NIS operating in the red – GM tells consultation

Dec 08, 2012 News

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By Leon Suseran

The National Insurance Scheme (NIS) is operating at a deficit. It is paying out more benefits than contributions received on a monthly basis. This is according to the General Manager of NIS, Mr. Terry Thomas. He was discussing the Eighth Actuarial Review during Public Consultation of the NIS at the University of Guyana Berbice Campus (UGBC) on Wednesday.
“Our income has not been matching our expenditure…We have to do certain things to correct that so that we can have enough income in order to pay all the benefits that we have rather than eating into the reserves that we have.”
The official added, “We are having an aging population

and therefore, the rate of our outflow is much more than our inflow…there are less persons employed who are paying, so that’s why we have to increase the rate or get more persons to contribute to the scheme and investment income is also falling and therefore we are not getting lots of money from investment”.
He stated, too, that the Eighth Actuarial Review is all about correcting the imbalance.  This can be corrected “by increasing contribution rates; by having much better and fuller compliance by employers and self- employed persons; by stalling or delaying the pension payments—that is – increasing the pensionable qualifying age and it can also be corrected by reducing the pension of those who come into the scheme now”.
The Review has made certain recommendations to be implemented to ensure the sustainability of the Scheme. There are 28 recommendations put forth by the Review on which members of the Berbice public were consulted.
Some of the recommendations include increasing contributions from 13 per cent to 15 per cent no later than January 2013; increase the wage ceiling to $200,000 per month; freeze pension increases for two years or until the contribution rate is increased and finance improves; increase Maternity grant to at least $5,000, etc.
Thomas explained that the Law states that there are specific periods that there should be someone trained as an Actuary to look at probabilities, look at trends and to assess the ability of the Scheme to continue. “So this actuary has come based on our requirements and he has looked at our scheme from all angles; our source of funds and the benefits, adequacy of the benefits, the coverage we provide and to see whether how we are now, with the existing rate, whether we can continue this same way and pay the same kinds of benefits we are paying to future generations. It’s informing the public what the recommendations are and letting them know what we have to do to correct the situation and listen to their recommendations as well”.
Thomas added that Guyanese should be concerned about this review “because NIS impacts the life of almost everyone, whether you are a worker, pensioner, on maternity leave. It affects you and that affects your contributions with the scheme and eligibility to pension and other benefits”.
One of the more popular recommendations to the Scheme by the review is that the pensionable age be increased from 60 to 65 “on a phased basis…and keep 60 as early pension age with reduced pension (six per cent lower per year) only if retired”.
And many Guyanese are concerned about this. The General Manager, however, added that this could happen very soon and is one of the measures proposed to save the Scheme from the current ‘deficit’ state it is in.
“It’s a possibility that raising the pensionable age can [happen] because this is one of the mechanisms we want to use. However…when this scheme started, the pensionable age was 65.
“We changed it along the way so we are hoping to go back to what it was when we started because persons are living longer and it’s important right now to correct the imbalance in the Scheme. It’s better you have something that is viable than you have something that cannot sustain itself”.
There were consultations with the Labour Ministry, employers as well as the opposition political parties. The Scheme will be having more consultations around the country.
After the consultations, he stated, “we feedback whatever recommendations they have made, once it is going to affect the situation, we are going to input that into the recommendations…because we have not yet decided what we are going to implement”.
The last stage is when the recommendations will go to the National Assembly for final approval. Thomas is hoping that they can get to Parliament “as quickly as possible because the recommendations are imminent and we have to make a decision.
Public Relations Officer (PRO) of NIS, Ms. Dianne Lewis- Baxter added that the public consultations are not the only avenues or means through which NIS can get feedback about the review.
Persons can e-mail or call the NIS offices to make suggestions “but the whole idea is to have maximum participation from members of the public”.

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