NIS Redux

Mar 18, 2013 Editorial

The National Insurance Scheme (NIS) is more than just another governmental institution. It literally represents the lifeblood of our workforce when they become too old or too injured or too ill to labour any longer.
The NIS is not even technically owned by the government: it is fully supported by the money that is deducted from the pay-packets of workers before they even saw their earnings. These ‘contributions’ from workers make subscribing workers the real owners of the NIS, with the Board having a fiduciary responsibility to represent their interests.
We raise this issue once again after the deafening silence from the NIS Board following our editorial of February 13 where we asked the question: “Is the ‘NIS committing suicide’”? We asked the question against the background of its 2011 Financial report which 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 an even larger deficit when that report comes out later this year. Rather bleakly, the 8th Actuarial Report which came out towards the end of 2012, concluded that with assets of just over two times its annual expenditure, the “entire Fund will be exhausted in less than 10 years if benefit reforms are not made immediately”.
While the Report warned that “Urgent attention is required if the NIS is to meet its future obligations without burdening employers and workers,” there has been total focus from the Board with the recommendations that called for: (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.
The Private Sector Commission (PSC) reviewed the Report and recommendations but focused on what everyone seemed to ignore: the need for a more robust investment policy by the NIS Board.
“The investment policy should give due consideration to the current financial position of the fund and current and future market conditions. The policy should include the roles and responsibilities of the various parties, investment objectives, strategies, constraints and asset allocations,” advised the PSC.
But our question of ‘suicide’ was prompted by information that we received on one of its present investments, specifically the investment in the Berbice Bridge. We said 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 was 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 the BBCI when that institution has consistently declared massive profits and its Board lived high off the hog?”
We have now received information that the NIS actually has over $5billion invested in the Berbice Bridge. We need to have a clear statement as to how and in what form the NIS has invested in the bridge. What is the rate of return on capital investment if in the form of shares, preferential or otherwise, it means that hundreds of millions of dollars have been forgone.
In three years the NIS can wipe out its deficit through collecting dividends from the Berbice Bridge. We demand an answer as to why the NIS is not collecting dividends on the Berbice Bridge.
If the information is correct, the Board had betrayed its fiduciary responsibilities to the workers and it is our suggestion that they take a class action suit against it for this betrayal.

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