Opposition leader wants answers about the finances of the NIS

LEADER OF THE Parliamentary Opposition, Dr Godwin Friday has expressed concerns about the depletion of the finances of the National Insurance Services (NIS) of St Vincent and the Grenadines (SVG).

Friday raised the issue as he contributed to debate on the 2023 Budget in parliament on Tuesday, January, 10.

The $1.45 billion budget was presented in Parliament by Minister of Finance, Camillo Gonsalves on Monday, January 9, and passed on Thursday, January 12, in the absence of opposition members.

Leading off response to the 2023 Budget on Tuesday, the Opposition Leader raised questions regarding the NIS, which he said may have the potential to affect the well being of retired Vincentians.

Friday said the executive director of the NIS, Stewart Haynes, has stated that the NIS is the only source of income for approximately 85% of retired Vincentians.

Therefore, he expressed concerns about the fate of such persons, “if something happens to the NIS.”

Recalling the issues surrounding the collapse of CLICO and BAICO, the Opposition Leader warned that “institutions that seem to be built on granite, can just evaporate, turn into dust.”

He stressed that without the NIS, people will be much more vulnerable, and they will live more precariously.

During his contribution, Friday recalled the many times that former Prime Minister, Arnhim Eustace, expressed caution and how passionately he spoke about the critical importance of the NIS and “ the need to keep its affairs insulated from politics, or meddling”.

He reminded Members of Parliament that the former New Democratic Party (NDP) leader did this to ensure that the NIS was run professionally, and also to ensure its long term viability.

He also recalled that Eustace did not allow the NDP administration to use NIS funds to help other institutions.

Last year, the NIS executive director was quoted as saying that draconian measures would be needed if reforms were not made to the NIS before 2024.

This could mean an increase in the contribution rate, an increase in the pension age, among other things.

Friday asked, “how did the NIS get to this point to where such draconian measures may be part of its conversation?”

He also questioned the present state of the NIS reserves.

The NIS, reportedly has had to draw down on its reserves to maintain payments of benefits.

“This is something you don’t want to do.

“What you want to have in place, is that you have contributions and investment income that help to carry the programme going forward,” the Opposition Leader stressed.

He added that administrative costs of the NIS have

to be kept in check “to make sure that it does not exceed what is considered to be reasonable and sustainable.”

And, he put forward that between 10-15 years reserves is considered to be a prudent yardstick to measure reserves.

Recalling the estimates passed in Parliament in December, 2022, Friday said the package contained several loans from the NIS to government, with interest rates as low as 3 1/2%.

He called on the NIS Board to answer the question, “where are we now, and how did we get there?”

Additionally, Friday wants to know how does its present situation affect the liquidity and earning potential of the NIS, and ultimately, its reserves.

In order to get an increase in contributions from self employed persons, Friday is urging the NIS to take its show on the road.

“You can’t just sit back and wait for legislation; you have to get in the market and encourage people to sign up.

“People know what is in their best interest,” Friday stressed.

In his presentation of the 2023 Budget on Monday, Finance Minister Camillo Gonsalves said “the NIS invested $267 million in the economy to support economic development.”

The finance minister also disclosed that there was a reduction in the NIS asset base from $500 million to $476 million.

He said this is “largely due to the volatility and uncertainty of market factors, including interest rates and equity prices.