– collections still below payments

THE National Insurance Scheme (NIS) has recorded a loss of $414 million at the end of June but the company believes that it could still avoid the bleak outlook that was presented in the eighth actuarial report of the National Insurance Fund in 2011.

According to the report, NIS was nearing a crisis stage. In 2011, the fund experienced its first deficit of $371 million and was expected to incur a larger deficit in 2012.
“With assets of just over 2 times annual expenditure, the entire fund will be exhausted in less than 10 years if contribution rate increases and benefit reforms are not made immediately.,” the report had stated.

General Manager of the NIS, Holly Greaves, believes that the gloomy projection could be averted once certain recommendations are adopted by the Government.
The scheme’s viability was, however, questioned on Monday when a team from NIS appeared before the Parliamentary Sectoral Committee on Social Services.
A member of the committee and Opposition Member of Parliament, Dr. Vishwa Mahadeo asked the team how viable is the NIS.

In response, Finance Controller of NIS, Jacquelyn Scotland said that on June 30, the funds stood at $31.1 billion but the company had still recorded a loss of $414 million.
Over the years the NIS has been facing challenges because of the imbalance between the collections and payments.

Scotland said the NIS projected that at the end of this year they would make a total payment of $23.3 billion to beneficiaries but would only receive $23.2 billion in contributions, a deficit of $100 million.

“Each year the payments we make increase by $2 to $3 million,” she said, adding that for the last three years NIS has also recorded a deficit.

The report in 2011 had projected that if NIS continues to suffer a deficit, cash flow deficits will continue in all years; the fund will be exhausted in 2021; and the pay-as-you-go rate, or rate required to meet expenditure in 2021 will be 18.7 per cent; the pay-as-you-go rate in 2041 will be around 28 per cent.

Greaves, however, contended that the NIS is preparing the ninth actuarial report which will paint a more accurate picture of the future. The report is expected to be completed by the end of August.

“We believe that we are getting things on track because we are aware of the aging population and we are getting into areas that have potential contributors; we can increase the contributing populations,” she said.
The general manager also pointed to recommendations that were made in past reports that could assist the NIS in correcting the situation.

While more recommendations are expected to be presented in the new report, the NIS has been working on ways to collect debt by establishing a Debt Management Section. The scheme intends to go after persons who owe the NIS.