(Excerpts of the Leader of the Opposition, Honourable Dr. Godwin Friday’s, Press Statement)
The National Insurance Services (NIS) is in trouble. That is not hyperbole; the Executive Director, Mr Stuart Haynes, said as much publicly when he started his consultations of the matter last year. The warnings were sounded several years ago, but apparently were not heeded by the government. As things stand, according to the actuarial review, the NIS is set to run out of money by 2034.
In one Budget Address after another, the finance minister acknowledged the problem, talked tough, but did nothing. In the 2020 Budget Address, this is what the minister said, “In the 2018 and 2019 budget speeches, the Government highlighted the urgency of pension reform in the near term. In 2018, the Budget listed six options for pension reform, in an attempt to initiate public debate on the issue. The response was tepid. Last year, we established a Pension Reform Steering Committee of senior officials, and mandated them to study the options, make recommendations to the Government and manage the public consultation process. In 2020, the Committee will engage extensively with stakeholders and the general public as we attempt to both educate and learn from others about the most efficient way to implement pension reform. In recent consultations with leaders of the labour movement, the Government was encouraged by the willingness to engage frankly and constructively on the issue. By year’s end, we hope to have arrived at a common understanding about how necessary reforms will be implemented.”
In the Executive Summary of the 11th Actuarial Review, it is stated at (p. 2): “None of the contribution and benefit related recommendations in the report of the 10th Actuarial Review were made during the review period.” (i.e., 2017 to 2019) The crisis at the NIS jeopardises the pensions of all its members, with serious financial and economic implications the whole society. It threatens to shred our most important economic safety net. Most of the pensioners (85%) have no other source of income during their retirement. This means the NIS is their only lifeline in retirement. Therefore, as a country we cannot do without the NIS. It must survive and be made healthy again.
How did the NIS get to the point of crisis? The government must take responsibility for it. They failed to act when they were advised to do so. They dithered and postposed action that would have been easier if they had been done in a timely manner and would have averted the current crisis. They put politics ahead of the welfare of pensioners by giving the impression that things were not as bad as they seemed. They did so, for e.g., in their 2020 manifesto when they said to voters that the 11th Actuarial Review would likely result in improved pensions and other benefits. They knew better when they promised that because the previous actuarial review had made similar findings to those in the current review.
I don’t have that review (10th Actuarial Review) because the government did not present it to Parliament though the law required them to do so. But, in the current review, when summarizing the projection sets, the actuary states (at p. 3): “These results are similar to those of the 10th Actuarial Review and once again show that the Fund is not financially sustainable over the medium and long-terms at the current benefit provisions and contribution rate.”
The Actuarial Review calls for action, urgently. At (p.5) it says, “With the National Insurance Fund projected to be depleted in less than 15 years, meaningful changes are urgently required. Even if all of the recommendations made above are fully accepted and implemented by January 2022, additional contribution rate increases will be required to ensure the continued payment of benefits without Government support. Policymakers should therefore not depend on ‘hoped-for’ results but instead adopt rational responses for the specific challenges that lie ahead.
Implementing the above recommendations will not be easy for the government to make or for stakeholders to accept. It is therefore recommended that extensive consultation be held with stakeholders and the Board publish audited financial statements and actuarial review reports during such consultation.”
The writers of the Review knew that the government had not been making the reports available to the public. So now that the situation is dire, they are urging transparency and consultation. Before now, the NIS was run like a hermit kingdom: no actuarial reports laid in parliament as required by law; the Board appointments secretive and opaque; last financial statement on their website date to 2020. The actuary prepared the current report by August 31, 2021 and said the report should be placed on the NIS website.
That was two years ago, yet it has not been placed on the website. Now that there is a mess that must be cleaned up, it is an all-inclusive approach that is recommended to be adopted. Given the great importance of the NIS to our well-being, we in the NDP and Opposition will play our part and continue to be constructive. That has always been our approach to the NIS, as Arnhim Eustace had taught us to treat the matter with utmost seriousness and sincerity.
However, in this matter the government holds all the cards. Therefore, the Government has a responsibility to present its plan for the NIS to the nation. There has been more than enough handwringing by successive finance ministers; and the proverbial can has already been kicked too far down the road. They want to lead so they must take the lead on this vital matter. Our future quite literally depends on it, whether many descend into poverty or enjoy a decent standard of living in retirement.