The Unity Labour Party (ULP) administration must take the blame and responsibility for the current state of the National Insurance Services (NIS).
At the recent sitting of parliament, the Minister of Finance made a Ministerial Statement based on the eleventh actuarial study of the NIS. He listed a number of recommendations from the actuarial study. These include, increase contributions progressively from 10% to 15% over the next ten years, increase pensionable age to 67 years by 2032 and reduce the pensionable rate from 60% to 55%. The NIS reserves are projected to be depleted by 2034.
On his weekly radio program, president of the New Democratic Party (NDP) and Leader of the Opposition, Dr. the Honourable Godwin Friday, made the following comments on the NIS. He said, “The National Insurance Services (NIS) is critical to our social security, our social safety net for the people of our country. We take this matter extremely serious, so we do not speak publicly or even privately in any cavalier way about it.
Mr. Eustace taught us extremely well on that matter. He more than anybody in this country understands the importance of the NIS. I am speaking now about his work in the parliament. He taught us during the time that we were there and in his work as the Chairman of the NIS in the early years the importance of ensuring the integrity of this social safety net. I thank you, Mr. Eustace, for drilling that into us and to make me appreciate better what is necessary from a government that is responsible to have the integrity of the NIS upheld because it is there to protect the retirement standard of living of the people who have invested all through their working lives in this important social safety net.
There is no doubt about it. The NIS must continue. The NIS is critical for maintaining the social safety net for our people in retirement. The Executive Director at one time had said that about 80 or 85 percent of the persons who receive a pension from the NIS that it is their only income after retirement. So, you could see the significance of it. The concerns that have been raised are ones that we take seriously. I have heard the comments that were made publicly and we have been discussing this for quite some time. We have had advice from a number of persons but we did so in a vacuum, in the sense that we did not have the actuarial study. Now that we have it; we have to go through it, and we await the report from the World Bank or review of that study and then we will be better informed as to how we proceed.
There are two essential things that must be taken on board. Foremost is that the NIS is critical and must be protected because this is important for most people’s livelihoods for their standard of living after retirement. Secondly, this problem has arisen under this ULP administration. They have had twenty-two years in office. They brag about the longevity of their time in office, being long in doing something is not what is important, what matters is how you use the time when you were there. They have had twenty-two years to correct whatever they see as the problems arising and they have not done so. Now you have a situation, under their watch, they have made the NIS vulnerable and people’s pension are at risk unless drastic measures are taken.
In their 2020 manifesto, this is what the ULP said on page 63, “They would conduct and publish before the end of 2020 the eleventh actuarial evaluation of the NIS.” That is what we got in the parliament on Thursday. It continues, ‘out of this will likely come increases in pensions and other benefits and recommendations on the way forward.” In their election manifesto of 2020, they were saying after the eleventh actuarial evaluation of the NIS that there will likely be increases in pensions and other benefits.
In the parliament on Thursday, the Minister was wringing hands about all kinds of things that they will have to do; none of them was about the increase in benefits and increasing pensions. They are proposing to raise as one option the contribution rate to 15%. They are proposing as one option to raise the pension age to 67 years. What do you do in the period between retirement and age 67? Then, you have also the possibility of reducing benefits for persons who have invested in NIS. So, these options do not square in anyway with what they were promising just two and a half years ago, in order to be reelected. They said from the study will likely come increase in pensions and other benefits. That is what they said in 2020. So, what happens to all of the warnings you were given or the cautions from the IMF?
This is the first actuarial review we have seen from this government. All of those concerns that were raised fifteen years ago, they have done nothing to address them and they boast about how many more persons are on the NIS, how much they have increased the payouts and how the other programs have benefitted from short term or long term contributions and the non-contributory pensions.
What they did not say, is that the NIS under their watch, that the foundation upon which it was built was crumbling and everybody’s pension would then be placed in jeopardy; unless as they say draconian measures are taken. You have to put the blame squarely on the maladministration, the mismanagement of the finances of this country and the financial institutions upon which the citizens depend, the NIS being one of them. This is something that they should have dealt with much sooner.”