The IMF team on its recent mission to St Vincent welcomes the recently launched pension reform package to bolster the National Insurance Services’ (NIS) financial sustainability in view of the rapid population ageing and the still low contributions compared to generous payouts.
The IMF said additional measures to ensure NIS’s long-term sustainability and further enhance its efficiency and fairness could be considered, including linking retirement age to life expectancy and applying a uniform accrual rate across years to promote long careers.
“Reforming the non-contributory PSPS to better align it with the NIS is urgently needed to improve fairness and reduce fiscal costs”, the team stated in its concluding statement.
On the revenue side, the team said efficiency and progressivity of the tax system can be improved while enhancing revenue by drawing on the comprehensive roadmap for tax reforms from recent IMF technical assistance.
The proposed reform roadmap includes enhancing the progressivity and fairness of personal income tax, improving the design of tax incentives and corporate income tax, streamlining value-added tax (VAT), and modernizing recurrent property tax.
