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No growth in revenue could see NIS surplus turn to deficits
– Dr Luncheon
The National Insurance Scheme recently held a strategic retreat which concentrated on auto editing and controls, human resource management, resolving the back log and ensuring financial security
This is according to Head of the Presidential Secretariat Dr Roger Luncheon who is also the Chairman of the Board of Directors at the Scheme.
Dr Luncheon was addressing the backlog of entries for contributions by pensioners that have not been entered into the system.
He said that the clearing of the backlog is a source of unhappiness among some contributors given that they do not receive what they ought to.
The clearing of the backlog will definitely see an increase in expenditure and the Scheme will undeniably need to see a commensurate increase in revenue.
Dr Luncheon also said that the surplus that the Scheme has in actuarial terms is not, “where we would like it to be to provide us with the greatest assurance about meeting the long term responsibility to contributors.”
He explained that at present young people are obligated to contribute to the Scheme and he is sure that when they reach the age to start collection, they would want to know that the scheme is financially secure.
Dr Luncheon lamented that using the most stringent and rigid criteria on financial security then they are not in a favourable position.
He did point out that the scheme has just over $30B in their fund and surplus is generated yearly, “again actuarially speaking and using rigid criteria we are not there….expenditure has to be controlled and revenue has to be expanded.”
Dr Roger Luncheon
Speaking of the investments that the scheme depends heavily on, Dr Luncheon conceded that there is a mismatch, given that all of their investments are short term but their commitments are long term.
In addressing the issue of expanding revenue Dr Luncheon said that a number of models have been tried elsewhere in the world but they need to aggressively address the issue of self.
Dr Luncheon stressed that just one ward in Georgetown has an estimated 100, 000 self employed persons that are active in the economy.
He said that they have to find ways of persuading the self employed that it is in their long term interest to become active contributors, adding that it is an obligation according to the law.
It was stressed also that a major issue that the scheme is dealing with is the back log which has led to a large number of beneficiaries not in receipt of what they should be receiving because of the back log in entering the records.
He said that when this is done there will be a growth in payment and if there isn’t a commensurate growth with income then surplus could turn to deficit, “expenditure will go up and therefore revenue will go up too.”
Dr Luncheon opined that with good sound management of the scheme they will not have to resort to consolidated fund for a bail out.
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