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– Report says Board failed to make key changes since 2007According to the Review, the NIS will have to immediately take drastic action,China NFL Jerseys, if it is to surviveA key assessment on the state of the National Insurance Scheme (NIS) has been completed; its findings are alarming and in keeping with the fears expressed by Government a few weeks ago.According to the 8th Actuarial Review, an independent analysis of the fund as at December 31st, 2011,Jerseys From China, NIS is nearing crisis stage and will be exhausted in less than 10 years, unless contribution rates and benefits reforms are done immediately.The report also criticized the National Insurance Reform Committee for failing to make critical changes that were recommended from the 2007 reviewAmong other things, the report is recommending an increase of the contribution rate from 13% to 15% no later than January 2013. The wage ceiling should also be increased to $200,Cheap Jerseys Store,000 per month. The pension age should also be raised from 60 to 65 years on a phased basis and there should be a freeze on pension increase for two years until the contribution rate is increased and finances improve.The reform committee was established to look at the NIS and provide guidelines as to the way forward from the 2007 report. “However, no meaningful changes emanating from either of these reports have been made,” this recent assessment found.Government has already expressed worry in the future of the fund and the report has been sent to Parliamentarians with several meetings planned with key stakeholders to plot the way forward.With thousands of pensioners and others depending on NIS, for spectacles, among other things,Authentic Jerseys China, the implications would be a troublesome one for the administration of the People’s Progressive Party/Civic (PPP/C), which for the first time in its 20-year continuous rule is now also facing an unrelenting opposition which has a one-seat combined majority in the National Assembly.DEFICITAccording to the report, in 2011, the fund experienced its first deficit of $371M and will incur an even larger deficit in 2012.“With assets of just over two times annual expenditure, the entire fund will be exhausted in less than 10 years if contribution rate increases and benefit reforms are not made immediately.”The report noted that the 7th Actuarial Review which was conducted in December 2006 and submitted to the NIS Board in early 2008, contained several recommendations for reforms, but the situation worsened.“Between 2007 and 2011 the Guyana economy performed well, but NIS finances deteriorated more than expected as the greater than expected increase in the number of old age pensioners and reduction in investment yields have not been fully offset by increased contributions.”The review was conducted by Derek Osborne,Jerseys From China, Chief Actuary of Horizonow Consultants Ltd, who was in Guyana in June.He had some comments for the management of NIS, which included inefficiency in management and failure of government and the Board to plan properly for the future.“The Guyana NIS can be described as providing a generous benefits package in a low-wage economy. These two factors result in the system being very costly. Due to administrative inefficiencies, a large portion of the workforce does not contribute regularly and after over 40 years of operations, less than half of the over-60 resident population receives an NIS old age pension.”MANAGEMENT FAILURERegarding government and the NIS Board, the report noted that policymakers have not responded to changing socio-economic conditions and deteriorating finances and thus the long-term financial sustainability of the system is now in jeopardy.“Urgent attention is required if the NIS is to meet its future obligations without burdening employers and workers.”Given the gloomy predictions, there is likely to be a heavy backlash from the public. The report warned that if the situation remains the same, the cash flow deficits will continue in all years -meaning that payouts and other expenses will outstrip income and contributions.In addition to the fund becoming exhausted in 2021, there is all likelihood that NIS will be required, in an aggressive mode, to hike the pay-as-you-go rates to 18 7% in 2021 and 28% in 2041.“If NIS performance is better than assumed (higher contribution and investment income and lower benefit and administrative expenditure) depletion of reserves may be deferred until 2023. Conversely, if performance is worse than assumed, depletion of reserves may be as early as 2019.”SURVIVORS’ PENSIONAmong the other recommendations are the increase of the minimum survivors’ pension to 50% of the minimum old age pension and the increase of the maternity grant to at least $5,000.NIS,Cheap NFL Jerseys, it was noted, should also start developing links with various government departments that issue licences and permits so that such licences and permits are only issued if the employer/business/self-employed person is NIS-compliant. The Scheme should also strengthen and enforce existing penalties for late or non-payment of contributions and introduce new legal measures, such as garnishing.The report also recommended that NIS publish “annual audited financial statements and periodic actuarial reviews and share openly with the general public NIS’s financial challenges and reform options.”NIS began operations on September 29, 1969, providing coverage to employed, self-employed and voluntary insured persons for three main types of social security benefits – short-term benefits, long-term benefits or pensions and industrial benefits.The system is financed by contributions which are levied on employment earnings up to a wage ceiling and are paid by employers, employees, self-employed persons and voluntary contributors. Surplus funds are invested in various types of securities.NIS’s surplus in past years has taken a beating, especially after the Scheme invested US$30M in the bankrupted CLICO. Even though it was able to invest almost US$10M (G$2B) in the Berbice River Bridge, its earnings are definitely not enough to help cover its ballooning expenses.The NIS Board is headed by Cabinet Secretary, Dr. Roger Luncheon
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