AFC struggles to explain proposed mandatory pension fund

Executives of the Alliance for Change (AFC) on Friday last avoided providing specifics on the structure and implementation of a proposed mandatory New National Pension Fund (NNPF), which forms part of the party’s manifesto and would be introduced if it wins the September 1 General and Regional Elections.
Questioned about the NNPF on Friday during the party’s weekly press conference, AFC’s Prime Ministerial candidate Laura George and Executive Cathy Hughes struggled to explain what the fund is about and how it will work.
Hughes suggested that the fund is simply a recommendation, however, on the party’s manifesto’s flyer, the fund is explained as something that will be a “mandatory, contributory fund open to all workers – employed and self-employed”.
According to Hughes, “it is not a fund that is going to replace our national insurance scheme. It is a totally private fund that we are recommending could be established.”
Hughes went on to try to explain that, “there are hundreds of medium size companies, and smaller companies that are not able to have their own internal pension fund for their employees, and therefore this is a fund that companies could buy into, and of course pay into that employees from those companies would be required…Could get a pension at the end of their service. As you know NIS is a government contributing fund so I do want to make it clear there’s no intention to replace that.”
According to the information published by the party, the NNPF, will see a 10% salary contribution being paid into the fund of which 5% will come from the employer and 5% from the employee.
However, the party is extremely vague on the details of how this fund will work alongside Guyana’s existing National Insurance Scheme (NIS), an already mandatory social security programme operationalised through the National Insurance and Social Security Act Chapter 36:01.
Under NIS, a total of 14% of an employees’ wages are paid into the Scheme at a breakdown of 5.6% from the employee and 8.4% being paid by the employer. Contributions are capped at a salary ceiling of $280,000 per month.
All individuals aged 16 to 60 in “insurable employment” are required to contribute to NIS.
Meanwhile, according to the AFC advertisement of the NNPF, “NIS will be audited, digitally transformed and integrated with NNPF”. Asked if Guyanese workers would be required to pay into both NIS and the NNPF should it be implemented, the politicians seemed unsure.
George reiterated Hughes’ sentiments that the fund would not replace NIS, and went further suggesting that the fund would somehow be getting money from Guyana’s oil and gas industry.
“The pension fund is not going to be replacing the NIS, but really reforming to NIS and improving to make sure that pensions for all citizens are there in one place, private and public service workers. But also to ensure that funding is set aside for all citizens from the royalties that we receive from oil and gas,” George said.
“So, it will be part like NIS but not NIS but a fund that really supports what exists to make sure that all citizens can access their pensions and funding for social services in one place so that is scattered all about…,” she added.
However, in its existing state NIS covers maternity benefits, sickness benefit and medical care, disability, invalidity, and an old age pension benefit, among other claims.
When pressed further for a clearer explanation, Hughes noted that the party’s executive and financial adviser, Jaipaul Sharma, is the only one competent enough to explain how the party expects the fund to work, and he would give a clearer explanation of the initiative at a later date.