ST. GEORGE’S, Grenada, March 15, 2019 (CMC) – Prime Minister, Dr. Keith Mitchell, has indicated that his government will be amending the legislation that establishes the National Insurance Scheme (NIS), to ensure that it does not become bankrupt.
But he added that the amendment will only happen, after there is wide public consultation on the issue.
“We stated that, at present, the NIS 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,” Mitchell told journalists at the recent, weekly, post-cabinet briefing.
“But all this can only be done, after thorough consultation with the public, on a whole,” he said, while 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.
Among the first group of persons to participate in the National Insurance Board consultation, is journalists. The Board is the five-member decision-making body of the NIS.
Scheduled for next Thursday, the letter of invitation to journalists 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 of 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 percent, from the current rate of 9 percent; and increase the insurable limit, gradually, given that current limits were very small for high-income brackets. Contributions are based on a maximum insurance limit of $3,000.
In August 2018, the NIS said that it had paid out more money than it was able to collect, for the first six months of 2018, and its management wants for appropriate changes to be made, to extend the life of the Fund.
When questioned, where the extra money came from to settle pay-out, Lisa Douglas, the Public Relations Officer, explained that the Scheme had to dip into its reserve and from income on investments.