Minister of Social and Community Development Phillip Telesford has outlined the actions to be taken by the seven month old National Democratic Congress (NDC) administration to address the financial difficulties of the state-run National Insurance Scheme (NIS).
Speaking at a government post-Cabinet press briefing on Tuesday, the senior government minister said that the last actuarial review of NIS that was submitted to government in October 2022 revealed that “we must take immediate action to save the NIS for the next generation of Grenadians.”
According to Minister Telesford, the Cabinet of Ministers have taken a number of decisions to address the problem including an action plan which is due to roll out from February 1 for contributions to be increased from both employers and employees.
He announced an increase in the rate of personal contributions from 5% to 5.5% and by employers from 6% to 6.5%.
“This would now enable us to properly fund an unemployment benefit scheme to benefit the population. This move is extremely critical,” he said.
Minister Telesford disclosed that the government will also be addressing an increase in the retirement age as advanced by the Actuarial report and the gradual increase in employment contributions.
He also said that the government is making a number of adjustments to the running of the NIS and there will be a full roll out from the Public Relations unit from the NIS “as to what they are doing.”
Minister Teleford also told reporters that progress is being made on what he called “the rescue” of NIS which in recent years has been under severe financial constraints.
He said that there is agreement based on conversations and interactions with the governing Board of Directors that action has to be taken to safeguard the institution.
In presenting the 2023 budget, Prime Minister and Minister of Finance said the following about NIS:
“National Insurance Scheme (NIS) Mr. Speaker, the current National Insurance Scheme (NIS) is an important pillar in the social protection architecture in this country.
Successive NNP Governments have kicked the can down the road as it relates to the tough decisions that will ensure our hardworking citizens are guaranteed a pension when they are no longer able to work.
Mr. Speaker, in the current construct, the NIS will be bankrupt in the next 10-12 years. This is the harsh reality that we face. This Government is prepared to make the tough decisions because we care about our people.
Therefore, we will implement the following recommendations of the Actuary next year:
(i) Increase the pensionable age on a phased basis from 60 to 65, starting with a move to 61 by January 2024.
(ii) Gradually increase the contribution rate for employers and employees from its current level of 11% to 16% by 2031, starting with an increase in 2023 to 6.5% and 5.5%, a 0.5% increase for employers and employees, respectively.
Furthermore, Government will amend the NIS Act and strengthen the existing system to include protection for children of a deceased insured who are disadvantaged due to the negligence of a parent, and the inclusion of survivors’ and maternity benefits for persons who are in common law relationships.