NIS expenditure to surpass income in two years

Mar 16, 2012 News

…2010 report says Scheme’s reserves will dry up in a decade

The Minister of Finance Dr. Ashni Singh yesterday in the National Assembly tabled a plethora of annual reports and audits including the National Insurance Scheme’s 2010 Annual Report.
This report revealed that the Scheme’s expenditure is dangerously close to exceeding its annual revenue as well as illustrates the institution’s heavy dependence on short term investments.
According to the NIS report, in 2010 the total expenditure as it relates to pension was some $9.1B, while the income was only pegged at $7.8B.
Old age benefit was responsible for some $6.7B of the pay-out.
On the income from short term benefits, it was reported that the Scheme raked in some $2B while expending just over $1B.
While the total income for the scheme rose to $11.2B in 2010 up from 10.2B in 2009, the report revealed that total expenditure accounted for some 10.8B as against $9.6B the previous year.
The report also revealed that the administrative costs associated with running the scheme is some $1.4B.
According to the independent auditor’s report for NIS prepared by TSD Lal & Co. Chartered Accountants, “the actuaries reported several matters of concern among which were that annual expenditure is projected to exceed the year’s contribution income beginning in 2014 and reserves are expected to be exhausted in 2022…The actuaries made certain recommendations to ensure the future viability of the Scheme but so far these have not been fully implemented.”
The independent auditors also said that investments of $28,813,685,000 in the statement of financial position include an amount of G$5,748,710,367 for CLICO Life and General Insurance Company Ltd.
CLICO Life and General Insurance Company Ltd., was put under judicial management in 2009.
“Due to uncertainties regarding the future of CLICO Life and General Insurance Company Ltd and its ability to honour its debts when due, a unanimous Parliamentary Resolution was passed guaranteeing State support for the recovery of this investment.”
In the transmittal letter to the Finance Minister in the 2010 Annual Report, the Scheme’s General Manager Doreen Nelson informed that during the year under review, the Insurable Earnings Ceiling was adjusted in accordance with the increase in the Public Service Minimum Wage. Hence the ceiling was increased to $126,504 per month from January, 1, 2010.
The minimum Insurable Earnings for self-employed persons contributing to the Scheme was increased from $35,000 per month to $39,500 per month from January 1, 2010.
The Minimum Rate payable for Old Age and Invalidity Pensions was increased from $14,207.00 to $15,813.00 effective January 1, 2010.

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NIS expenditure to surpass income in two years

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