| PPP/Civic Government will never let NIS fail – says Finance Minister |  |  |  |
| Thursday, 15 November 2012 23:43 |
MINISTER of Finance Dr. Ashni Singh yesterday emphatically stated that the PPP/Civic Government will never let the National Insurance Scheme (NIS) fail. He emphasized that the Government is firmly committed to finding viable and lasting solutions to the challenges faced by the Scheme, while minimizing the impact of any such solutions on workers, employers, and pensioners.  Minister of Finance Dr. Ashni Singh Singh made the point that a number of well known factors have contributed to the current situation faced by the NIS, including very importantly, the phenomenal growth in benefits paid by the NIS to its beneficiaries which has outstripped the growth in contributions received. The Minister pointed out that total benefit payments have grown phenomenally from a paltry $272 million in 1991 to $10.7 billion in 2011. What is particularly significant is that, in 1991 administrative expenditure amounted to $142 million equivalent to 52 percent of benefit payments. In striking contrast, in 2011 administrative expenditure amounted to $1.5 billion equivalent to 14 percent of benefit payments. In fact, Minister Singh pointed out that if one only looked at recent years from 2007 to 2011, total benefit payments made by NIS increased by 46 percent to $10.7 billion with some categories of benefit payments rising even more rapidly, such as old age benefit payments which rose by 64 percent to $7.8 billion over the same period. At the same time, the Scheme’s total contribution income increased more slowly by 33 percent to $10.8 billion over the same period. Meanwhile, the Scheme’s administrative expenditure rose by a much more modest 20 percent over that period. According to a release from the Government Information Agency, these developments reflect a number of realities, including the fact that more persons are recognizing the value of NIS benefits and are making claims, life expectancy has been rising and as a result the pension receiving population has been increasing steadily, and the cost of providing coverage in such areas as medical benefits has been increasing rapidly. At the same time, recognizing the fact that contributions are paid by the working population and the business community, the Scheme’s contribution rate increases over the years have been very modest. In addition, the Board and Management of the NIS have been endeavouring to augment contribution income with investment income by seeking out higher return investment opportunities without compromising the quality of the investment portfolio. It is for this reason that such investments as those made in the Berbice River Bridge Company Inc (BBCI) were made. GINA noted that, in the case of the BBCI investments, rates of return as high as 11 percent were being earned, compared to the paltry rates of return that were being earned on some investments made by the Scheme prior to 1992. The Scheme’s investments in Clico also represented a part of this effort to earn higher rates of return, given the levels of return that Clico investments were paying at the time. In relation to the Scheme’s investments in Clico, the Minister reiterated the Government’s previously expressed assurance that the Government will ensure that the NIS does not lose the amounts it invested in Clico. Minister Singh also acknowledged the need for accelerated progress to be made in improving administrative efficiency at the Scheme, particularly as it relates to timely processing of benefit payments and updating and maintenance of accurate contribution records. In this regard, the Minister stated that the management of the scheme has been working diligently to address these issues. The Minister stated that there are no easy answers or solutions to the issues identified by the actuarial report, drawing attention to the fact that the Opposition mouthpieces in all of their politically motivated pronouncements have conveniently sidestepped the reality that some of the report’s recommended solutions, such as increasing the contribution rate, increasing the wage ceiling, freezing pension increases, and raising the pensionable age, will all cause hardship to the beneficiary and contributing populations, including both employees, employers and self-employed contributors. Minister Singh stated that the Opposition mouthpieces should state clearly what their Party’s position is on these specific recommendations including the ones that will cause hardship to workers. For example, he stated, the Alliance for Change and its spokespersons should state clearly what their Party’s position is on increasing contribution rates and raising the pensionable age. Meanwhile, Minister Singh stated that the PPP/Civic Government remains firmly committed to consulting with the widest range of stakeholders on the full set of issues facing the Scheme, in order to identify sustainable solutions that would benefit from strong national ownership and that would ensure the long term viability and effectiveness of the National Insurance Scheme. |