NIS IS ONE OF THE BEST INVESTMENTS FOR THE SELF-EMPLOYED

THE name “National Insurance Scheme” (NIS) is known to all Guyanese, but the understanding of what it really is, is known by only a small minority of persons. Even many of those who are registered with it, do not fully know of all of its benefits and how important it is to cushion the misfortunes of life.

The NIS is an insurance institution analogous to the commercial insurance companies. The only difference is the NIS offers a greater variety of benefits to its contributors at a cheaper cost than the private insurance companies offer. The NIS weekly payments are called ‘contributions’ while the payments to the commercial insurance companies are termed ‘premiums’.

The main offerings of the NIS to its contributors are sickness benefits, whereby 80 per cent of the cost of the medicines prescribed by a doctor is borne by the Scheme, as well as the cost of hospitalisation and surgical operations. The Scheme is able to contribute to overseas treatment where the treatment is unavailable in Guyana and the patient has to undergo such treatment. The NIS also pays the wages for a limited period of a contributor who is hospitalised. There is also help accorded for spectacles, eye-care and dental care. What could be considered the centre-piece of the Scheme is its pension regime. There is, for example, ‘disability pension’ when a contributor is permanently disabled from working, a survival pension paid to widows of insured contributors, and the Old Age pension which becomes payable at the age of 60 years. There is even a payment towards one’s funeral expenses. The premiums to be paid to a commercial insurance company for such benefits would be prohibitive.

Most people are interested in the Old Age pension, so we will give a short explanation of it: One has to make 750 contributions to qualify for an Old Age Pension. Such contributions are regarded as weekly, and may not be consecutive, unlike with commercial insurance companies where if one does not pay one’s premiums consecutively, the insurance policy will lapse.

The NIS has been in operation for the last 50 years, and until two or three years ago its financial position was very strong. It had a number of income-bearing investments and the cost of benefits was balanced by contributions collected. The reserves of over 30 billion dollars were never touched. Now, in the last two or three years, contributions have been slightly short of the cost of benefits and a very tiny part of the reserves has been used to meet the deficit. The management of the NIS is fully aware and committed to taking measures to keep the reserves untouched, except for investments and that they have to work towards balancing the cost of benefits with contributions. Ideally, it is hoped that a surplus would accrue from contributions.

The NIS is owed many hundreds of millions of dollars by several semi-governmental entities, such as the Georgetown City Council and GUYSUCO, as well as many big businesses. The failure of such institutions to pay the NIS the contributions they would have collected from employees, results in employees not being able to accession NIS benefits because they would not have been insured. Employees must keep a check on whether their contributions have been paid into the NIS, and they could do this by checking on the NIS. If their contributions have not been paid to the NIS, they should demand that the employer does so. The NIS, on its part, must begin the process of recovering the contributions owed by recourse to the Courts.

Many employees, and especially the smaller ones, as well as a large number of East Asian businesses which have proliferated in recent years, do not pay NIS contributions either for themselves as self-employed owners or for their employees. This illegality could be addressed by NIS inspectors being more proactive and employees having the courage to demand the employers pay. Many small employers deceive their employees by telling them, that instead of paying their contributions to the NIS they will pay them instead, and it is only when it is too late that they understand how they have been exploited. In addition to the small shops and commercial establishments referred to, the employees in the fishing and mining industries need to be educated as to the benefits of the Scheme. Efforts should also be made to bring the employers in these industries on board.

The main reason why the self-employed in small businesses do not take advantage of the NIS, is simply that they do not know of the benefits the Scheme offers and at what economic cost. We have spoken with small shop-keepers, vendors, joiners, goldsmiths and other tradesmen and have heard their plights, that they, unfortunately, did not know of the benefits of the NIS and their regrets that it may be too late for them to make 750 contributions to be able to accession a pension. It would be in the interest of shopkeepers, joiners, carpenters, vendors and tradesmen to invest in the NIS, since it is one of the most profitable investments they could have made.

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