Gail Alexan­der

Gov­ern­ment is of the view that an in­crease in the Na­tion­al In­sur­ance Sys­tem's (NIS) con­tri­bu­tion rate should be a last re­sort but no de­ci­sion has been made on in­creas­ing the re­tire­ment age from 60 to 65, says Min­is­ter in Fi­nance Bri­an Man­ning.

Gov­ern­ment has been hold­ing talks with trade unions on the is­sue in re­cent months.

Man­ning's up­date in the Sen­ate yes­ter­day was part of his re­ply to In­de­pen­dent Sen­a­tor Charisse Seep­er­sad's query on ad­dress­ing the Na­tion­al In­sur­ance Board's sub­si­dis­ing of the short­fall by ap­prox­i­mate­ly $20 bil­lion af­ter pen­sions were raised to $3,000.

Man­ning stat­ed that Chap­ter 32:01 of the Na­tion­al In­sur­ance Act man­dates that an ac­tu­ar­i­al re­view is con­duct­ed at fre­quent in­ter­vals for as­sess­ing the NIS' fi­nan­cial po­si­tion.

"The most re­cent 10th Ac­tu­ar­i­al Re­view iden­ti­fied the root cause of the sus­tain­abil­i­ty chal­lenge faced by the NIS, and oth­er so­cial se­cu­ri­ty sys­tems world­wide is the age­ing pop­u­la­tion phe­nom­e­na. This is a sit­u­a­tion where peo­ple are liv­ing longer while hav­ing few­er chil­dren."

"The net re­sult is that the num­ber of re­tirees in the sys­tem is in­creas­ing, while the num­ber of con­trib­u­tors, (peo­ple of work­ing age) is de­creas­ing, which has cre­at­ed a deficit be­tween ben­e­fits and con­tri­bu­tions. In fact, all over the world, pop­u­la­tion age­ing is hav­ing a neg­a­tive ef­fect on the sus­tain­abil­i­ty of pub­lic pen­sion sys­tems."

Man­ning added, "Apart from hold­ing the min­i­mum NIS pen­sion at its cur­rent lev­el at this time, the rec­om­men­da­tions laid out in the 10th Ac­tu­ar­i­al Re­view in­clude (a) in­crease in the con­tri­bu­tion rate from the cur­rent 13.5 per cent to 16.2 per cent; and (b) in­creas­ing the re­tire­ment age from 60 to 65."

"It should be not­ed the pro­pos­al to in­crease the re­tire­ment age isn't new and has been rec­om­mend­ed by the NIB to Gov­ern­ment on sev­er­al oc­ca­sions as a re­sult of sev­er­al Ac­tu­ar­i­al Re­ports pre­pared by the In­ter­na­tion­al Labour Or­ga­ni­za­tion, go­ing back many years. In the 9th Ninth Ac­tu­ar­i­al Re­view cov­er­ing the three-year pe­ri­od up to 30 June 2013, pub­lished in June 2015 un­der an­oth­er Gov­ern­ment, it was rec­om­mend­ed by the NIB’s Ac­tu­ar­ies that in or­der to im­prove the fi­nan­cial vi­a­bil­i­ty of the Na­tion­al In­sur­ance Sys­tem 'the re­tire­ment age for an unre­duced pen­sion should be grad­u­al­ly in­creased from age 60 to age 65 over the pe­ri­od from 2025 to 2060'."

"Fur­ther, a rec­om­men­da­tion to in­crease the re­tire­ment age al­so ap­pears in the 8th Ac­tu­ar­i­al Re­view pub­lished Sep­tem­ber 2012, un­der an­oth­er Gov­ern­ment."

Man­ning added, "The Gov­ern­ment is of the view that an in­crease in the con­tri­bu­tion rate should be a last re­sort."

"On the oth­er hand, the NIB’s Ac­tu­ar­ies are of the firm view, sup­port­ed by sci­en­tif­ic analy­sis, that an in­crease in the re­tire­ment age will in­crease the lev­el of con­tri­bu­tions to the Na­tion­al In­sur­ance Sys­tem and re­duce costs, and will al­so pro­vide work­ers with the op­por­tu­ni­ty to earn their full salary and be en­gaged in pro­duc­tive ac­tiv­i­ty for a sig­nif­i­cant­ly longer pe­ri­od."

"Ac­cord­ing­ly, Gov­ern­ment is en­gaged in ac­tive con­sul­ta­tions with key stake­hold­ers on the is­sue of in­creas­ing the re­tire­ment age, start­ing with trade unions." (G.A.)

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