– pensioners roll stood at 43,000 in July
Dr Roger Luncheon
National Insurance Scheme Chairman, Dr Roger Luncheon said contribution revenue for last year stood at Gy$ 11.32 billion, but the scheme paid out Gy$ 11.33 billion in benefits. He made the disclosure in an address at the scheme’s 44th anniversary celebrations.
Luncheon, who is also head of the Presidential Secretariat, said although the spectre of an imminent dire situation is highly exaggerated, the scheme’s financial viability does evoke apprehension among the informed.
According to him as is known, long-term benefits dominate the benefits profile with more than 43,000 pensioners receiving payments at July 2013.
He said the aging population and longer longevity has impacted significantly on this growth in benefit expenditure, noting that non-coercive methods in enrolling the self-employed has had inconsequential results in population size over the years. At the end of 2012, the active population of the employed contributors numbered 117,219, while the active population of self-employed contributors was only 8791.
The NIS chairman said the self-employed anomaly is evident in the face of the size of the parallel economy in Guyana. “Importantly, the contribution rate has seen occasional annual increases in the last decade.”
In the meanwhile, Luncheon said NIS continued to offer a pension indexed to minimum wages in the public service with a wide range of short-term benefits to contributors and pensioners.
According to Luncheon, nationwide public consultations at that time provided ample evidence of concern among stakeholders. He said a general principled approach must include increased revenue collection and controlled expenditure growth.
In the 2013 national budget, Finance Minister, Dr Ashni Singh proposed an increase in the contribution rate for both employed and self-employed to 14 per cent and 12.5 per cent respectively.
The central government absorbed and subsidised that increase for employed contributors whose incomes were less than Gy$ 50,000. The impact of the contribution rate increase did not significantly reverse the deficit, which was also being negatively influenced by the increasing cost of doing business by the scheme, Dr Luncheon said.
While as stated before, there is little likelihood of a collapse of the scheme in the short to medium term, the current situation is not sustainable.
The interventions are obvious, but consensus among stakeholders and decision makers is of paramount necessity, he asserted.
The NIS chairman noted that in Barbados, a similar situation attracted such consensus on the way forward, under which their scheme rallied without stakeholders’ discord and divisiveness.
A parallel in Guyana must provide for a long-term solution that revolves around two main thrusts: significant expansion in population of contributors, and increased contribution rates and managed growth in benefit expenditure, particularly pensions.
