While President Donald Ramotar says that the $226M allocated for the National Insurance Scheme (NIS) in this year’s budget is to improve its efficiency, Opposi-tion Leader David Granger says it is not enough and he will be lobbying for an increase when the estimates are debated next week.
“A lot of this money would be going into probably different types of studies and so forth to ensure we adopt different policies and so forth. How do we broaden the net so that the NIS … can be sustainable so that when we retire we can be assured of something there,” the Presi-dent told a press conference on Thursday.
However, Granger said that the sums were not enough. “There must be urgent and far reaching reform in order to avert a deeper crisis in the NIS. There should also be special attention to providing a living pension for the socially vulnerable including old age pensioners, the proposed level is inadequate,” Granger said on Friday at his party’s weekly press conference.
The NIS has been in a crisis and its Chairman, Dr Roger Luncheon last September, for the first time, acknowledged that its recurring and projected deficits were not sustainable.
Expenditure for 2012 was $11.33B while income was $11.32B. Dr Luncheon had said then “the interventions are obvious but consensus among stakeholders and decision makers is a paramount necessity.”
The Eighth Actuarial Review of the Scheme in 2012 declared that the NIS was nearing a crisis and immediate steps were required to pull it back from the brink including raising the contribution rate from 13% to 15% no later than January 2013, hiking the insurable income ceiling to $200,000 per month, freezing pension increases and raising in a phased manner the pensionable age from 60 to 65.
A raft of other measures was enunciated in the report which set out the jeopardy faced by the Scheme and other dangers such as an unbalanced investment portfolio and a low number of contributors.
Facing the likelihood of annual deficits the NIS then moved to raise the insurable income ceiling among a clutch of measures to bolster its financial viability.
The insurable income ceiling which is the upper limit on earnings that attract NIS contributions moved from $150,628 to $158,159 per month or from $34,760 to $36,498 per week while the increase in the minimum insurable earnings ceiling for the self-employed moved from $47, 032 per month to $49,384 per month from 1st January, 2014, the notice said.
This was the second increase in the insurable income ceiling in less than a year. Effective March 1, 2013 last year the ceiling increased by 5% with insurable earnings being set at $150,628 per month and $34,760 weekly.
The President noted the 2012 deficit on Thursday and said that he hoped the money will ensure the NIS’s stay is “forever”.
“It is to improve on its efficiency because you know that last year …for the first time its payout was more than its revenue …we have to prepare the NIS to be there forever,” Ramotar said.