Kingstown – St Vincent and the Grenadines Finance Minister Camillo Gonsalves has warned that reform to the pension and benefit structure of the National Insurance Services (NIS) can begin as early as next year.
Gonsalves wa briefing lawmakers on the finding of the 11th actuarial review of the National Insurance Services (NIS) and an independent analysis of the actuarial review, conducted by the World Bank’s Reserve Advisory and Management Partnership (RAMP).
The Finance Minister told Parliament that according to the report, NIS reserves are projected to be depleted by 2034 if reform is not undertaken and as such “the intention of the government is to implement NIS and pension reform beginning in budget year 2024.”
These changes, he said, would allow the social security agency to be able to continue providing its essential services to the people of St Vincent and the Grenadines, “thereby avoiding last minute draconian changes or fiscally imprudent government interventions”.
The 11th actuarial review made 11 specific recommendations for the financial viability of the NIS which includes an increase in the contribution rate to at least 15 per cent — up from 10 per cent — progressively over the next 10 years and making NIS registration and payment contributions mandatory for all self-employed and informal sector workers.
The actuarial reviews also suggest considering a number of options to reduce long-term old age pension costs, including consideration of continuing the increase of the pensionable age until age 67 by the year 2032.
The review also suggests reducing the maximum old age pension replacement rate from 60 per cent to 55 per cent, meaning that rather than receiving 60 per cent of their salary, pensioners would receive 55 per cent.
It also recommends that the NIS discourages “the take up of early retirement pensions through adjusted benefit calculations or making the pension formula more progressive. That is, instituting a slightly lower pension rate for those at higher income levels”. (CMC)