by Linda Straker
- Government to amend NIS legislation so scheme does not become bankrupt
- Board commencing a series of consultations next Thursday
Prime Minister Dr Keith Mitchell has indicated that government will be amending the legislation that establishes the National Insurance Scheme to ensure that it does not become bankrupt, but the amendment will only happen after wide public consultation on the issue.
“We stated that at present NIS scheme will go bankrupt in a few years if we do not increase the retirement age and in some cases increase the contribution to NIS per worker,” Dr Mitchell told journalists when he hosted last Tuesday’s weekly post-cabinet briefing.
“But all this can only be done after thorough consultation with the public on a whole,” he said explaining that recommendations submitted to the cabinet pertaining to the operations of the proposed National Health Insurance will also be part of the consultation.
“The cabinet will not make a decision until the consultations,” he promised.
The first group of persons to participate in the National Insurance Board consultation is journalists. The board is the 5-member decision-making body of the scheme. Scheduled for next Thursday, the letter of invitation said that the board is commencing a series of consultations on the parametric changes that will enhance the sustainability of the National Insurance Fund in keeping with the recommendations with the 11th actuarial review.
For the NIS to legally implement any change to its operational systems, government must make the necessary changes by amending the relevant section(s) in the NIS legislation. The 2009 actuarial review forecasted that expenditures would exceed contributions by 2017 and forecasted that expenditures would exceed total income by 2029.
The review also said that operational deficit would continue to increase after 2029 and the reserve would be completely depleted by 2042.
The main recommendations of the actuarial review were to:
- increase the retirement age from 60 to 65
- increase the contribution rates to 11% (5% employee + 6% employer) from the current rate of 9% (4% employee + 5% employer) and
- increase the insurable limit gradually given that current limits were very small for high-income brackets.
Contributions are based on maximum insurable earnings of $5,000 per month.
In August 2018 the National Insurance Scheme said that it had paid out more money than it was able to collect for the first 6 months of 2018 and its management wants for appropriate changes to be made to extend the life of the fund.
“For January to June 2018: The NIS paid $42.05 million in benefits and collected $39.9 million in contributions. This means that contributions collected for the period were not enough to cover the benefits paid during the period,” the NIS said in a public post.
When questioned where the extra money came from to settle payouts, Lisa Douglas, Public Relations Officer explained that the scheme had to dip into its reserve and income on investments.
NOW Grenada is not responsible for the opinions, statements or media content presented by contributors. In case of abuse, click here to report.