-but needs to ensure future viability in wake of sobering actuarial review
THE External Auditor of the National Insurance Scheme TSD LAL & Co. has noted that the Scheme had not fully implemented measures as recommended by the last Actuarial Review, aimed at ensuring the future viability of the entity. This Review projected that by 2014, NIS’ annual expenditure will exceed its annual contributions and that reserves will be exhausted by 2022.
The Actuarial Review also recommended that the Scheme carefully considers any changes to Old-Age Pension provisions that will increase costs, and if such changes are made, enact other changes that will make some limited savings; invest assets in a manner that is consistent with the approved Prudential Management Framework and in line with projected funding objectives; and take immediate steps to improve the administrative efficiency and effectiveness.
The 2008 and 2009 NIS Annual Reports were tabled in the National Assembly on Thursday. The NIS Board of Directors at the time of the report said that it was reviewing the recommendations of the Actuaries.
At a recent press conference, Head of the Presidential Secretariat and NIS Chairman Dr. Roger Luncheon said that while in actuarial terms the financial position of the National Insurance Scheme (NIS) is not where it should be, the Scheme still sits on $30 billion in its fund and is financially strong…for now.
Speaking of some of the measures that would guarantee the Scheme’s future viability, Dr. Luncheon said that raising the retirement age and the pensionable age remains “well considered interventions” which have worked in other jurisdictions.
“There has been talk about [this], but I could predict that were that to happen, [there would be prior consultations with stakeholders],” said Dr. Luncheon.
Asked whether the NIS was financially secure or making a loss, the HPS, said that the company makes a surplus, but the surplus made is not what the latest actuarial review said it must be achieving if it hopes to remain viable into the future.
He assured that the NIS fund is in the neighbourhood of $30 billion and said they may be no need for the Scheme to resort to the Consolidated Fund to meet its obligations, since expenditure is not exceeding revenue at this point.
As at the end of 2009, the National Insurance Scheme’s fund stood at $30.051 billion, up from $29.447 billion at the end of 2008. Further, the Scheme is assured by government’s commitment that its investments in the now wound up Clico Life and General Insurance Company have been guaranteed, to the tune of $5.749 billion.
For 2009, the excess of income over expenditure was $628 million while for the year before it was $1.405 billion.
For the year 2009, the amount paid in benefits was $8.351 billion, up from the amount of $7.835 billion paid out in 2008.
During 2009, the Minimum Insurable Earnings for self-employed persons contributing to the scheme was increased from $30,000 to $35,000 per month from April 1, 2009. For that year also, the Minimum Rate payable for Old Age and Invalidity Pensions remained at $14,207 per month.
Total income for 2009 was $10.283 billion, representing a decrease of approximately 1.9 percent when compared to the previous year. For 2008, the total income of the Scheme was $10.486 billion, representing an increase of approximately 9.4 percent when compared to 2007.
According to the 2009 report, 489 employers registered with the Scheme during 2009 and of this number, 455, or approximately 93 percent were small-scale employers employing no more than 10 persons. Of the 489, 28 or approximately 6 percent employed between 11 and 60 persons while 3 or approximately 1 percent employed between 51 and 100 persons and over, respectively.
The report said the total number of employers registered with the Scheme as at December 31, 2009 was 26,392 and of this, the number of active employers was approximately 5,856.
In the year 2009, 12,481 employed persons registered with the NIS and of this, 6,686 or approximately 54 percent were males and 5,795 or approximately 46 percent were females.
Turning to self-employed registrants, the NIS said that in 2009, 571 such persons were registered with the Scheme. This total comprised 387 males or approximately 68 percent and 184 females or approximately 32 percent.
A total of 685 self-employed persons were registered with the NIS in 2008 and as such, the 2009 figure of 571 represents a decrease of approximately 17 percent. “The total number of self employed persons registered with the Scheme as at December 31, 2009 was 28,508. The number of active self employed persons was approximately 8, 358,” the 2009 report said.
Pensions
The report for 2009 said that a total of 2,133 Old Age Pensions were awarded during 2009 and of this total, 1,489 or approximately 70 percent were awarded to males and 644 or approximately 30 percent awarded to females.
“An analysis of the new Pensions by Employment Category reveals that 1,720 or approximately 81 percent were employed persons, while 413 or approximately 19 percent were self employed persons. A further breakdown shows that of the 1,720 Employed Persons, 1,200 were males and 520 were females. Likewise, there were 289 Self Employed males and 124 Self Employed females who received Old Age Pensions,” the report said.