Opposition Leader Arnhim Eustace has described as hypocritical statements by the government that the state-managed social security agency is very liquid.
The government recently asked Parliament to approve a resolution to borrow EC$15 million from the National Insurance Fund to liquidate EC$15 million the government owes to the fund.
The government, which owes the debt because it failed to pay state workers’ contribution to the National Insurance Services (NIS) over several months, has portrayed the deal as a good one, saying that the NIS is very liquid, and the interest is more than it would have received from other investments.
“I want to draw to your attention how hypocritical some of those presentations were,” Eustace said on his radio programme and proceeded to quote the recently released International Monetary Fund 2012 Article IV Consultation on the Vincentian economy.
“The National Insurance Service (NIS), a state-owned pension company, is facing long term sustainability challenges,” the IMF said in the Article IV consultation.
Eustace commented: “So, since 2012, they are telling the government that the NIS is not what it should be to sustain it, to keep it going. You have challenges doing that.”
“The recently completed eighth actuarial review indicates that under the existing parameters — 8 per cent contribution rate, 60 year retirement age, and 60 per cent replacement rate — the NIS could face sustainability issues, especially given the increasing rate of unemployment and high outward migration of the working age population. In particular, it is estimated that contribution income will not be sufficient to cover total expenditures starting from 2015; the reserve fund would need to be tapped to finance expenses starting from 2025; and the reserves are expected to be depleted by 2036,” the IMF further said.
“They are saying that the contribution income you are getting right now, based on those rates is not sufficient to cover expenditure for next year,” said Eustace, a former minister of finance and chair of the NIS board of directors.
“Listen that statement! The government says, ‘Oh you have too much money; NIS should be glad that we are giving them 4 per cent.’ And here is the IMF and the actuaries who study and analyse the IMF saying the contribution income, that is people’s payments and the employers payments will not be sufficient to cover total expenditures starting from 2015 –that’s next year.
“The government is being told this by the actuaries which the government paid for, and which the IMF have studied…” he said.
“You see the difference? Completely different to the foolishness [Senator] Luke Browne and them been talking about; just the total opposite,” Eustace said.
“Look at the difference. You believe we’re talking about the same institutions? And they know this,” Eustace said, pointing out that the actuarial review is financed by the government and goes to the government.”
The actuarial review also called on the government to look for ways to boost the NIS’s income.
“So when a government comes and don’t pay in the income and tell you, ‘Oh the NIS has plenty money, who they talking too? Who are they speaking too? Who are they representing? The people who are members of the NIS and who are going to depend on this for their maternity and other benefits and for their pension? You can’t fool people like that. This is too serious a matter to play party politics or politics with.
“It is real nonsense to give that impression to the public when you full well have been advised by your own actuaries, and by the IMF and others that what you are doing in nonsense and therefore you have to take other steps,” Eustace said.