Is the NIS committing suicide?

Feb 15, 2013 Editorial

Notwithstanding all the protestations from the Chairman and the Board of the National Insurance Scheme (NIS), the latter has been in trouble for quite some time. Last December, after the eighth actuarial review, which simply reiterated concerns made four years before in the review of that year, the Chairman, Dr Luncheon, in his patented circumlocutory style, sparred with reporters over the use of the word ‘dire’ to describe the situation of the institution he heads.
“Dire reflects some immediacy like tomorrow or yesterday and I can say this with the greatest honesty, those wicked people who are out there and trying to pander to this notion that this NIS is a sinking ship and it’s about to go down, it’s just total nonsense.” But even he was forced to acknowledge that, “Were we not to make specific interventions that are outlined in this actuarial review, yes, hard times, dire times, but as we sit here today the Scheme is healthy.”
But that was exactly what had been proposed before but never taken aboard by the board.
The 2011 actuarial report noted that for the first time in its forty-two year-old history, the NIS racked up its first ever deficit – a whopping $371M. Since nothing has been done in 2012, we can expect that the report for that year, which comes out later this year, will reveal an even larger deficit. Rather bleakly, the report concluded that with assets of just over two times its annual expenditure, “the entire Fund will be exhausted in less than 10 years if (the) contribution rate increases and benefit reforms are not made immediately”.
Some of the more pertinent changes that the report recommended were: a) increasing the contribution rate from 13% to 15% no later than January 2013 as well as the adoption of a policy for future contribution increases. b) Increasing the wage ceiling to $200,000 per month. c) Freeze pension increases (no pension increase) for two years or until contribution rate is increased and finances improve. And most controversially; d) Increase the pension age from 60 to 65 on a phased basis.
And all of this did not signify ‘dire”?
In a very far-reaching review, the Private Sector Commission (PSC) assessed the Report’s recommendations, but fundamentally concluded that as a threshold issue, the NIS has to first get its house in order. We could not agree more. The first thing we recommend is that the entire board of the NIS must be scrapped and be replaced with individuals that are qualified to run the affairs of that critical institution.
It boggles the mind to learn that the contributory base of the NIS keeps shrinking when the employment situation has improved so dramatically in Guyana. After so many reviews and recommendations, why has the NIS not been revamped to capture the new emerging Guyanese workforce? Have all the new taxi-service depots that flourish in every town, village and hamlet been brought into the pool? Has the NIS been working with the GRA’s licencing office, for instance, to ensure that before the taxi owners receive their licenses, they submit their NIS submission certificates? And the same for the burgeoning gold-mining industry and the Guyana Geology and Mines Commission?
But what in fact was most stupefying to discover, in light of the crisis the NIS is facing – when workers are being denied their benefits through the imposition of all sorts of hoops that they have to jump through – was that last December, the NIS Board acquiesced in the non-payment of dividends from the Berbice Bridge. The NIS Board, in its wisdom, had invested some $1.5 billion in that venture. Now when it is facing another massive loss in 2012, it is criminal for the Board to pass on some $200 million in dividends.
The question has to be asked: “In whose interest is the NIS Board acting?” Why should it buy into the importuning of Berbice Bridge Company Inc., when that institution has consistently declared massive profits and its Board lived high off the hog?
Is the NIS committing suicide?

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Is the NIS committing suicide?

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Is the NIS committing suicide?

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