General Manager of the National Insurance Scheme (NIS), Holly Greaves says that steps have to be taken to secure the future of the Scheme in light of the varied challenges it faces.
Speaking at the 48th anniversary of the NIS on Friday at its Brickdam and Winter Place offices, Greaves said “This requires not only a change in strategy, but also a change in attitude and commitment by all staff to the organization. In a world where change is inevitable we at the National Insurance Scheme must refuse to be complacent as individuals and as workers within our organization.”
She stated that capturing the economically active population is “paramount” given the current economic challenges, aging population, rising life expectancy and increased pension payments.
For the period January to August 2017, she said that income collected was $13.6B or 67% of the $20.2B budgeted, while total expenditure over the same period was approximately $13.7B or 70% of its $19.4B budgetary allocation. This means there is a year-to-date deficit of $95,368,000, 1.6% more than the budgeted deficit of $93,841,000.
She said that it is projected that by the end of 2017 total income would be approximately $21.4B while the projected expenditure would be approximately $21.1B. This means that the Scheme is projected to collect a further $7.8B in revenue during the period September – December which will allow it to surpass its revenue target by $1,249,817,000. The NIS is expected to expend a further $7.4B for the September – December period which will cause the Scheme to surpass its budgetary allocation by $1,266,943,000.
In recent years, the NIS has faced difficult financial circumstances with expenses exceeding income on some occasions.
“Of significance is the fact that Benefit expenditure, at the end of August 2017 totaled $12.5B and it is projected that by the end of the year, this figure would increase to $19.2B. It is evident from the analysis that, of the projected total expenditure of approximately $21.1B, benefit expenditure represents 19.2B. The Pension Branch – Old Age, Invalidity, Survivors – accounted for approximately 90% of these payments. The pension branch of the Scheme is rapidly expanding and as such keen attention has to be paid to that branch”, Greaves said.
At the end of August 2017, the population of active pensioners stood at 49,466. In addition, at the beginning of the year, increases were granted to the Funeral Benefit from $36,725 to $40,398. The minimum rate for Old Age and Invalidity pensions was also hiked from $25,000 to $27,500 per month and all other pensions above the minimum were raised by 4% from 1st January, 2017.
Greaves said that as predicted in the last actuarial review, the Scheme’s growing benefit expenditure has been consistently surpassing contribution income.
“These problems are consistent with a maturing scheme. The Scheme has experienced two deficits in the last 10 years. The first occurred in 2011 and the second in 2016. The Scheme has already dipped thrice into the Fund for 2017 to pay benefits. It is therefore imperative that the Scheme generate funds in keeping with the growth in benefits. The other income earner for the Scheme is through its investment portfolio. However, the Scheme continues to be faced with low interest rates and no interest from some of its non-performing investments”, Greaves stated.
Compliance activities this year have also been affected by an expanding informal work force that is not complying with the National Insurance Regulations, Greaves lamented. “In some cases there is an increase in the practice of employers to deem workers who are under their supervision and control as self-employed persons.
The inability and difficulty to cover the majority of the self employed population and more so to even determine the actual population continues to be a burden on the resources of the Scheme. In addition, our poor customer service and the extensive time taken to resolve customer issues have led to public distrust and poor publicity”, the General Manager said.
Notwithstanding this, in 2017 the NIS benefited from continuous upgrades of its core information technology framework and software. Greaves said that these efforts have and will continue to positively impact the organization’s overall efficiency. Connectivity to the Lethem Office was completed in May 2017.
She added that with the expansion of the Web-Application, another small but powerful addition to the online application is the pension calculator, which based on contributions, calculates the projected minimum and maximum pensions. She said that the tool is able to accept input from users testing different scenarios.
Greaves said that the impending findings of the 9th Actuarial Review that is presently being conducted and the implementation of the three-year Strategic Plan in 2018, will assist in shaping the organization’s future.
“Cognizant of our responsibility, focus in 2018 would be on changing culture, the level of human resource readiness across the institution, infrastructure, operating pro-cesses and enabling technology. This will enable us to achieve greater efficiency in operations”, she asserted.