For­mer Min­is­ter in the Min­istry of Fi­nance Mar­i­ano Browne says he was “shocked” by Fi­nance Min­is­ter Colm Im­bert’s com­ments that the Na­tion­al In­sur­ance Fund has more than $20 bil­lion and would not be a prob­lem to­day but 35 years from now.

Speak­ing to the Guardian Me­dia yes­ter­day Browne rub­bished the Min­is­ter's claims say­ing "the as­set prob­lem of the Na­tion­al In­sur­ance Scheme (NIS) is a prob­lem to­day not to­mor­row.”

Ref­er­enc­ing the Ninth Ac­tu­ar­i­al Re­view of the Na­tion­al In­sur­ance Sys­tem as of June 30, 2013, Browne not­ed that the re­port warned that “start­ing in 2019,” the Na­tion­al In­sur­ance Board would have to start sell­ing as­sets to pay ex­ist­ing pen­sions, “2019, that is next year."

The re­port was based on 2013 da­ta and Browne is of the view that based on cur­rent da­ta “the po­si­tion would be even worse.”

The NIB had re­quest­ed that the Gov­ern­ment in­crease NIS con­tri­bu­tions from 13.2 per cent to 15.6 per cent to avoid the NIB run­ning out of funds.

But speak­ing to the me­dia on Tues­day, Im­bert said, “the fact is you can't do every­thing one time.”

He ad­mit­ted that the ac­tu­ar­ies have said, “if we don’t look at the Na­tion­al In­sur­ance sit­u­a­tion the fund will ex­pire.” But he said, “the fund will ex­pire 35 years from now, we have 35 years to fash­ion a so­lu­tion to that prob­lem.”

Im­bert said he did not want to im­pose ad­di­tion­al bur­dens on the cit­i­zen­ry, “you can’t do that as a gov­ern­ment and a Min­is­ter of Fi­nance you can’t spend every year just pun­ish­ing peo­ple, I can’t do that and I am not like that.”

He ex­pressed con­fi­dence that the NIB can sur­vive with­out the in­crease in con­tri­bu­tion rates. “The NIB will sur­vive, it has over $20 bil­lion in its fund. It has enough mon­ey there for the next 30 years.”

Im­bert said who­ev­er is the Min­is­ter of Fi­nance over the next 30 years “will solve that prob­lem but right now we have no in­ten­tion of pun­ish­ing tax­pay­ers any fur­ther,” he said.

But Browne dis­agreed with the po­si­tion. He said the ac­tu­ar­i­al rec­om­men­da­tions are ab­solute­ly clear, “the rec­om­men­da­tions re­quire an in­crease in the con­tri­bu­tions and grad­u­at­ed change in the pen­sion­able age. That has to be changed, if that does not change then the sys­tem will find it­self not be­ing able to meet its com­mit­ments. Those are mat­ters which have to be dealt with to­day. Those are cur­rent live is­sues,” he said.

Browne said this im­pacts the very same peo­ple whom Im­bert was tar­get­ing in the bud­get. “It im­pacts the small man in every pos­si­ble way. It means in the first in­stance that the mon­ey he is putting aside or if he not putting aside enough for his pen­sion then he is in a sub­stan­tial prob­lem and even if he were putting aside mon­ey for his pen­sion and was in some way re­ly­ing on the Gov­ern­ment or NIS, then he is in great dif­fi­cul­ty be­cause there is a sig­nif­i­cant pos­si­bil­i­ty that the cur­rent rate that NIS will not have the funds to make good his con­tri­bu­tions, and that is a sig­nif­i­cant is­sue.”

Ac­cord­ing to Browne, this is “not some es­o­teric idea that will take place 25 years down the road for some­body else to deal with it, ab­solute­ly not! This is a prob­lem that ex­ists to­day.”

The Ninth Ac­tu­ar­i­al Re­view not­ed that to­tal as­sets of the NIS will con­tin­ue to in­crease un­til 2018-2019 be­cause part of the in­vest­ment in­come will be used in ad­di­tion to con­tri­bu­tions to sup­port the ex­pen­di­tures of the sys­tem.

But the re­port point­ed out that from 2019 to 2020 ‘as­sets will rapid­ly de­crease and the NIS funds will be com­plete­ly de­plet­ed in 2029-2030,’ which is just about 17-18 years from now, ‘if noth­ing is mod­i­fied in terms of con­tri­bu­tions or ben­e­fits.’

The re­port not­ed that the ra­tio of as­sets to to­tal ex­pen­di­ture of the sys­tem is present­ly equal to six. But it not­ed that the ra­dio will de­crease to a lev­el be­low two from 2025-26 to ze­ro in 2029-30.

Browne said what the ac­tu­ar­i­al re­view is say­ing is that the “sys­tem is in trou­ble. To meet its cur­rent oblig­a­tion it has to start sell­ing its as­sets, what does that tell you about fu­ture in­come. If you have no as­sets in the fu­ture you will have no in­come.”

It is for this rea­son Browne said that the rec­om­men­da­tion was made for an in­crease in the re­tire­ment age and the in­crease in con­tri­bu­tions, “be­cause there are not enough con­trib­u­tors and there will not be enough con­trib­u­tors on the ba­sis of the ex­ist­ing po­si­tion,” this he said is be­cause there had been a “dra­mat­ic de­cline in the birth rate.”

The Ac­tu­ar­i­al re­port al­so not­ed that un­em­ploy­ment al­so im­pacts on the fund, ‘high­er un­em­ploy­ment means few­er con­trib­u­tors to the scheme and low­er sys­tem's rev­enue. It al­so means that few­er per­sons will be el­i­gi­ble to ben­e­fits in the longer run, but this will not ful­ly com­pen­sate for the per­ma­nent neg­a­tive im­pact on rev­enues,’ the re­port said.