The Gov­ern­ment’s de­ci­sion to ad­dress the is­sues faced by T&T’s Na­tion­al In­sur­ance Sys­tem (NIS) in Mon­day’s bud­get was long in com­ing, ex­treme­ly con­se­quen­tial and po­lit­i­cal­ly coura­geous, giv­en the ex­pect­ed push­back that is sure to come from those neg­a­tive­ly af­fect­ed.

The 11th ac­tu­ar­i­al re­view of the NIS in­di­cates clear­ly that if no ac­tion were tak­en to im­prove the sus­tain­abil­i­ty of T&T’s so­cial se­cu­ri­ty regime, the sys­tem’s as­sets would be ex­haust­ed by its 2033/34 fi­nan­cial year.

The ac­tu­ar­i­al re­view points out that the ex­pen­di­ture of NIS ex­ceed­ed con­tri­bu­tions in its year end­ed June 2021. That was al­so the year that NIS ex­pen­di­ture first ex­ceed­ed its con­tri­bu­tions plus its in­vest­ment in­come, which is an in­di­ca­tion that the sys­tem’s as­sets had start­ed to de­cline.

This de­te­ri­o­ra­tion in the NIB’s as­set base is clear­ly demon­strat­ed in its fi­nan­cial year end­ed June 2024. In that year, NIB’s ben­e­fit ex­pen­di­ture to­talled $6.5 bil­lion, while its con­tri­bu­tion in­come amount­ed to $4.7 bil­lion. That deficit was fi­nanced by the sale of as­sets from the in­vest­ment port­fo­lio of the NIS.

The pre­vi­ous ad­min­is­tra­tion, which was in of­fice from Sep­tem­ber 2015 to April 2025, would have been in­ti­mate­ly aware of the rec­om­men­da­tions in both the 10th and the 11th ac­tu­ar­i­al re­views of the NIS. For­mer min­is­ter in the Min­istry of Fi­nance Bri­an Man­ning was man­dat­ed by the then gov­ern­ment to con­sult with stake­hold­ers on the re­form is­sues that were ur­gent­ly need­ed by the NIS. Mr Man­ning con­sult­ed ex­haus­tive­ly with trade unions, busi­ness groups and oth­er stake­hold­ers, but if he made rec­om­men­da­tions to the then Cab­i­net, they were ig­nored.

The sus­tain­abil­i­ty of the NIS is im­por­tant be­cause its 23 ben­e­fits touch the lives of its cus­tomer base of close to 700,000 na­tion­als, es­pe­cial­ly its over 200,000 long-term ben­e­fi­cia­ries, who re­ceive their pen­sions reg­u­lar­ly every month.

On Mon­day, Min­is­ter of Fi­nance, Dav­en­dranath Tan­coo out­lined the cau­tious steps the cur­rent ad­min­is­tra­tion was pre­pared to take “to save this crit­i­cal in­sti­tu­tion from bank­rupt­cy and pre­serve the ben­e­fits for fu­ture gen­er­a­tions.”

He pro­posed a phased ap­proach by im­ple­ment­ing a three per cent in­crease in the con­tri­bu­tion rate ef­fec­tive Jan­u­ary 5, 2026 and an­oth­er three per cent in­crease from Jan­u­ary 4, 2027.

Mr Tan­coo al­so pro­posed a grad­ual ad­just­ment to the re­tire­ment age for a full NIS pen­sion. Be­gin­ning in Jan­u­ary 2028, the age at which an in­di­vid­ual can re­ceive a full NIS re­tire­ment pen­sion, which is now a min­i­mum of $3,000, would in­crease over a 10-year pe­ri­od.

In ef­fect, this means that start­ing in Jan­u­ary 2028, the age to qual­i­fy for a full NIS would in­crease by one year every two years un­til it reach­es 65 in 2036. It al­so means that work­ers in 2036 would be able to re­tire at 60, but with a re­duced pen­sion, the de­tails of which are yet to be dis­closed.

The Gov­ern­ment may have adopt­ed this grad­ual, phased ap­proach out of con­sid­er­a­tion for the tough fi­nan­cial cir­cum­stances faced by many em­ploy­ees in this coun­try, some of whom have not re­ceived an in­crease in their salaries since 2014.

But giv­en the des­per­ate state of the NIB’s in­vest­ment port­fo­lio, the 11th ac­tu­ar­i­al re­view rec­om­mend­ed that the con­tri­bu­tion rate be raised from 13.2 to 17.2 per cent start­ing in Ju­ly 2022. And they al­so rec­om­mend­ed that the NIS in­tro­duce a six per cent re­duc­tion in the pen­sion re­ceived per year be­fore the age of 65.

The ac­tu­ar­ies opined that the in­crease in the con­tri­bu­tion rate to 17.2 per cent and the in­tro­duc­tion of ear­ly re­tire­ment re­duc­tion fac­tors would de­lay the ex­haus­tion of the NIS fund from 2034 to 2042.    It seems that the sus­tain­abil­i­ty of the NIS is an is­sue politi­cians will have to re­turn to in the fu­ture.