NIS considers buying Paramaribo property used for Guyana embassy

The Board of the National Insurance Scheme (NIS) is considering buying the building in Paramaribo, Suriname that now houses the Guyana Embassy as an investment opportunity.

In a letter to Minister of Foreign Affairs Carolyn Rodrigues-Birkett, dated March 28, 2012, the Secretary to the NIS Board said that at the 444th Meeting of the National Insurance Board, held on Monday March 26, 2012, the Directors considered a proposal to acquire a building that the Guyana Embassy occupies in Paramaribo, Suriname.

“Directors expressed an interest in the acquisition of the building but requested a prospectus for the sale of the building to be made available to the Board of Directors,” the letter said.

The indication of interest comes amidst ongoing concerns about the wisdom of NIS investments, such as a $5.8 billion invested in the doomed CLICO and the $1.5 billion invested in the Berbice Bridge.

For 2010, the NIS recorded $10 billion in contributions and $1.2 billion that came in from investments. In addition, the Scheme paid out some $9.4 billion in benefits and spent $1.4 billion in administrative costs.

The NIS 2010 annual report said that investments of $28,813,685,000 included an amount of $5,748,710,367 for Clico Life and General Insurance Company. It said also that accrued investment income of $511,920,000 includes an amount of $90,274,292. The report was clear in pointing out that this figure of $90,274,292 had been guaranteed by the Government of Guyana.

The NIS is also one of the six investors in the US$40M Berbice Bridge, to which it contributed $1.5B. And based on its 2007 annual report, the NIS also has $2.4B in Hand-in-Hand Trust Corporation, which was exposed to the Stanford Group implosion to the tune of over $800M

The NIS recently drew the ire of analysts when it purchased a building once owned by CLICO for $600 million. Commissioner General of the Guyana Revenue Authority Khurshid Sattaur is on record as saying that some of the GRA’s offices would be soon relocated to the said building, which is located on Camp Street.

At the beginning of 2010, the National Insurance Fund was $30.051 billion and Fair Value Adjustment was approximately $90 million. Income received during the year totalled $11.258 billion, while expenses amounted to $10.817 billion. “The Fund therefore realised a surplus of $441 million…” the report said.

In her letter to Minister of Finance Dr. Ashni Singh on the submission of the NIS Annual Report, General Manager Doreen Nelson said that the sum of $11.258 billion as income for 2010 represents an increase of 9.5 per cent over the previous year 2009.

She reported too that the amount of $9.4 billion paid as benefits for 2010 was 13 per cent more than the previous year 2009.

According to the 2010 Annual Report, the Actuaries reported several matters of concern, among which were that annual expenditure is expected to exceed the year’s contributing income beginning in 2014. The report said that the Actuaries have made certain recommendations to ensure future viability but so far these have not been fully implemented.

Among the ideas touted with a view to ensuring financial sustainability of the NIS was increasing the retirement age, from 60 to 65.

Rajendra Rampersaud, a former Chairman of the NIS Reform Committee, had said in 2008 that the proposed increase in the pensionable age to 65 was based on a number of factors. Among these was a study of life expectancy rates in Guyana and of the type of jobs persons do and the contributions they are able make.

It was pointed out that as the Scheme stands, the employees of tomorrow will have to pay the pensions of yesterday, and that the proposed changes will remove some of the burden from the backs of future generations. He said that the increase in the NIS pension was meant to be matched with a hike in the retirement age for public servants and that the actuary is still to advise on it.

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