The National Insurance Scheme (NIS) was established via the National Insurance Act (NIA) on 4th April 1983, with the assistance of a Caribbean-wide project of the International Labour Organisation (ILO) during the 1970’s, for universal social security coverage.
Presently, the NIS caters for the payments of eighteen benefits under three main categories; those payments are made primarily to qualified insured individuals of the labour community and come from a managed pool of funds called the National Insurance Fund (section 3 of the NIA).
The upkeep of the financial source of NIS is through the collection of contributions by the registered individuals and of other incomes including from various investments, and this upkeep is the responsibility of managerial officials called the National Insurance Board (section 4, NIA).
Pertinently, the NIS Act (NIA) also speaks in section 22 about the performing of an actuarial review every three years, essentially on the general operations of NIS consistent with the objectives and provisions of the Act and on the specific management and status of the funds.
The findings of those actuarial reviews typically focus on the capacity and adequacy of the funds and on any discrepancies and pressures about the funds, with recommendations and warnings for the health and viability of the funds; and the Minister responsible for Social Security shall lay copies of the reports on such findings, before the House of Representatives for action and for the learning of the general public.
Innocent Grenadian citizens, including those unborn, are being punished for the harsh financial reality which the NIS faces; that is; the Grenada 2023 Budget Statement promotes the ‘panicking’ situation that NIS would be “bankrupt in the next 10-12 years”.
The citizens are now called upon to sacrifice for the ‘restorative sustainability’ of the NIS and thereby having to suffer from not, or from without any guarantee of, receiving the ‘objective rewards’ of NIS as originally contracted for, graciously contributed towards, and justifiably expected.
This unfair predicament for the citizens happens because of the ‘indicative’ abuses of the Government through its connection with NIS and the ‘troubling’ management of NIS’ Executive, in the past.
A case in point is the observation in the November 2010 Report on the Ninth Actuarial Valuation of the NIS Fund that, despite the accounts for the previous study period from 2006 to 2009 show that “income exceeds expenditures” with an average surplus of over 44 million dollars, there has been an increase of 61% on the expenditures side due in part to the item “Other expenses” in the Statement of Accounts of NIS, which “represent the write-off of the investment held in British American Insurance Co. Ltd (‘BAICO’)”; BAICO collapsed in January 2009.
There have been countless accusations regarding indications of the Government intimidating and overpowering the officials and operations of NIS; failing to pay timely NIS contributions for its workers and delaying and restructuring payments of other debts to NIS; borrowing from NIS to meet its fiscal deficits and to partner with foreign investors; and of the Government encouraging the selling and the mortgaging of NIS assets.
An interesting case surrounds the Government’s comprehensive and collaborative debt restructuring initiative which has been developed to reinforce its fiscal consolidation efforts, essentially aimed at reducing the ‘huge and growing’ public sector debt to a ‘reasonable and manageable’ level; as part of Grenada’s 2014-2016 IMF (International Monetary Fund)-supported Home-Grown Structural Adjustment Programme.
The major debt restructuring initiatives were about negotiations with external and internal creditors which include State governments, institutional bodies, and private corporations.
Thus, the strategy also featured “Negotiations of less burdensome terms on debt outstanding to a range of domestic creditors, including the National Insurance Scheme, some commercial banks and the Grenada Ports Authority”.
It should be instructive at this point, to note that the 2023 Budget Statement discloses that Grenada’s debts are at over two billion and thirty million dollars, to which over twenty-six percent of the over one billion three hundred and fifty million dollars of the Estimates of Revenue and Expenditure has been allotted; being the highest percentage allocation.
Fittingly, there was a 07 September 2014 public statement by the Grenada Technical and Allied Workers’ Union (GTAWU) declaring “with extreme consternation” that it will not support the quest of the Government for a ‘hair cut’ in the State’s debt to the NIS, as it believes that “the proposal made by Government is misguided” and that “the debt to the NIS cannot be equated to the debt to the commercial banks or other financial institutions”.
The GTAWU also notes that in conjunction with the Government’s proposal to disrupt or to cause the workers to “give up its old age security or any part thereof”, is the already pressure on the workers of “making great sacrifices by the payment of increased taxation, by falling family incomes and high unemployment”.
By considering the NIS as a “sacred territory”, the GTAWU then calls on the umbrella of the labour movement, the Grenada Trades’ Union Council, to “resolutely resist all attempts to cut Government indebtedness to the NIS”; and also bearing in mind the first time in the NIS history that the benefit expenditure is in excess of cash contribution.
It is even more disappointing and sad for We The People, when realising that the situation with NIS, for receiving the ‘objective rewards’, seems worsening going into the future, with the shifting of the goal posts; whether or not this situation results from global influences and trends, local related parameters, or reckless and corrupt practices.
What generally stands out however are, the half-truths and variations of devious semantics, offered by the Government about arresting and/or reversing the harsh reality facing the NIS and the Grenadian citizens, with its articulated and actual efforts of Pension Reform.
In seeking to endorse its rhetoric on efforts of improving the financial capacity of the NIS, on securing the retirement benefits of all workers and on preventing workers from retiring into poverty, the Government makes references of the findings of the Actuarial Reviews; however, this is often done in a ‘selective, isolated, and out-of-context’ manner.
Some of the Actuary’s counsels are conditional on and integral with the state of the economy and personal earning capacity, and are to be complemented and supported by improvements in NIS’s managerial and regulatory mechanisms.
For instance; the Eleventh Report points out “increase in the retirement age should not stand alone” and the Eighth Report explains, “not adjusting pensions regularly could lead to a gradual deterioration in pensioners’ standard of living”.
The previously internet-circulated article, “Why The Display By Grenada’s New Administration About NIS Pensions?”, raises deep concerns about how ‘complete and accurate’ is the pertinent information presented on the bleak financial position of NIS and the way forward; and this referred article is consistent with the July 2019 article “Grenadians Should Protest Increase In NIS Contribution”.
The guidance and knowledge acquired by the 23 June 2022 ‘new’ National Democratic Congress (NDC) Administration, on the historical context and the corrective measures regarding the NIS had also been of concern, and this apprehension seems to be of merit, as a ‘new reason’ for the increases in NIS contributions was presented by the Honourable Mr. Philip Telesford, Minister for Social & Community Development, Housing and Gender Affairs, during the Government’s ‘loaded almost two and three-quarter hours’ Post Cabinet Press Briefing on 24 January 2023.
The leading usual contention for increasing the pension contributions rate and the pension retirement age has been based on studied low birth rate, high life expectancy, increase in pension payments, depletion of reserves, smaller numbers of active workers, unfavourable migration pattern, low productivity level and slow economic growth.
“….We continue to make progress towards the ….rescue….of the NIS. Based on our analysis and our conversation with top management of the Board, we recognize that we must act now. The last actuarial review that was submitted to us sometime in October of 2022, depicts that we must take immediate action to save the NIS for the next generation of Grenadians. And so at the Cabinet level we’ve done quite a number of things to ensure that the NIS is saved. One of the things we witnessed, beginning from the first of February, is an increase in the rate from personal contributions, which will move from five percent to five point five percent.
That’s by individuals, and by employers it will move from six percent to six point five percent. This would now enable us to properly fund an unemployment benefit scheme to benefit the population; this move is extremely critical.
“We’ve learnt from the (‘2020/2021 COVID-19’) pandemic, we’ve learnt from 911 (‘11 September 2001 terrorist attacks in America’), and so many other downturns that we’ve had in the economy, including the global recession.
“And so, this is something that must be done and so that is something that will take effect from the first of February, and a number of other pieces including the retirement age and the gradual increase in employment contributions. So that is going to happen. So we are making a number of adjustments ….,” said Minister Telesford.
Shouldn’t it be considered ‘warranted and imperative’ by the Cabinet, also to act now or to take immediate action for recompense on the NIS’ investment which has been lost in the BAICO fiasco, as well as for adjustments to the doings and plans concerning NIS’s funds?
Which of the actuarial reviews was submitted to the Cabinet in October last year – was it the latest or Twelfth Actuarial Valuation as at 31 December 2018?
Does this latest review recommend that the gradual increase in the contribution rate “would now enable us (‘the Government/NIS’) to properly fund an unemployment benefit scheme to benefit the population” in accordance with sections 42 and 43 of the NIS Act?
Was this latest review laid in the Parliament for attention? What are the justifications for the addition of an “unemployment benefit”, or any other type of benefit, in light of the already financial stress on the NIS? Is this “unemployment benefit scheme” a ‘separate special’ scheme; and what are the details on the execution of such a scheme?
What mathematical model and risk analysis has been applied for successfully meeting the demands on NIS’ funds, considering the new benefits and the old areas of contention for the life of NIS?