Citizens deserve better social protection from the NIS

Dec 08, 2013 APNU Column, Features / Columnists

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Guyana’s National Insurance Scheme (NIS) is in jeopardy. For the first time in more than four decades of its existence, the scheme recorded a deficit of $371 million in 2011. The 8th Actuarial Reviewin December 2011 deemed the NIS to be nearing “crisis stage” and predicted that, unless reforms are implemented immediately, it will be exhausted in less than 10 years.
The NIS faces several serious problems. The biggest is the failure of People’s Progressive Party Civic policy-makers who have dominated the NIS board for the past two decades to respond to changing socio-economic conditions and deteriorating finances. They have recklessly endangered the scheme’s long-term financial sustainability.
Another problem is that NIS’s investments seemed to have been driven by political interests rather than prudential considerations especially during the last decade. They ended up compromising the quality of the investment portfolio.
The scheme plunged impetuously into the ill-advised investments of US$30M in the bankrupted CLICO and the US$10M funding of the Berbice River Bridge; the acquisition of the Guyana Embassy building in Paramaribo, Suriname and the Guyana Revenue Authority building in Georgetown and the granting of  ‘loans’ to chosen commercial companies. Another investment mirage on the horizon, even as the scheme is failing, is the proposed multiplex cinema on the East Coast.
The danger is that, left in the hands of the PPP, caution will be thrown out the window. The Scheme’s funds will continue to be diverted away from its real goals into costly misadventures.
Dr. Roger Luncheon, Chairman of the NIS Board and PPP Central Committee member who presides over the slide, could not mask the mismanagement that is enfeebling the Scheme. He confessed, on the 44th Anniversary of the National Insurance Scheme in September, “Essentially, the Scheme’s expenditure growth is outstripping revenue growth. Contribution income, the main ingredient of revenue, was G$11.32 billion in 2012, while benefits expenditure, the main ingredient of expenditure, was G$11.33 billion.”
Ms. Doreen Nelson, NIS general manager, admitted that in the wake of the deficit at the end of 2011, the trend of losses continued into 2012 with a deficit of about $474 million. It seems that there will be further losses in 2013. Nelson announced: “Contributions collected over the period January to August 2013 were approximately $7.754 billion while total expenditure over the same period was approximately $9.120 billion. The projections to the end of 2013 show that income from contributions would be approximately $11.631 billion, while the projected expenditure would be approximately $13.684 billion.”
The story of the NIS is one of a dream turning into dread. It began operations in September 1969 under the People’s National Congress administration. Prime Minister Forbes Burnham had a clear vision of a welfare state which stood on three pillars – free education from the nursery to the university, affordable housing and social protection through the creation of a national insurance scheme  which would afford coverage “from the cradle to the grave.”
The PNC administration, in 1969, formulated the Scheme’s mission. This was, initially, to establish a system of social security through which citizens could secure sufficient income to take the place of earnings when they are interrupted by sickness or accident. The Scheme, more generally, was designed to provide for retirement through age, sudden death of a breadwinner, and to meet exceptional expenses as those concerned with birth and death. It also had to ensure that the funds to be used for future payments would be invested in such a manner that the economy of the country would benefit.
The PPPC administration today has all but shattered that dream. It must now rethink its social security strategy, if it has one. It must try to understand the Scheme’s social roles, develop a clear sense of purpose and comprehend the consequences of its wild investment policies.
The present parlous state of the NIS has had an impact on the way both employees and employers perceive social security. Few employers would have faith in contributing to a scheme if they thought that, once politicians got their hands on the funds, they would embark on reckless investments. Many employees, particularly in the sugar industry, now understand the importance of this visionary scheme on their daily lives; many have had to take to the picket lines to protect their entitlements or to protest whenever there are delays in the payment of benefits.
The NIS, at present, is in a sad state. It does not now provide an adequate level of coverage to Guyana’s working and elderly population. It could return to robust health, however, if it were to become a truly autonomous institution. This would free it and its management from the heavy hand of political direction and the reckless pursuit of wild investments.
The trustees of the national insurance funds must be accountable directly to the National Assembly and not to the PPPC administration. The scheme’s investment portfolio must be managed professionally and prudently in order to ensure its sustainability. Guyanese workers demand and deserve no less.

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