45 years later…Dwindling work force, unregistered self-employed biggest worry for NIS

Sep 30, 2014 News

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The National Insurance Scheme (NIS) is insisting that the entity remains in a strong financial position with efforts intensified to clamp down on collections from unregistered self-employed persons.

The entity, which is tasked with maintaining a system of social security through which enough income is secured to take the place of earnings in the event of sickness and accident, yesterday celebrated its 45 years in existence.
Under the laws, employed persons and employers have to make payments, based on their earnings, to National Insurance Scheme.
But there has been worry whether the entity’s payments were not exceeding collections, threatening its long-term viability.
Chairman, Dr. Roger Luncheon, in his anniversary message, denied that the scheme is insolvent and financially challenged. “On the contrary, the records, the financial records made available to the public, for the years of the life of the scheme should dispel any fears of insolvency. Again, I insist that the scheme is a viable social insurance entity.”
As a matter of fact, says Dr. Luncheon, the scheme has assets that exceed $30B, reliably meeting its more-than $1B monthly benefits expenditure.
However, the official admitted that there are a number of major issues currently being addressed. One would include its backlog and computerisation of contribution records.
“This backlog prevents timely and accurate computation of benefits for contributors, a situation that is unacceptably prolonged.”
With complaints by retired workers that NIS is unable to locate records, Luncheon assured that a project to computerise contribution by workers is expected to be eliminated by the end of this year.
By then, all outstanding contribution records are expected to be up-to-date, and verified on the scheme’s official electronic database and made available for use in benefit computation.
With more than 120,600 active contributions and 42,000 pensioners, the Chairman said that periodical reviews of NIS have pointed out the unmatched growth in expenditure as compared to income.
“The consensus of all is that income collection must be enhanced.”

NIS is hoping to improve the situation by increasing the number of contributors and improving its debt recovery.
Unregistered Self-employed
Another major problem over the decades has been the failure by NIS to enforce the law on registration of the self employed.
“Literally, hundreds of thousands of self-employed Guyanese have not been registered overtime.
All stakeholders would have to collaborate to address this malady.”
According to Dr. Luncheon, another critical area affecting NIS is its debt management which has seen the scheme losing uncollected contribution income from defaulting employers and the self-employed.
“A debt management unit has been established. The losses must now be quantified and then the debt pursued. Compiling/maintaining an up-to-date data base of debt and debtors is recognised as the important foundation of debt management initiatives.”
The growth of the economy and diversification itself has also proved a challenge.
“The scheme’s response to this reality is to have expansion in its geographic coverage, encourage collaboration with sister revenue collecting agencies, to promote application of technology in enforcing the law.”
An independent office in Region Eight, a key mining area, is expected to be established soon.
NIS has been working with sister agencies to address concerns like registration, contribution liability and public procurement.
NIS is also depending more and more on technology to move away from its manual system solve the increasing volume of data that comes in daily.
“The scheme is here to stay. The scheme intends to continue discharging its mandate to the satisfaction of Guyanese and in accordance with its laws,” Luncheon said.
Dwindling Workforce
Meanwhile, General Manager, Doreen Nelson, in her 45th Anniversary message, said that during the last two years, increased focus has been placed on debt and data management.
But the intended results are slow in coming. “Our efforts thus far have failed to yield the expected results of broader coverage and improved compliance but have allowed us to meet our benefit obligations to eligible claimants in a more timely and efficient manner.”
Worryingly, NIS is seeing its structured workforce dwindling even more as employers continue to seek ways to try to evade their legal obligations to their employees and the scheme.  “Moreover, many self-employed persons are still reluctant to register and remit contributions in accordance with the law.”
These, together with an ever aging population, increased claims and a reduction in funds available for investments are causes for concern about the future of the scheme.
Last year, NIS reported a deficit of approximately $16M.  The trend will continue this year.
So far for this year, between January and August, contributions collected were approximately $9.012B while total expenditure over the same period was approximately $9.823B.
The projections to the end of the year show that income from contributions would be approximately $15.035B while the projected expenditure would be approximately $15.748B.
The amount paid as benefits during 2013 was $12.6B and it is projected that for 2014, the amount will increase to $14.0B. The Pension Branch – Old Age, Invalidity, Survivors – accounts for approximately 89% of these payments.
From January 1, 2014, the minimum rate for Old Age and Invalidity pensions was increased from $18,829 to $19,770 per month and the insurable earnings ceiling was increased from $150,628 to $158,159 per month.
According to the General Manager, it is hoped that recommendations in respect of pension management and reform as made in the last review would be seriously considered so as to provide the necessary interventions that would ensure the sustainability of the scheme.
“Much investment in time, money and training has been made to improve our system of record-keeping, the aggressive monitoring of the employer and self-employed populations and the quality of service provided by staff.”

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