Opposition Leader Godwin Friday has called on the government to pay to the NIS immediately all the money it owes in deductions from salaries.
“Not on no payment plan like you hire purchase. You have to pay it off now because you should never be owing the NIS,” he told Parliament on Tuesday as he led off the debate on the EC$1.6 billion Budget that Minister of Finance Camillo Gonsalves presented on Monday.
Gonsalves said the reform measures that he announced will push from 2035 to 2060 the date when the NIS is expected to be unable to meet its obligation, without further reform.
The measures include increasing the contribution rate from 10 to 15% through 2027, with the first adjustment on June 1.
Friday said that the government should be setting an example as an employer.
“You should be the flag-bearer of a good example of an employer and its relationship with the NIS,” Friday said of the government.
“But we know in the past that the government has abused that position of closeness with the NIS by not paying into it and then when they can’t pay, they force the NIS or tell the NIS they have to give them a loan so that they could pay the contribution. And then they swap that loan for a building that who knows what’s going to happen with now? Oh, come on, these are not prudent things that ought to be done.”
He was speaking of a period from 2013 to 204, when the government failed to pay into the NIS tens of millions of dollars that it withdrew for workers’ salaries and wages and failed to pay into the NIS.
The central government bought the Ju-C building in 2008 for EC$6.325 million, with Prime Minister Ralph Gonsalves saying then that he wanted the property at the entrance of the city to be owned by Vincentians.
Friday said there are some other things that Gonsalves did not mention in his address, about the way in which the government has dealt with the NIS in the past and the way they should do it going forward.
He noted that the NIS have made payments to students and to non-contributor repayments to deserving persons.
Friday further pointed out that when he asked in Parliament during the last sitting in December, he was told that the NIS had paid out EC$144 million in non-contributory pensions over the years.
“But they also have had a very good programme of paying students $500 when they passed CXC. I have no problem with that. I think it is a very worthwhile programme because it encourages students to do their best,” Friday said.
He, however, noted that over the life of that programme, it has cost the NIS $14 million “in basically a handout to the government because the government says we’re giving it to the students.
“The students don’t know where it is coming from. But the government taking the credit because they are saying, ‘Here, we give you a $500.’
“But it is the NIS, the pensioners, the parents and grandparents of those students who are paying for their $500 and at the same time, it’s undermining the integrity of the system. So, the government has to give a commitment that in continuing the programme, that they will source the funding elsewhere.”
Friday said that the NIS “quite clearly needs an injection of capital.
“You can’t just get it from pensioners, taking more and more money out of them and then telling them that maybe you’re not cutting the benefits now or they’re not raising the pensionable age now? But who knows?
“That $14 million should be put back in the NIS as a contribution from the government should be treated as a loan. So that there is a capital injection to keep the NIS healthy.”
Friday noted that if the contribution to students no longer comes from the NIS it must come from elsewhere.
“Maybe, the prime minister can cut back on some of his foreign travel and put some money into the fund to pay the students and some of the other ministers. That would help. But in any event, it should not be, going forward, taken from the NS funds. Those funds should be found elsewhere.”
The opposition leader also called on the NIS to be more proactive in its efforts to get unemployed people to contribute to the social security agency.
He noted that people who seek private insurance for air ambulance service do not wait for people to come to their offices.
“They come to you to offer the services … I don’t see the NIS doing this. They are sitting back and saying the law says you have to do X, Y, and Z and therefore that’s sufficient for me” he said and accused the NIS of sitting back and quoting what the law says.
“They have to do better than that. If they going manage it, then they have to be more aggressive in going out there and getting people to be part of it,” Friday said.
The opposition leader said the reform is going to cost pensioners money and have implications going forward.
He, however, raised questions about whether the government could be trusted to restore and sustain the NIS, adding that the government took a long time to bring the reforms, which made the situation worse.
“The government, in fact, put politics ahead of the interests of NIS, pensioners, and failed to take timely and prudent measures to fix the problem,” Friday said.
He said that in the end the pensions are jeopardised, noting that NIS data shows that 85% of pensioners have their NIS pension as their only source of income.
“That has implications for the wider economy because those persons were persons who were employed before,” he said, adding that the employment rate is around 21%.
He said that the opposition agrees that the country cannot do without the NIS, adding that it must continue perpetually.
“All of this happened in virtual darkness because the NIS reports they were not made public,” Friday said, referring to the actuarial reports that the government failed to make public despite the legal requirement to do so.
“Imagine that. The law says that those reports have to come to Parliament. And we had to be surreptitiously trying to find out how you can get a report from somebody. Policyholders can’t go and have a look at the report and the actuaries.”
The opposition leader said transparency and accountability are wonderful things “because it makes for better governance.
“It may be easier if you could do things in darkness by yourself without restraint. But when you’re wrong, you become catastrophically wrong. And other people pay the consequence.
“It’s better to have all of us looking at it and saying this is what needs to be done. And if you don’t do it to have the people raising the noise, and they say, get it done. So, the minister outlined a number of the proposals that were set out that you’ve accepted from the actuaries.”
He said that the opposition will have to study more over the course of the few days the reform that Gonsalves announced, noting that they were just announced the night before the debate began.
“But given the situation that I’ve outlined just now, the relationship between the government and the NIS over the past, can we trust this government to restore and sustain the NIS? That’s the thing.
“Can we trust this government to do it? Given the poor record and the failure to act repeatedly? Can they be trusted with pensioners’ money? And my conclusion is that they cannot. I believe that they will continue, as they have over the years, ill-treating the NIS in a way that brought us to the crisis situation that we are in now.”
Friday said that the current situation with the NIS sums “a lot of things” that are wrong with.
“… they have failed to create jobs. That is needed to create the revenue base for the NIS. They are fair to increase wages to increase the revenue base of the NIS,” Friday said, noting the study done last year that shows SVG has the lowest wages in the Caribbean.
“Also, they fail to take the tough decisions needed to ensure sustainability. They have promised things that will improve over the years but they didn’t deliver,” Friday said.
“So that is why I do not believe. The jury’s still out and we have to be vigilant and that is to say the policyholders, the other stakeholders, unions and so forth. Civil society, you have to be vigilant.”
Friday noted that the 12th actuarial review of the NIS, a draft of which Gonsalves cited in his Budget Address, should be laid in Parliament.
He told Parliament that regular updates should be provided to the policyholders.
“I mean, that’s his obligation,” he said of the finance minister.
“You’re working on behalf of the policyholders while you’re treating them as though somehow, you’re doing them a favour.”
The opposition leader noted that the finance minister said the administrative costs of running the NIS is high.
“So, these are things that need to be taken into account and say listen, let me treat the pensioners with more respect and be accountable to them.”