Government to take measures to prevent collapse of NIS
St George’s – Prime Minister Dickon Mitchell announced on Tuesday that the National Insurance Scheme (NIS) is to undergo significant legislative changes as part of measures aimed at preventing it becoming bankrupt in the next decade.
Mitchell told reporters that some of the major stakeholders, such as trade unions and the Public Service Commission (PSC), are willing to do what is necessary to facilitate the changes to save the scheme, which was established in April 1983.
“This government intends to act, and we intend to act quickly,” Mitchell told the end of Cabinet news conference. “This NIS is steering bankruptcy in its face if we do not take the necessary measures to ensure that the fund is put on a sustainable path.
“And the fact that the major players have indicated their willingness to support the changes and had called upon the prior administration to act is testimony of the fact that we are partly in this situation because of past failure to act, and we cannot continue like that.”
Mitchell gave no indication about how soon the new measures will be presented to the Parliament for approval.
“Before the legislative changes are placed before the Parliament, there will be a public education campaign explaining the justification for the changes,” he said. “Among the changes will be an increase in the pension age, an increase in contribution, and repealing or amending clauses as it pertains to survivors’ benefits.”
The NIS is equivalent to what is referred to in other countries as “Social Security”, and Phillip Telesford, the minister responsible the scheme, said that the NIS board made numerous submissions to the previous administration of Dr Keith Mitchell for certain interventions and certain actions by way of legislative changes.
“What we have noticed is that a lot of these recommendations are still in their embryonic stage,” he said. “Cabinet has approved, but no further steps taken in order to ensure that the proper changes have been made, so we have reviewed all of that and have come to the conclusion that immediate intervention and careful intervention has to be administered in order to save the NIS.”
Telesford said that the increase in pension age is causing the biggest worry for the authorities, noting that “from the seventh actuarial review back in 2004 to present, every single time, the actuary requested that the requirement age be amended”.
“So over the last 18 years or so the recommendations have been made for the amendment of the retirement age,” he said.
The minister added that the NIS continues to pay out more that it was receiving.
“The NIS presently is breaking deposits to pay pensioners because the inflows, the income from the payment of NIS dues is less than the benefits that is paid out under the NIS Act,” he said.
“So notwithstanding that we have a very youthful population, we are still at this stage paying out more than we collect. So every year, NIS has to be breaking deposits to facilitate the payment of pension to retirees.”
He said: “That is unsustainable, as a matter of fact, if the NIS were to continue like this within the next 10 years or so there will be no NIS.
“We have looked at information from throughout the region, and we recognise that Grenada is behind when it comes to legislative changes to the scheme. Grenada needs to do what is necessary at this stage to shift the retirement age gradually from age 60 to 65, that recommendation was made several times since 2004 by the actuary until now.”