TODAY, the National Insurance Scheme (NIS) celebrates 44 years of unwavering service to the people of Guyana, and in recognition of this august milestone, Board Chairman, Dr Roger Luncheon, has issued a statement, detailing to some extent the many setbacks plaguing the company of late, and where he sees it heading in the coming years. The following is the full text of that statement:The 44th Anniversary of the National Insurance Scheme (NIS) cannot be viewed without mixed concerns by the different categories of stakeholders and decision-makers.Even though the spectre of an imminent dire situation is highly exaggerated, the Scheme’s financial viability does evoke apprehension among the informed. Essentially, the Scheme’s expenditure growth is outstripping revenue growth.

Contribution income, the main ingredient of revenue, was G$11.32b in 2012, while benefits expenditure, the main ingredient of expenditure, was G$11.33b.
As is known, long-term benefits dominate the benefits profile, with over 43,000 pensioners in payment at July, 2013.The aging population, longer longevity has impacted significantly on this growth in benefit expenditure.
Non-coercive methods in enrolling the self-employed has had inconsequential results in population size over the years. At the end of 2012, the active population of the employed contributors numbered 117,219, while the active population of the self-employed was only 8,791.
The self-employed situation of anomaly is evident, in the face of the size of the parallel economy in Guyana. Importantly, the contribution rate has seen occasional annual increases in the last decade.
In the meanwhile, NIS continues to offer a pension indexed to minimum wages in the Public Service, with a wide range of short-term benefits to contributors and pensioners.
The end result is predictable: Expenditure growth exceeds that of revenue. The NIS fund is therefore being used to meet the operational deficits currently being incurred.
As a result, the NIS fund has failed to show growth over the recent years, as deficits in operational costs have been financed from the savings in the fund. In 2011, the fund was $30,410,427,000, while the 2012 unaudited fund was $30,214,987,000.
The 8th Actuarial Report on the Scheme’s financial status disclosed details of this situation, and made concrete proposals/recommendations about solutions.
Nationwide, public consultations at that time provided ample evidence of concern among stakeholders. A general principled approach must include increased revenue collection and controlled expenditure growth.
In the 2013 National Budget, the Minister of Finance, Dr. Ashni Singh proposed an increase in the contribution rate for both employed and self-employed to 14% and 12.5% respectively.
The Central Government absorbed and subsidised that increase for employed contributors whose incomes were less than $50,000.00. The impact of the contribution rate increase did not significantly reverse the deficit, which was simultaneously being negatively influenced by the increasing cost of doing business by the Scheme.
While, as stated before, there is little likelihood of a collapse of the Scheme in the short to medium-term, the current situation is not sustainable. The interventions are obvious, but consensus among stakeholders and decision-makers is a paramount necessity.
In Barbados, a similar situation attracted such consensus on their way forward, under which their Scheme rallied without stakeholders’ discord and divisiveness.
A parallel in Guyana must provide for a long-term solution that revolves around two (2) main thrusts:
1. Significant expansion in population of contributors, and increased contribution rates.
2. Managed growth in benefit expenditure, particularly pensions.
The Board of the National Insurance Scheme is convinced that the specific elements underpinning the two (2) general thrusts can be consensually arrived at among stakeholders.
The imperatives face us all, current and future contributors, current and future pensioners and all the beneficiaries of the welfare system that the NIS has institutionalised in Guyana.