NIS Director urges swift reforms as pension payouts estimated at $80 million by year-end

Up to September of this year, the National Insurance Scheme (NIS) had paid out $70.7 million to pensioners, and by the end of the year it is estimated that $80 million will be paid from the Fund.

Speaking at the NIS Pensioners Appreciation and Health Day on December 1, Director of the NIS, Stewart Haynes said if the Fund is expected to meet its growing obligation to pensioners next year and into the future, it is imperative that reform measures are implemented with haste.

“Last year we paid out 75 million, therefore in 2023 we estimate to pay out 80 million dollars. This number, because of how we design, would increase every year.”

He disclosed that the pensioner base in SVG is currently 9,349 in total – 8.5 per cent of the country’s population. Of that number,1,615 persons receive the survivor’s pension, which is paid to children, widows and widowers of deceased pensioners; non-contributory pension for economically disadvantaged persons accounts for 296 persons, invalidity pensioners are 163 and contributory pensioners are 7,275.

Haynes said he has heard the call for increase in pension payments, but emphasized that sustainability of the Fund is key.

He said that while there were gradual increases over the first 20 years of the Fund, since 2014 benefits have remained steady.

“We had to create a financial balance … when we see the actuarial projection we see that the Fund is unsustainable in the long run. We … [froze] pensions for a while until we treat that financial imbalance.”

The 11th actuarial review projected that NIS funds could be depleted in 2034 if the necessary changes are not made.

“We have been the subject of national debate recently… As an actuary my job is not about guessing or posturing. I have analysed our numbers … and St Vincent and the Grenadines just like any other social services in the region must reform now to ensure that this safety net is here now and in the future.”

Haynes said declining birth rates and the increase in life expectancy has created a “real problem for social security”, coupled with high unemployment numbers means that there is an insufficient number of workers to carry the Fund.

“In 2002, when we look at the number of contributors supporting a pensioner, there were 10…. In 2022 there are four contributors supporting one pensioner. This is evidence of population ageing and this is increasing the cost of NIS.”

A number of recommendations for reform have been put forward including increasing contribution rates from 10 to 15 per cent, moving pension age to 67, as well as a reduction in the maximum old age pension replacement rate from 60 per cent to 55 per cent. Also tabled in the recommendations is the implementation of mandatory contributions for self employed persons.