The NIS website has published its annual report from 1970 to 2016. The scheme was passed into law in 1969.
Each year, the employee and employer contribute a total of 14% of an employee’s salary to a cap. In 2016, contributions totalled G$16.6B. 2016 is the last year that the NIS posted its annual report. In 2019, it is likely that the total contributions moved up closer to G$20B.
The NIS has not done well. Its assets total only about 2 times its annual contributions. The NIS scheme is destroying capital with a negative return after deducting administrative expenses.
This is not how an investment scheme should work. See the below table on investment income, administrative costs, contributions, and assets. Net returns on investment are negative. Net returns on assets are negative. The cost of administering the scheme is greater than the returns from investing its assets.
Pension and medical-related benefits are the two primary benefits delivered by the NIS. It may be more efficient for the Government to grandfather the pension benefits into its own scheme and develop an efficient direct deposit scheme for the 50,000 NIS pensioners. Might it not be more efficient to combine this with the 30,000+ Old Age Pensions administered by Government? With the healthcare system funded by the State, with small changes, the national healthcare systems can take up the slack provided by the NIS for medical-related benefits.
Certainly, the NIS performance suggests a radical makeover, if not elimination. A 14% payment by the employee/employer is like a tax. Would it not be great if this is eliminated? A strong argument can be made that it may be more efficient for the social safety net from the Government to be expanded to fill this space.
Putting G$16B+ back into the economy as disposable income would make a huge difference. Employers, employees and the country could benefit from the elimination of all the administrative paperwork associated with administering this scheme.
As the political season unfolds, having a public debate on the role of our NIS may be very relevant. What are the benefits of the NIS? What are the costs? With an oil economy, would it not be more efficient to transition the benefits directly over to Government?
It is time we have a serious discussion and look across the region to our Caricom neighbours and their performance. Since the NIS scheme started in 1969, some 50 years ago, it is a serious indictment that the assets total only two times its annual contributions.
Barbados NIS Fund assets in 2017 totalled US$2.3B compared to US$160M in 2016 for Guyana, almost 15 times greater. The Barbados fund started in 1967. Guyana NIS law was passed in 1969 but its first year of operations was 1970. Last October, the Guyana NIS celebrated 50 years.