PM says NIS on sound footing

While the National Insurance Service (NIS) is on a sound footing, according to the latest actuarial report, Prime Minister Dr. Gonsalves is asking the country to brace itself for times when some changes will have to be made to the parameters of the NIS as the system matures.{{more}}

Speaking at a ceremony to mark the opening of the new NIS building on Wednesday, the Prime Minister said “It is imperative for us to recognise that as the system matures, long term benefits will grow exponentially partly because the pension population increases. This means that there will come a time when benefits expenditure will exceed contribution collections and changes will have to be made to some of the current parameters to sustain the financial health of the NIS,” said Dr.Gonsalves, while advising the public to rest assured that no changes will be made without proper actuarial advice.

He said even then, all the environmental factors will be taken into consideration so that the most reasonable position will be ascertained.

Dr.Gonsalves noted that based on the actuary’s assessment this parametric move will not be forthcoming in the short term.

“As a matter of fact, the actuary in her last valuation report recommended several increases in benefits in an effort to maintain the dignity of real value of the benefits to which the members of the service of the NIS have become entitled,” said Dr.Gonsalves.

Prime Minister Gonsalves said that it must be borne in mind that there are other options besides increasing the contribution rate. He said some of the NIS sister social security systems

in the region have already adopted measures such as gradual increases in the retirement age and adjusting the qualifying benefit conditions.

The Prime Minister said so far this year, the NIS has already paid out $3.2 million in short term benefits, which comprise employment injury, maternity benefits and sickness benefits.

Dr. Gonsalves is warning that while he believes that the current financial crisis affecting the more developed nations provides a stepping stone for small open economies such as ours, he is cognizant that the short term effects of the crisis potentially can be devastating especially for persons who receive direct remittances from abroad and for persons who are on fixed incomes.

“This crisis may even escalate to the extent that it impacts upon the NIS voluntary contribution programme that is extended to Vincentians living in the Diaspora. However, we are a resilient people,” said Dr.Gonsalves. (HN)