The National Insurance Scheme (NIS) is set to record a deficit of $854.9M this year because of an increased number of benefactors and slow return on investments.
At a ceremony held at the agency’s Brickdam, Georgetown office on Friday to observe its 49th anniversary, General Manager Holly Greaves disclosed that the agency collected $14.4B from January to August of this year and is projected to collect $8.3B for the remainder of 2018.
While this will add up to $22.7B, the entity’s expenditure for 2018 is set at $23.6B, showing a deficit of $854.9M.
“The primary contributing factor to the escalating total expenses was Benefits Payments of $14B which represented approximately 92%of the $15.5B in expenditure as at August 31, 2018,” Greaves said. She added that the pension branch accounted for $13.3B, while the short-term and industrial branches accounted for $1B and $160.9 respectively.
As the claims to the NIS which stood at 82,934 at the end of August increase, she noted that the NIS is simultaneously faced with demographic, financial and economic challenges.
She further pointed out that the other income earner for the Scheme is its investment portfolio but it continues to “be faced with low interest rates and no interest from some of its non-performing investments.”
Chairman of the Scheme, Dr. Surendra Persaud said to keep the agency viable, policymakers will have to make difficult decisions moving forward.
“Those financial pressures will make it hard for us to maintain the future viability of the Scheme and thus the policymakers will have to make some difficult decisions,” the Chairman told those gathered including Finance Minister Winston Jordan.
The complaints did not sit well with Minister Jordan who delivered the featured speech at the event. The Minister instead told the Management of the NIS to look at ways to update the National Insurance and Social Security Act of 1969.
The Minister reminded the heads of the agency that they have a role to play in the survival of the scheme. “Reform measures are necessary to put the institution on a stronger financial footing,” he noted in the presence of majority of the NIS staff.
He noted that the archaic law is not suitable for the viability of the agency in a 21st century.
Jordan pointed to sections of the Act which require the NIS to make certain investments which are no longer beneficial to the agency.
“It is time that either you get a legal personnel or your legal department begins to look at that legislation to see where it has to be tinkered with or reformed in whole or in part to bring it up to speed,” Jordan told the Chair and General Manager of the board.
The Minister suggested investments in the private sector, collaborations with the Deeds Registry and the Guyana Revenue Authority to ensure all new businesses remit employees benefits; and treat beneficiaries with respect.
He also called out the employees at the scheme for colluding with businesses which are evading payments.
The National Insurance Scheme has a total of 51,178 pensioners on its database. Of this amount, 37,285 are in receipt of old age pension.
