The National Insurance Board over the years continues to hold true to its mantra ‘serving you because we care.’ The impact of the Covid-19 pandemic on economies has pushed countries worldwide to implement expansive stimulus packages to address the economic fallout for citizens and the almost certain recession that will follow.
As the pandemic takes its toll on business operations, an increasing number of workers face lay-offs or reduced hours, significantly reducing their ability to take care of basic needs and their overall spending power.
On 20 March 2020, Prime Minister and Minister of Finance, Dr The Right Honorable Keith Mitchell announced a series of economic stimulus measures, including the introduction of an Unemployment Benefit (UB) programme to be administered by the National Insurance Scheme in the amount of EC$10 million. The mandatory curfew imposed to help curb the spread of Covid-19 resulted in economic activities grinding to a halt during the month of April and although the government has started easing restrictions, it will be a long way back to normal. Cognisant of the challenges that lie ahead, the NIS is honoured to join forces with the Government of Grenada and employers in supporting and caring for affected persons, notwithstanding our own constraints.
It is the second time in its history that the NIS has been called to provide an Unemployment Benefit. You may recall that after the passage of Hurricane Ivan in 2004 the NIS paid an Unemployment Benefit. That was not a benefit offered by the NIS, and contributors were not paying towards that benefit. However, the NIS, recognising the economic malaise that followed, saw the need to take care of our valued contributors. As a consequence, we introduced a temporary Unemployment Benefit and 3,600 of our valued customers received over $6.8 million over a period of 6 months.
As we prepare to start paying the unemployment benefit this month, it is important to note that this comes at a time when the NIS is itself facing a financial challenge. You may recall that in 2019, members of the NIS Team traversed the country highlighting the deteriorating financial and actuarial position of the NIS and making a case for changes. During those consultations, we received your overwhelming support to make the tough but necessary changes and the Government of Grenada acted prudently with your support to make the following 2 critical changes: Increase the contribution rate by 2% in 2020; increase the retirement age from 60 to 65 gradually over an extended period. In January of 2020, the first of these changes, the 2% increase took legislative effect. Covid-19 could not have come at a worst possible time for the NIS and its impact on the sustainability of the NIS in the long-term can be significant. The pandemic is expected to have a substantial impact on all of the NIS’ revenue sources as a consequence of the almost sure decline in economic activity and looming recession. Despite the reduction in income, the NIS remains committed to our pensioners and other beneficiaries. For the month of March, our pensioners received $8.2 million and total benefit expenditure was in excess of $10 million. Pension expenditure will continue to increase as new pensioners are added monthly and pensioners continue to live longer. We anticipate that pension expenditure in 2020 will range from $6-$8 million monthly.
Already, with the reduction in income during the month of April, the NIS was forced to liquidate fixed deposits to finance its pension expenditure. This situation, though unsustainable, is expected to continue into the immediate future as the NIS honours its commitment to the Grenadian people. The situation we find ourselves in is not unique to Grenada, unemployment packages are being discussed and implemented by several regional Social Security Systems (SSS). It is important to note that the SSS in the region are at various stages of sustainability and the ability to support such a programme may vary significantly.
What sets Grenada apart is that we are not paying for 3 months like most of the other social security systems in the region. This programme will run for 6 months. Like the UB paid after Ivan, this benefit was not on the NIS books or Regulation. Contributors were not contributing towards an unemployment benefit. The National Insurance Board and NIS family, understanding the hardships faced by contributors, consider this an excellent opportunity and vehicle to serve our customers during a difficult period.
So, let me discuss the key components of this programme: The National Insurance Board has allocated $10 million to provide support and assistance in these difficult times, in conjunction with support provided by the Government of Grenada and your employers. This pie of $10 million will be shared equally among all. There will be no distinction between higher and lower-income workers. This will not be based on your income. Eligible persons must have been contributing to the NIS and must be unemployed as a direct consequence of Covid-19. Persons who are receiving income support or payroll support from the Government of Grenada will not be eligible. There will be no double-dipping. Applications for this benefit will be made by the employers and self-employed persons only and in keeping with the need for social distancing, applications can only be made using the form available on the NIS website, www.nisgrenada.org.
Qualified persons will receive a flat monthly payment of $330 per month over a period of 6 months. Payment will commence during the last week of May 2020.
Thank you for your continued support. Thank you for your patience and understanding in these difficult times. Stay tuned in to our social media platforms and listen to the local radio and television stations for further updates.
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