Oct 09, 2012 News
Former Chairman of the National Insurance Scheme (NIS) Reform Project, Christopher Ram, is calling for the immediate resignation of Dr. Roger Luncheon amidst revelations that the fund is in serious trouble.
Dr Luncheon, the current Chairman of the Board of Directors, is also the Head of the Presidential Secretariat and the Secretary to the Cabinet of Ministers.
Ram, an accountant and lawyer, who has been fiercely critical of Government and its policies, noted that Dr Luncheon is a powerful figure within government who under his watch as Chairman of NIS did nothing to ensure that the fund, which is a main source of income for thousands of pensions, was protected.
“I am calling for Dr. Luncheon to resign. He and other board members have been there for several years now.”
NIS recently warned that it is worrying and hopes to find urgent solutions as expenses will exceed income by year end.
NIS earns income from investments and contributions.
According to Ram, the last periodical actuarial review of NIS had been completed before the CLICO financial fallout and as such, included income from the investments that NIS had in CLICO.
Despite this, NIS accounts continued at the end of 2010 to show income from CLICO.
“As I already stated, this was an extremely dangerous thing to do and Dr Luncheon alone cannot be blamed. We have to also blame former President Bharrat Jagdeo and Minister of Finance, Dr. Ashni Singh and even the Minister before that.”
Many workers, especially public servants, are especially dependent on the NIS pensions after they would have retired. The scheme also issues vouchers for spectacles and medical treatments.
Ram noted that the NIS Act made it clear that the scheme could only invest in securities approved by the Cooperative Finance Administration, a body that the Finance Minister chairs.
The accountant claimed that since 2009 he had written the Minister on the nature of its investments but to date has not received any replies.
“What has made this matter worse is that despite the recommendations of the most recent actuarial a few years ago, it is becoming clearer that over the last ten years or so, the politics have hampered the proper running of NIS.”
According to Ram, it is becoming clearer that NIS is not a serious consideration for Government despite its significance and implications to Guyanese.
In recent years, the expenditure and income gap has been narrowing.
This, the accountant said, was being made worse by the $5B “hole” in the accounts of NIS from the collapse of CLICO.
“It is obvious that we can’t wait anymore. Solutions must be found for NIS and found now. The future does not look good. Dr Luncheon
should do the honorable thing now and resign and the entire Board of Directors be revamped.”
Recently, Leader of the Alliance For Change, Khemraj Ramjattan also called for the resignation of Dr. Luncheon.
NIS during its 43rd Anniversary admitted that immediate reforms are needed at that state-owned agency.
“The year 2012 has issued in a period of importance for the scheme and importantly for its stakeholders. The challenge of maintaining its financial viability has become even more pressing and it is evident that immediate solutions are necessary,” NIS said in a statement from Board Chairman, Dr. Roger Luncheon
It was established in September 1969 to maintain a system of social security through which enough income is secured to take the place of earnings when such are interrupted by sickness or accident. The scheme was to also provide for retirement through age and sudden death of a breadwinner.
“Expenditure has risen in the face of payments for rising benefits claims, particularly those related to long-term old age pension. The situation has been compounded by rising commodity prices for goods and services needed by the scheme for its operations.”
According to the Board Chairman, on the other hand, revenue growth has stalled, lagging behind expenditure growth.
“Contribution income growth has not occurred adequately and investment income growth by the scheme has not been forthcoming. The continuation of this current dispensation is clearly not an option. Aggressive and immediate reforms are required to enhance growth in revenue and to control expenditure.”
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