The current situation at the National Insurance Services (NIS) is NOT a ‘Big Lie’. We maintain that the Unity Labour Party (ULP) government has mismanaged the NIS and it is in trouble. Further, we demand to see the government’s plan to save the NIS.
The 11th Actuarial Review calls for action, urgently. At (pg.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.” Be reminded that 11th Actuarial Review was done in 2019.
In a recent press conference, Leader of the Opposition and President of the New Democratic Party (NDP), Honourable Dr. Godwin Friday, made the following comments about the NIS. He said, “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 for 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.”
We demand government’s plan to save NIS
The New Democratic Party (NDP) is calling on the government to outline its plan to save the National Insurance Services (NIS), with a particular focus on the range of measures it is proposing to strengthen and ensure long-term stability.
It is only through full transparency and accountability that everyone – opposition, trade unions, and pensioners – can understand the scale of the reform required and the state of the fund.
The 11th Actuarial Review recommends the need for urgent reform. Moreover, recent media reports about the use of the fund for political purposes makes it clear that it is only through full accounting that the scale of reform can be fully understood.
Recommendations to shore up the declining NIS were made in the 11th Actuarial Review, but the government has failed to implement any of these measures to protect people’s pensions or set out any plans for reform.
The government has been told repeatedly by the IMF, the World Bank and the NIS actuary that it needs reform – but it has failed to take the tough decisions or take any action whatsoever. Because of the government’s lack of action, the NIS is in crisis. This is a mess of the government’s own making.
The NDP is committed to the long-term sustainability of the fund and wants to protect those who need support, while the government has failed to take action.
We demand to see the government’s plan for NIS reform.
Our principles for reform are simple:
It should be a stand-alone entity with the sole aim to act in the best long-term interests of its members.
Investment decisions and fund management decisions should be made by an independent board.
Assets and other investments should only be undertaken or divested if demonstrably in the best interests of the fund.
Under any reform, no person currently in the scheme should be worse off than he is at present.
Transparency should be at the heart of everything the NIS does. Regular updates, in a form and manner that is easily understood should be provided regularly to all.
Recently, Camillo Gonsalves said in Parliament that the government would implement NIS and pension reforms beginning in budget year 2024. However, the Executive Director of the NIS has said reform will have to be made before 2024 in order to avoid “draconian changes”, such as an increase in contribution rates by 10 per cent.
President of the NDP, Honourable Dr Godwin Friday, said, “The threat that faces the NIS is a problem created by the lack of action of the ULP. The ULP has been in charge of the NIS; they cannot blame anyone for the current problem. The government has been sleepwalking into this crisis. The Minister of Finance said that reforms were needed. When will the government outline its plan so that everyone can understand the long-term implications? The government must stop playing politics and put the country first. Everyone will suffer the consequences.”