12th NIS review possibly ‘contaminated’ by gov’t ‘interference’ — Bramble

An opposition lawmaker is asking whether “interference from the government” played a role in removing from the latest actuarial report on the National Insurance Service (NIS) a “high priority” recommendation in the previous report that was not implemented.

MP for East Kingstown, Fitz Bramble asked the question about the recommendation in the 11^th actuarial review that the investment committee of the social security agency be reconfigured.

The 11^th review said that two of the three members of the committee should be replaced with non-board members of the NIS.

This was not done, but the 12^th actuarial report, given to lawmakers on Thursday, does not include this recommendation at all, Minister of Finance, Camillo Gonsalves told Parliament that day.

The rationale behind reconfiguring the investment committee was “that every effort should be exerted to appoint to the Investment Committee people who have some semblance of an understanding of investment,” Bramble, an economist, said Friday on his New Democratic Party’s radio programme on NICE Radio.

“Because, clearly, the recent history of the NIS shows that very bad and imprudent investment decisions contributed significantly to the NIS being in the quagmire in which it finds itself with regards to its sustainability.”

The government has begun implementing at the NIS reforms that are intended to ensure its sustainability and push the “exhaustion date” from 2035 to 2060.

“The reforms include an increase in contributions, disincentives to take early pensions, increased insurable wages, improved benefits to vulnerable Vincentians, and changes to the ways in which pensions are computed,” Minister of Finance Camillo Gonsalves said in his Budget Address in January.

As part of the reforms, contribution rates will be raised incrementally from 10-15% with the first increase coming into effect next month.

Responding to a question from Bramble, Gonsalves told Parliament on Thursday that the advice to restructure the investment committee “focuses on a particular concept of practice for enhancing investment skills and experience and improving independence rather than on recommendation to improve the financial sustainability of the fund.

“For this reason, the actuary indicated that the recommendation was excluded from the 12th actuarial review because policymakers are to focus on measures that directly improve the fund’s financial sustainability, benefit adequacy, contribution affordability and intergenerational equity,” Gonsalves said.

But Bramble pointed out to radio listeners that the 12^th actuarial review was given to lawmakers just before the question period in Parliament.

He said maybe the finance minister thought it fortuitous that the report was available before answering the question.

“So, my supplementary question was between the 11th and the 12th reports, which spanned maybe a year or so, what went wrong or what changed so drastically that you’re go in to remove a high-priority recommendation,” Bramble said.

“You didn’t even drop it down to medium or low priority; you took it out completely. So, my question to myself was, ‘Should we question the credibility of the actuarian?’” Bramble said.

He said the finance minister had “the gall” to tell Parliament that the composition of the Investment Committee does not impact significantly on the sustainability of the NIS.

“So, who’s fooling who? You paid money, you hire an actuarian to do an actuarial report, to do an assessment of the financial behaviour and realities of the NIS, they told you that one of the ways to fix this thing is to make sure that you have people who know about investment on the Investment Committee, and then a year later, they come back and tell you no, don’t bother with that?” Bramble said.

He said he wanted to highlight the issue “so people can pay attention.

“And that is something that I personally am going to continue to flag that because it points to very many different deficiencies,” he told radio listeners.

“I mean, how are we to place our trust and confidence in professionals like that?

“If you’re coming one time and you telling me something, and you turn around, am I to conclude that you don’t know what you’re talking about? Or was your report contaminated by interference from the government?”

Bramble said his is a legitimate question.

“So, they have a responsibility to come, or at least to get some kind of plausible explanation from the actuarian as to why was this recommendation removed from one report to the other which span just about a year.”

Bramble said that at the very least, the actuary could have said, “This recommendation was removed, because maybe, you know, we made some miscalculations in our assessment in the previous actuarial report.

“…  or maybe we focused on something, maybe a derivative of that recommendation. So maybe instead of putting two non-board members on the Investment Committee, maybe we appointed an overseer for the committee, who has experience in — something.

“But absolutely no explanation was given. So, I just wanted to put that out there,” Bramble said.