As the National Insurance Scheme (NIS) rings in its 50th anniversary of serving the nation, General Manager Holly Greaves says the shrinking legitimate workforce is negatively affecting the scheme’s finances and long term viability.
“The decline in the active employed population does not augur well for the future of the scheme since it is expected that those in the workforce would be able to sustain payments to the pension population,” Greaves said.
“The trend of movement from the structured workforce to an expanding informal workforce that is not complying with NIS regulations seems to be continuing.”
The General Manager was at the time speaking on Wednesday at the distribution of bursary awards that mark the 50th anniversary.
According to Greaves, the scheme has had to face a shortfall in contributions during the period under review.
Greaves noted that from January to August 2019, the fund collected little more than half of the $26.6 Billion target. And during that very period, NIS spent $16.8 Billion or 65 per cent of the $25.7 Billion allocated for current expenditure.
At the end of December 2018, the fund stood at $32.9 Billion. “A brief examination of our performance over the period January to August 2019 revealed that the NIS collected $15.8 Billion or 59 per cent of the $26.6 Billion budgeted target for 2019.”
A further $9 Billion is projected to be collected between September to December 2019. As a result, the projected revenue is targeted at $24.8 Billion.
According to Greaves, the main contributor to these escalating expenses was benefit payments which amounted to $15.3 billion. Pension accounted for most of this, at $14.3 Billion, while short term and industrial payments were $960 and $155 Million respectively.
Greaves also spoke of the recommendations from the 9th actuarial review, which includes a 2 per cent hike in the contributions rate. But for all these recommendations, the shrinking workforce is still an issue NIS has to grapple with.
“Over the 50 years of our existence, the scheme has registered 30,563 employers, 731,917 employed persons and 35,134 self-employed persons. However, the scheme is currently providing coverage to 5,679 active employers, 173,758 active employed persons and 10,734 active self-employed persons,” she said.