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NIS still adrift

Jul 10, 2013 Editorial

For once, the National Insurance Scheme (NIS) was in the news for a positive reason, as far as working to secure its viability. Vendors in the New Amsterdam Market who were ordered to pay up their contributions to the Scheme protested the agency’s actions. But it is over five years that actuarial reports have indicated that, as presently run, the NIS is not viable.
One of the numerous reasons for its precarious position is that even though the economy has shown positive growth in that period, the number of contributors has headed in the opposite direction. It should have been obvious that unless someone was sleeping at the wheel, something was rotten in the state of the NIS web that garners contributions. One reason was that as the service sector of the economy inexorably increased, the NIS administration and bureaucracy remained steadfastly ossified in their traditional static method of collections.
The service sector, however, is dominated by small operators who have not become socialised into making NIS payments: they operate along the lines of the informal economy; evasion is the norm. Take the new phenomenon of every hamlet having a taxi service. Very conservatively, there would have to be at least five hundred of these new taxi operators with some five thousand drivers. But has the NIS shown the same initiative displayed in the New Amsterdam Market to seek out the taxi operators and ensure they operate within the system? Not as far as we have been able to gather.
There are several points of intersection at which the taxi operators are in touch with officialdom, such as for the registration of their vehicles. We have suggested in the past that these records be utilised to ensure that the owners comply with the NIS regulations or be penalised. In addition to the expansion of the service sector, there has been the explosion in gold mining. Has the NIS been coordinating their efforts with those of the Ministry of Natural Resources and the Guyana Geology and Mines Commission that have so many officers in the field keeping tabs of activity in that sector?
But contributions are not the only source of revenue for the NIS? In every other country that has progressed in the liberalisation drive over the last three decades, schemes such as our NIS have provided the funds for a substantial chunk of investment and the schemes have been rewarded handsomely with hefty returns. But as with all investments, success depends of the quality of those in charge of making the decisions of the investment portfolio mix. The NIS does not appear to have invested wisely – the decision to commit US$30 million to Clico comes to mind. We have also asked, without receiving any response, as to why the NIS Board consistently votes to defer dividends on their investment on the Berbice Bridge when it is on the financial ropes.
The obtuseness of the NIS Board can be summarised in the comment of its Chairman, Dr Roger Luncheon, late last year, that the NIS was in good shape and that the recommendations of the actuarial report were “not orders”. This is tantamount to saying that the sailor on watch who shouts “Iceberg ahead!,” is not “ordering” the captain to take corrective action. Be that as it may, while the Board has not taken any action on the recommendations that call for the NIS to get its affairs in order, it should be noted that in the last budget, the NIS contribution was raised from 13% to 14% effective last month. The burden for keeping the Scheme alive once again fell on the contributors.
In the meantime, suggestions that the inhumane practice of denying contributors from receiving medical benefits once they start receiving pensions have fallen on deaf ears. One can only assume that the intent is to have pensioners die earlier so that the pittance they receive as pensions would also cease. We wonder why the Opposition parties in control of Parliament have not been more proactive in this area.

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