NIS records over $200M deficit in 2016

Although the National Insurance Scheme (NIS) has recorded a deficit of 8,163,000 in its year-to-date figures; the Scheme is expected to rake in a surplus of 8,072,000 at the end of 2017. This is according to Acting General Manager Holly Greaves.

Greaves stated that the NIS is delivering on its work plan as it continues to manage its finances in a more prudent manner, achieving some of its objectives and investing in infrastructure to support long-term growth.

She noted that a brief examination of the income and expenditure figures for 2016 shows that NIS income from contributions was $17.3 billion or 97.4 per cent of the budgetary allocation; while total expenditure over the same period was approximately $17.5 billion or 99.5 per cent of its budgetary allocation for current expenditure, and approximately $34 million for Capital Expenditure. Thus, the scheme recorded a year-to-date deficit of $238,163,000.

The NIS will also fall short of its budgetary target for Collectable Arrears by $644,273,000 or 49 per cent and Investment Income of $1,053,807,000 is projected from the Scheme’s portfolio of $31,356,410,000.

Despite this, 2016 shows that the NIS collected a further $2,249,962,000 in revenue in December and as a result, will surpass its revenue target by $1,804,005,000. This, according to Greaves, is mainly because the NIS has been aggressively pursuing delinquent contributors – the minimum insurable earnings ceiling for self-employed persons contributing to the NIS was increased from $53,335 to $62,400 with effect from January 1, 2016.

Meanwhile, NIS is expected to expend a further $1,701,355,673 in the month of December, taking the total expenditure to $19,240,846,673. As such, current expenditure is projected to surpass its budgetary allocation by $1,604,444,673. The projected expenditure includes $17,443,188,625 for benefit payments.

Worthy of mention here is that inclusive in this figure is pension payments of $14,455,625,000, benefiting approximately 47,372 persons. Of this figure 34,640 persons are old-age pensioners. “We have also paid out as of November 2016, $296,815,000 in sickness benefits; $605,540,000 in sickness medical care expenses, inclusive in this is payment for dialysis for approximately 200 cases and $366,590,000 in maternity benefits, just to name a few,” she said, adding that benefit payment is expected to surpass its allocation by $1,711,637,625, mainly because the scheme has been continuously clearing its backlog benefit Claims and Appeals. Funeral grants were increased from $33,385 to $36,725 from January 1, 2016; the minimum rate for Old Age and Invalidity Pensions was increased from $21,352 to $25,000 per month from January 1, 2016.

Challenges faced

Greaves stated that an assessment of the current business and operating environments during the 2016 budgeted period revealed that there are other key issues that had an impact on the entity’s income and operations.

“Foremost is our inability to adequately capture the self-employed population; thus, it is projected that this Sub-head will fall short of its budgetary target by $395,241,000 or 35 per cent,” she added, stating that other challenges included the development of an informal work force that is not complying with the National Insurance regulations; and an increase in the practice of employers to deem workers who are under their supervision and control as self-employed persons rather than employees.

Meanwhile, Greaves indicated that the budget for 2017 included targeted income of $20,214,532,000, Current Expenditure of $19.6 per cent and a Budgeted Surplus of $551,769,000.

The targeted income comprises $18,698,382,000 in Contribution Income, $63,035,000 in other Income and Investment Income of $1,453,115,000.

She stated that a survey has shown a relatively small increase in both the employed and self-employed populations that should be contributing to the Scheme at a higher rate, due to increased salaries/wages. Other income as budgeted would result from increased fines and penalties paid in to the Scheme by defaulters through increased compliance efforts and internal loan interest

“With the assistance of the Government of Guyana, Investment income is expected to be enhanced by $85,931,053 in 2017 based on the repayment from the CLICO Investment,” she added.