NIS contemplating reform measures aimed at enhancing public confidence in the scheme including overseas investment
Stabroek News
December 29, 2006
Reform measures being contemplated by the National Insurance Scheme (NIS) could include overseas investment of employee contributions, according to Head Office Manager Deryck Rodney.
Speaking with Stabroek Business earlier this week Rodney said that a reformed NIS could see the Scheme recruiting qualified investment managers to provide the soundest possible advice on the most worthwhile investments both at home and abroad.
Up to May this year 23 per cent of the scheme's fund had been invested in government treasury bills. A further 20 percent was being held in fixed deposits at the Demerara Bank while 18 percent was invested with Clico. Citizens Bank and Hand-In-Hand held 17 percent and 10 percent respectively of the scheme's fund in fixed deposits while a further 3 percent was bring held in Republic Bank bonds. A loan associated with the new Caricom Secretariat complex accounted for 3 per cent of the fund while a further 1 per cent represented a loan to the private company Laparkan. Up to May of this year more than 88 per cent of the Scheme's investments are committed for periods of between one and two years, a circumstance that suggests that the NIS is exposed to a limited liquidity risk.
Figures up to May this year also indicate that the NIS had liquid assets of more than $25b of which almost $24b or 92.2 percent represented investments.
Under the Prudential Investment framework for NIS investments approved by cabinet in September last year short-term investment categories include government treasury bills and fixed deposits in commercial banks while medium term investments include private sector bonds and debentures. Long-term investments include government loans and debentures, bonds and equities in social development projects and foreign currency denominated bonds and debentures.
The allocation of percentages of the fund to be invested in those categories limit short and medium-term investments to 5 per cent and 10 per cent of the fund, respectively long-term local investments are limited to 45 per cent of the fund while currency denominated investments are limited to 25 per cent of the fund.
Last week the NIS convened a workshop to address its ongoing reform project which is focusing on improving compliance of the contributor population, extending the scheme's coverage to embrace a greater proportion of the working population, enhancing the basket of benefits available to contributors and the implementation of the cabinet-approved Prudential Invest-ment framework.
Commenting on the ongoing reforms in the scheme's investment outlook Rodney said that the exercise sought both to reduce the burden on contributions to meet the cost of the scheme as well as to instil public confidence in the NIS.