The National Insurance Service is in a state of emergency. One major cause of the situation is that ruling politicians utilize the money as a sham. Governments must recognize that social security plans are similar to a legacy fund, allowing people to keep body and soul together later in life. As a result, the NIS must be viewed as more than just an ATM from which any hare-brained idea can be funded.
The National Insurance Service’s problem is evident in the immediate attention it is receiving from NIS leadership and the Gonsalves administration. The sense of urgency is appropriate. The fund is being strained by an aging population and rising life expectancy. We face the prospect of more money being paid out to retirees than is collected from employees. According to the most recent research, unless collection increases by one percent each year for the following five years, the fund will be unable to provide pension payments by 2034. The collecting challenge is exacerbated by the high unemployment rate of more than 40%. When unemployment is high, there are less payments to collect.
Discretionary costs were identified as a serious problem at the NIS in both the actuarial study and the KPMG audit. Discretionary spending is deemed unimportant to the NIS’s proper, efficient, and effective operation. NIS funds have been used for at least a decade to provide $500 to each student who has at least 5 CXC passes. It is anticipated that $50 million has been paid to non-contributors to the NIS. The unfortunate reality is that non-contributors receive more from the NIS than pensioners who paid into the service throughout their working years.
Discretionary spending may have risen through the ‘roof’ as elections in 2020 approached, as well as the ongoing issues caused by the covid plandemic and the eruption of La Soufriere.
The large percentage of NIS investment in the public sector is another source of concern in the actuarial study. The figure is 50%, with the BOSVG accounting for 24% and the federal government and national lotteries accounting for 13%. The industry standard requires that no more than 20% of the investments be related to the government. This financial discrepancy is especially concerning because PM Gonsalves has complete authority over the bank and the lottery. People’s hard-earned pension funds are being squandered to fund government projects and maintain the administration’s political supremacy.
The opposition disclosed a few years ago that the administration was judged to be committing a crime against the nation by refusing to hand over to the NIS money it seized from public employees’ salaries. Citizens may recall that in 2014, the government borrowed $15 million from the NIS to cover outstanding payments owing to the NIS. Former opposition leader Arnhem Eustace has repeatedly warned about the misappropriation of NIS monies.
One NIS bright spot was highlighted in the actuarial study. It discovered that the NIS’s overall reserves in 2019 were $488 million. This quantity was believed to be six times the amount spent the previous year. The Covid years, as well as the financial responsibilities imposed by the government on the NIS, must have significantly weakened the fund’s financial health. NIS funds are considered illegal in the United States and other industrialized countries. The board of directors in SVG lacks financial acumen, integrity, and independence. As a result, the directors essentially rubber stamp every government spending or investment plan.
Recognizing a severe concern with lack of independence, the actuarial assessment recommended replacing two of the three cabinet (think prime leader) chosen members of the investment committee. It is suggested that individuals with financial and business experience and skills be appointed to the investment committee. Take out the square pegs from the round holes!
Management fees were also scrutinized in the report. Management fees soared by 186 percent in five years. Even if management fees included staff compensation, Prime Minister Gonsalves’ rationale for the enormous increase was unconvincing. In fact, he stuttered through his response. In an attempt to reclaim control, he accused the opposition of lying.
PM Gonsalves’ poor habit is to reduce everything to partisan politics. He condemns the opposition on the contentious issue of crime and violence. One recalls his antics in Trinidad, where he cautioned his prime ministerial colleagues not to take opposition forces seriously.
Vincentians with knowledge must reject the desire to wallow in his cesspool. It was disgusting to hear him declare that he warned NIS leader Stuart Haynes not to speak to the opposition. And why was Mr Haynes compelled to inform him of his meeting with the opposition? His duty is to the board of directors, not the political directorate. Trained and qualified state administration officials must discover their voice and show their independence.
Some topics and policies are so broad in scope that competent governments must guard against party squabbles. National security and pension reform are high on the priority list. Gonsalves has demonstrated repeatedly that he is incapable of reaching above the party divide. His activities slow the progress of our country. He has outlived his self-life.
Gonsalves must step down if transparency, good governance best practices, and values are to have a chance. It’s finally time to break the spell.
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