NIS projecting surplus next year

While up to November this year it has recorded a year-to-date deficit of $238.1m, the National Insurance Scheme (NIS) is projecting a return to a surplus position by the end of this year and for this to continue next year.

This would be good news for the 47year-old NIS which has been buffeted by deficits since 2012 and dire prognoses about the financial health of the Scheme. The NIS got a major boost this year when the Guyana Government decided to cover its $5.6b investment loss in the CLICO (Guyana) Ltd meltdown in 2009.

At an end of year press conference yesterday at its Brickdam headquarters, Acting General Manager Holly Greaves said that as of November 30, 2016, NIS income from contributions collected was $17.3b or 97.4% of the budgetary allocation. Total expenditure over the same period was approximately $17.5b or 99.5% of its budgetary allocation for capital expenditure and around $34m for capital expenditure. This yields a deficit of $238m.

Greaves said that in December 2016, the NIS is projected to collect a further $2.249b and spend a further $1.7b,

If it attains the $2.249b, this will surpass its revenue target by $1.8b. It attributed this performance to the aggressive pursuit of delinquent contributors, the rise in the minimum insurable income ceiling for self-employed persons from $53,335 to $62,400 effective January 1, 2016, among other measures.

If it spends a further $1.7b in December, 2016 this will take total expenditure to $19.2b or $1.6b in excess of its budgetary allocation. If it meets its December targets, it will show a surplus.

Greaves said yesterday that benefit payments are expected to surpass its allocation by $1,711,637,625 mainly because the scheme has been continuously clearing its backlog benefit claims and appeals. This was exacerbated by a January 2016 increase in the funeral grant from $33,385 to $36,725 and in the minimum rate for old age and invalidity pensions from $21,352 to $25,000 per month.

She noted that though the scheme has been able to collect a significant sum in arrears they will fall short of their budgetary target for Collectable Arrears by $644,273,000 or 49%.

She stressed that they are looking at ways to expand their collection rate so as to be able to better provide social security coverage to the Guyanese population.

For 2017, Greaves said that targeted income is $20.2b while current expenditure is budgeted at $19.6b and capital expenditure at $363m for a budgeted surplus of $551.7m. The NIS noted that with the assistance of the government, investment income is to be enhanced by $85.9m next year based on the repayment from the CLICO investment. In September this year, the Government formalised a deal through which the NIS will recover the $5.6B which it had lost in 2009.

The agreement signed by Finance Minister Winston Jordan will see the scheme recovering the sum over a 20-year period. It is in keeping with Parliamentary Resolution 82 of 2009, which had called on the then PPP/C government to take “all possible actions to secure the investments made in CLICO (Guyana) by the NIS on behalf of contributors and beneficiaries of the Scheme to prevent any consequential loss in benefits to them.”

Remit

Assistant General Manager with responsibility for operations Orin Boston noted that presently there are 279 employers before the court for failing to remit deductions to NIS.

He explained that this number represents persons who have failed to respond to all other efforts to secure the funds owed the scheme. He noted that the sum presently owed the scheme is roughly in the area of $1.2 billion.

While these employers remain a challenge, Greaves explained that a major challenge the scheme is facing is their inability to adequately capture the selfemployed population.

“It is projected that this Sub-head will fall short of its budgetary target by $395,241,000 or 35%,” she said before explaining that other challenges include the development of an informal work force that is not complying with the National Insurance Regulations; and an increase in the practice of employers deeming workers who are under their supervision and control as self-employed persons rather than employees.

In an attempt to address this issue, the NIS plans to implement in 2017 several campaigns targeting not only delinquent employers, but also inactive or dormant employers who are still in business but have relinquished their responsibilities to those they employ by failing to remit contributions to the Scheme on their behalf.

During 2016, according to Greaves, the scheme has delivered on its work plan, managed its finances in a prudent manner; achieved its objectives and invested in infrastructure to support long-term growth while providing social coverage.

To this end $17.5 billion or 99.5% of its budgetary allocation for current expenditure, and approximately $34 million for Capital Expenditure have been expended as of November 30. An additional $1,701,355,673 will be spent in December taking the total expenditure to $19,240,846,673.

“As such, current expenditure is projected to surpass its budgetary allocation by $1,604,444,673,” Greaves announced.

She explained that the projected expenditure includes $17,443,188,625 for benefit payments inclusive of $14,455,625,000 in pension payment benefiting approximately 47,372 pensions. 34,640 of these persons are old age pensioners.

As of November 30, the scheme has paid $296,815,000 in Sickness Benefit; $605,540,000 in sickness medical care expenses, including for 200 dialysis cases and $366,590,00 in Maternity Benefits.

Next year, the NIS is expected to conduct its 9th Actuarial Review covering the period 2012 to 2016, Greaves added.