mainly due to a shortfall of $1 billion or 4.5 percent in employee contributions, compared to the amount budgeted for at the half-year, as well as an increase of $449.3 million or 1.9 percent in benefit payments. It is unclear where the employee shortfalls are coming from but the NIS also lost a large amount of employee contributions in 2017 and 2018 after thousands of sugar workers were made redundant.
The report added that for the first half of this year, the NIS recorded an overall deficit of $748.4 million, an increase when compared with $715.6 million for the same period last year.
Over the last five years, the NIS has seen a major tightening in its finances with benefits paid out beginning to outstrip contributions to the Scheme. Several actuarial reports have warned about the challenges facing the Scheme.
According to the 2019 mid-year report, revenue collected for the first half of this year reached $11.9 billion, 90.8 percent of the budget and 9.7 percent more than the same period last year.
The report noted that this improved position resulted from higher wage bands, on account of an increase in wages and salaries, as well as improved collection of outstanding contributions from delinquent employees.
At mid-year, contributions from the self-employed stood at $492 million, 22 percent lower than last year’s half-year target of $627.8 million, despite ongoing campaigns.
The report said that at the same time, NIS is working closely with the Guyana Revenue Authority (GRA) to update its list of self-employed persons and effective June 15, 2019, self-employed persons can make their contribution payments using GTT Mobile Money.
As it relates to expenditure, the report highlighted that at mid-year it increased to $12.6 billion from $11.5 billion at the end of June last year, mainly due to an increase in benefit payments which were 91.4 percent of total expenditure.
The report said that the NIS made adjustments to the following rates, effective 1 January 2019:
– minimum Old Age and Invalidity Pensions, from $30,000 to $32,100 per
month;
– minimum Survivor’s Pension from, $15,000 to $16,050 per month
– funeral grant from $44,438 to $48,882.
Additionally, the Insurable Earnings Ceiling was increased, with effect from 1 February
2019, from $240,000 to $256,800 monthly, and from $55,385 to $59,962 weekly.
