KINGSTOWN, St. Vincent, Pension reform in St. Vincent and the Grenadines will have to occur by 2024 if “draconian changes” such as doubling National Insurance Services (NIS) contribution rates are to be avoided, says NIS Executive Director Stewart Haynes.
“The NIS is currently unsustainable in the medium and long term,” he told the media at a consultation on Tuesday.
“Based on management’s and the external actuaries’ opinion, those measures will have to be implemented before 2024. Otherwise, we’re looking at draconian changes thereafter… So we’re at 10 percent [rate of contribution]; a draconian measure probably will move it from 10 to 20,” he said.
In 2021, four years after the government outlined six options for pension reform, the issue was again brought to the front burner. Finance Minister Camillo Gonsalves estimated that pension payouts in 2022 would be EC$60.3 million (One EC dollar =US$0.37), adding that these outlays are unsustainable.
The situation at the NIS exists even, as Haynes pointed out on Tuesday, that for 85 percent of pensioners, their NIS pension is their only shield against poverty.
When asked, Haynes did not speculate on the factors that might prevent the needed changes from taking place by the time identified by the NIS and actuaries.
“…. I can’t say what will stop it. What I can say is that I would give the best advice,” he said. “If it was an administrative matter, I could say I’m going to do it. But those decisions are made at the Cabinet and the Parliament, which are outside my remit. I will give my best advice for us to make sure the NIS is sustainable.”
Currently, retired civil servants receive a pension to which they make no contribution, meaning that it is funded entirely by taxpayers.
Haynes serves on a Cabinet-appointed committee for the reform of the civil service pension plan, and he said that “based on sentiments expressed, it appears as if for the civil service pension plan, they want action in 2023”.
Against the background of pension reform potentially eroding political points for the government, Haynes was asked whether the administration should bite the bullet in the long-term interests of the country and pension system.
“As a responsible citizen, I would like pension reform, and as an actuary, I will look at our system; I will give my advice to any policymaker that reform is necessary. That would be my advice as a professional,” Haynes responded.
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