Stewart Haynes, Director of the National Insurance Services in St. Vincent and the Grenadines (SVG), says the social security institution is financially sound and will meet its obligations for the next twelve years.
Haynes spoke to the soundness of the NIS on Sunday while appearing as a guest on the WEFM Issue at Hand Program.
He said the NIS at this time is financially and actuarially sound because it is able to meet obligations in full and on time for the next twelve years.
“We have reserves based on the half-year report of about $476 million or so in total asset base. On the contribution income side, we have collected roughly $35.5 million; on the benefits side, which is growing fast, we paid roughly $44.4 million for the half year; investment income did very well,” he said”.
In July, St. Vincent Finance Minister Camilo Gonsalves said the NIS’ finances improved somewhat in the first quarter of 2023. Net losses were reduced from $10.7 million to $1.07 million. The improved financial performance was attributed to an increase in contribution income, stronger investment performance, slower growth in benefits, and reduced administration costs.
Gonsalves, in July, also stated that contribution income for the first quarter of 2023 rose from $14.4 million to $16.1 million relative to the year-ago quarter on the back of strong private sector growth, led by increases in construction (7%), transport and storage (7%), accommodation (5%), wholesale and retail (5%) and manufacturing (5%).
On Sunday, Haynes further noted that, though the NIS is currently financially and actuarially sound and has resources projected to meet its obligations over the next twelve years, changes are required to be made in order to avoid the complete depletion of funds by 2034.
During a sitting of the parliament on July 18, Minister of Finance Camlio Gonsalves said Reform of St. Vincent’s Social Security System (NIS) is an urgent and unavoidable imperative.
“The unvarnished analysis establishes a gradual contribution rate increase from 10% to 15% over a 10-year period (2023–2033)”.
“A change in pension formulae to reduce new average pension amounts by reducing the maximum accrual rate of 60% to 55%; a shift from an age pension (where pensions are received at a specific age) to a retirement pension (where pensions are paid when you are substantially retired); and mandatory coverage of self-employed persons will extend the date of reserve depletion from 2034 to 2051”.
Gonsalves further stated that, as such, the potential reforms are explicitly on the table for discussion, debate, and decision. So too are reforms of the public pension system to enhance harmonization with the NIS arrangements, including consideration of measures to:
“introduce a mandatory contribution rate for employees; align the retirement age of civil servants with the NIS’ pensionable age; and
Limit the maximum replacement rate from 127% to about 85% by considering a top-up on the NIS’ pensions. For instance, if the NIS pays 60%, the Government would top up pensions to 80% for retirees under PSPS. This is in line with best practice and is similar to the designs of existing private sector pension plans operating in Saint Vincent and the Grenadines.
He said these measures would apply to new entrants into the Civil service and could significantly enhance the long-term sustainability of the public pension system.
