Crisis at the National Insurance Services

By *Jomo Sanga Thomas

(“Plain Talk” Sept. 1, 2023)

The National Insurance Services (NIS) is in crisis. A big reason for the crisis is that governing politicians use the fund as a scheme. Governments need to understand that social security plans are akin to a legacy fund that allows people to keep body and soul together later in their lives. Therefore, the NIS must be seen as something other than an ATM from which any hare-brain scheme can be funded.

The crisis at the NIS is reflected in the urgent attention it is receiving from the NIS leadership and the Gonsalves administration. The urgency is well placed. An aging population and increasing life expectancy of citizens put a strain on the fund. We face the spectre that more money will be paid out to pensioners than is collected from employees. The latest study found that unless there is a 1% increase per year in collection over the next five years, the fund will lack the necessary funds to make pension payments by 2034. The collection problem is aggravated by the high unemployment rate of over 40%. High unemployment means fewer payments to collect.

The actuarial report and the KPMG audit flagged discretionary expenses as a significant problem at the NIS. Discretionary spending is deemed unessential to the proper, efficient and effective functioning of the NIS. For at least a decade, NIS money has been used to pay $500 to each student with at least five CXC passes. It is estimated that $50 million has been paid to persons who have not contributed to the NIS. The sad reality is that there are non-contributors who collect more from the NIS than retirees who paid into the service for all of their working years.

Discretionary expenses may have climbed through the “roof” as elections approached in 2020 and the continuing difficulties faced as a result of the COVID plandemic and the eruption of La Soufriere.

Another area of concern in the actuarial report is the high percentage of NIS investment in the public sector. The figure stands at 50%, with 24% with the BOSVG and 13% to the central government and National Lotteries.  The industry standard demands that at most 20% of the investments be tied to the government. This investment imbalance is particularly ominous because PM Gonsalves exerts total and complete control over the bank and the lottery. The hard-earned pension money of the people is being used to finance the government’s projects and to perpetuate its dominance in the political arena.

A few years ago, the opposition revealed that the government was found to be committing a crime against the nation by refusing to pay over to the NIS money it took from the salary of public employees. Citizens may remember that in 2014, the government took a EC$15 million loan from the NIS to meet outstanding payments it owed the NIS. Former opposition leader Arnhem Eustace consistently warned against the misuse of NIS funds.

The actuarial report pointed to one NIS bright spot. It found that in 2019 the total reserves at the NIS were $488 million. This figure was said to be six times the expenditure for the same year.  The Covid years and the financial commitments that the government forced on the NIS must have caused further destabilisation of the fund’s financial health.  In the US and other developed countries, NIS funds are viewed as off-limits. Here in SVG, the board of directors lacks financial expertise, integrity and independence. Consequently, the directors rubber stamp literally every spending or investment proposal made by the government.

Recognising the lack of independence as a significant problem, the actuarial report called for replacing two of the three Cabinet- (think prime minister) appointed members on the investment committee. The recommendation is for persons with financial and business experience and expertise to be placed on the investment committee. Remove the square pegs in round holes!

Management fees also came under scrutiny in the report. In five years, the management fees increased by 186%. Even if management fees included employee salaries, PM Gonsalves’ explanation for the massive increase was not persuasive. In fact, he stumbled through the answer. His vain attempt to regain balance was to accuse the opposition of lying.

PM Gonsalves has the bad habit of reducing everything to partisan politics. On the vexed issue of crime and violence, he damns the opposition. One remembers his buffoonery in Trinidad, where he warned his prime ministerial colleagues not to take seriously opposition forces.

Knowledgeable Vincentians must resist the temptation to wallow in his cesspool. Hearing him say that he warned NIS boss Stuart Haynes from speaking to the opposition was nauseating. And why was Mr Haynes required to talk to him about his meeting with the opposition? His responsibility is to the board of directors and not to the political directorate. Trained and qualified bureaucrats in the state administration need to find their voice and assert their independence.

Some issues and policies are so national in scope that responsible governments must ensure that they do not become mired in partisan squabble. National security and pension reform rank high on the list of priorities. Gonsalves has offered ample proof that he is incapable of rising above the partisan fray. His actions retard the forward movement of our nation. He is way past his shelf life. 

Gonsalves has to go if transparency, good governance best practices and principles are ever to have an opportunity to assert themselves. It’s time to break the spell.

*Jomo Sanga Thomas is a lawyer, journalist, social commentator and a former senator and Speaker of the House of Assembly in St. Vincent and the Grenadines.

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