It is not hyperbole to say that the National Insurance Services (NIS), the state-managed social security agency, “is in trouble”.
Leader of the Opposition Godwin Friday told a press conference in Kingstown on Wednesday that his New Democratic Party (NDP) has consistently spoken about the situation at the NIS, having recognised its importance to the country and the well-being of the people.
“But the NIS is in trouble,” he said, adding that his statement was “not an exaggeration”.
“It is what the Executive Director, Mr. Stuart Haynes, said pretty much in his statements publicly when he started his consultations on the matter last year,” Friday said.
“The warnings were sounded several years ago, but apparently were not heeded by the government. As things stand, according to the actuary, the NIS is set to run out of money by 2034.”
The opposition leader pointed out that in one Budget Address after another, the finance ministers under the ruling Unity Labour Party administration “acknowledged the problem, talked tough, but did nothing”.
He noted that in the 2020 Budget Address, Minister of Finance, Camillo Gonsalves said: “In the 2018 and 2019 budget speeches, the Government highlighted the urgency of pension reform in the near term. In 2018, the Budget listed six options for pension reform, in an attempt to initiate public debate on the issue. The response was tepid.”
Now, the finance minister has noted that the reforms recommended by the 11th actuarial review include moving contribution rate from 10% to 15%, pension age to 67.
The report also recommends reducing the maximum old age pension replacement rate from 60% to 55%, meaning that rather than receiving 60% of their salary, pensioners would receive 55%.
Friday emphasised that after years of the opposition calling for information on the status of the NIS, it was only given the 11th actuarial review in Parliament on July 13.
“The law requires that this be laid in Parliament when it is prepared. This is the first one we have a copy of.”
The opposition leader said “the crisis at the NIS” jeopardises the pensions of all its members, with serious financial and economic implications for the whole society.
“So, it is not just the people who are paying into the NIS and expect to get a pension that will be affected. If the NIS is no longer able to perform in a way that is required, all of us, everybody will feel the negative effect of it.
“It threatens to shred our most important economic safety net,” Friday said, noting that some 85% of the pensioners have no other source of income during their retirement.
“This means the NIS is their only lifeline in retirement. This means that the NIS has to remain healthy. That is something we have to agree upon as a society and certainly we came to that position in the New Democratic Party a long time ago.”
He said the government must take responsibility for the crisis at the NIS.
“They failed to act when they were advised to do so. Even in their own budget address they acknowledge that… They dithered and postponed action that would have made it easier to conduct reform had they been done in a timely manner and would have averted the current crisis,” Friday said.
The 10th review, which the government received before the 2020 general elections, pointed to the need for urgent reform to keep the NIS afloat.
Despite this, the ULP suggested during the election campaign that higher pension and benefits were likely following the 11th review, which covered the years 2017 to 2019.
The government is yet to implement any reform at the NIS, even as the 12th actuarial review — to cover the years 2020 to 2022 — is now due.
“They put politics ahead of the welfare of pensioners by giving the impression that things were not as bad as they seemed,” the opposition leader further stated, adding that this was the case in the 2020 election campaign.
“This document that they say now is a doomsday scenario of we don’t do something drastic now, they said in 2020, going into the election that after this comes out, we will likely have better or improved pension and other benefits coming out of this and that it will point the way forward, with that assessment, presumably to greener pasture,” Friday said, holding up a copy of the 11th actuarial review.
“They knew better when they promised that because the previous actuarial review had made similar findings to those in the current review.”