SVG

Letter writer ‘doesn’t have a clue’ about NIS – Eustace

Leader of the Opposition Arnhim Eustace (file photo).

KINGSTOWN, St. Vincent – The person who wrote a letter published in at least two of last Friday’s newspapers about Opposition Leader Arnhim Eustace being wrong about the National Insurance Service (NIS), doesn’t have a clue about how the institution functions, Eustace said on radio yesterday.

“R. T. Luke V. Browne”, in the letter published in Searchlight and The News, said that Eustace and “his apologists and sympathizers have … demonstrated tremendous irresponsibility and scant regard for the truth” in commentary about the financial health of the NIS.

Browne singled out “Kenton Chance” and “I-Witness News”. However, the same facts published by I-Witness News were also published in a Searchlight article.

Browne said that Eustace was wrong in saying that according to the latest actuarial review, released in 2008, unless the 8 per cent contribution rate is revised, the NIS would not have enough money to cover its expenses after 2016.

He said that the actuarial projections show that the NIS could meet its obligations to pensioners and other operational expenses without reform up to around 2040.

Eustace was wrong in saying the NIS stands to lose $62 million as a result of the collapse of British American Insurance Company (BAICO) and Colonial Life Insurance Company (CLICO), Browne further wrote, adding that it is also improper to describe the NIS’ net income as profit.

But Eustace, who was chairman of the NIS for four years, pointed to the International Monetary Fund (IMF) Article IV Consultation report of December 2011.

That report, which quotes the 2008 actuarial review, says, “in the absence of parametric reforms, the contributions collected will not be sufficient to cover expenses after the year 2016, and investment income will have to be used as a supplement. The review also showed that reserves are projected to start falling in 2027 and will be depleted by 2040”.

Eustace, a former prime minister and minister of finance, said that in normal circumstances, the NIS uses the contributions it receives to cover its expenses.

“He (Browne) is trying to make do that that is something strange. That is how it is with those systems because the rest (investment income), you want to put in reserves to help cover the scheme over a long time,” Eustace said

He further stated that according to the report, the NIS would therefore have to use the income from its investments to cover its expenses.

“So I don’t know what he is trying to say. I am not misleading anybody or misinforming anybody,” Eustace further said, adding that the NIS is losing investment income because of the BAICO-CLICO debacle.

“You can’t count them. And the NIS itself is providing in its accounts for its losses associated with its investments, including the British American and CLICO investments,” Eustace further stated.

He said that is why the NIS “profit” fell from EC$27 million in 2008 to EC$5.6 million in 2010. “I know it is net income. But not everybody in the street would understand when you say net income. So I say ‘profit.’”

He said that while Browne concentrated on the 2027 and 2040 projections, the NIS could meet its commitments up to 2040 if it uses all its investment income also.

“… I don’t know what sort of foolishness he is talking about. … He doesn’t understand. He doesn’t have a clue. … People just run and write about things they have no knowledge about. And [he] is calling Kenton Chance, because he repeated something I said, … reckless.”

Eustace was also concerned about how National Properties Ltd., a state-owned company, would repay the EC$50 million it owes to the NIS.

He the NIS will have to increase its rates, adding that three years ago, when contributions were increased to 8 per cent, it was initially recommended that they be increased to 11 per cent.

“… the longer you wait, the more you would have to put on. So more money will have to be deducted from people’s salaries. … I was chairman of the NIS for four years. I have a pretty good idea of what is involved in running that institution.”

Browne, Eustace said, cannot be sure that the NIS is going to get back $30 million of its investment in BAICO-CLICO, which is now advertising for a company to take over its general insurance portfolio.

“There is no solution proposed for that up to now. The hope is that the company, which you ain’t set up yet, will eventually become profitable and you get back some money,” Eustace said.

Half of the annuity holders, who invested their gratuity in BAICO-CLICO would be dead by the time a new company become profitable, Eustace said.

“So what foolishness is he talking about? Get back and get back when? When they are all dead? … This is no game where people write letters because they want to write letters. This is the livelihood of Vincentians and other people in the OECS …”

Eustace said that while he does not normally respond to letters in the press the NIS “is a very, very serious matter on which I have been speaking for years.

“And I take strong objection to that kind of foolishness that is written in the papers, trying to fool the public of St. Vincent and the Grenadines.

“Whoever Luke Browne is, don’t write those kinds of foolish letters in the newspaper. Think of those people today. Maybe if he is one [of those annuity holders] he would have a different understanding of the situation. Those are who we have to think about in this and ensure that it never happens again,” Eustace said.

Eustace said he believes the government should float a bond issue to pay some of the monies owned to the Vincentians policyholders.

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Discussion

7 thoughts on “Letter writer ‘doesn’t have a clue’ about NIS – Eustace

  1. What is Browne doing, is he a government spokesman, does Gonsalves confide government business in him before he confides in the parliament and the opposition.

    By the way who is this, hope its not the boy who tried to take over the Eustace constituency, number one twerp.

    Is he trying to get payback time for the accusations against him?

    WAKE UP AND SMELL THE SULPHUR

    Posted by Peter | February 14, 2012, 12:58
  2. I am in SVG about 2.5 months annually and it seems that I am able to offer better ideas to the public and the Govt more than some folks who live there 24/7. It such a shame that even when people in SVG are suffering from no jobs, inflation on food cost,clothes,rent,morgage,pension reduction and the other 11 yards;yet people are still using partisian politics to cover up. Those type of politics normally leave those idiots in a deep whole when it is too late for them to realise. My advice to people is stop worring about ‘this or that is my party’ and focus on what is happening in the nation at present and the goals for the future. This is to say what ever Govt is doing now must be assessed for effectivity and whatever plans for future must be assessed for productivity and prosperity. As far as I am concern a party must be in power, which ever party goes there must work with the people’s most serious concerns before any thing else. Yes,the people cries come first. All I am hearing is murders,rape stealing breaking homes, stealing Govt money, NIS funds down,treasury funds down ect. So why use politics to defend those things that every one naked eye can see? It’s such a shame. Besides if you talking about SVG stop comparing to other places because you don’t live in other places 24/7 — It’s just a diversion from the point.
    Neul&Indep

    Posted by Prof-Dasilva | February 14, 2012, 14:44
  3. How is it that so many retired teachers after one year following their retirement still can’t get a penny, not a penny. Answer that.

    Posted by justice | February 14, 2012, 16:23
  4. Well who is he, is he just a nobody, well if he is nobody, who is confiding state information in a nobody.

    Speak up say what you know, is this a dream team reject?

    WAKE UP AND IDENTIFY THE PEOPLE GREASER, TIN FOR ROOF, LUMBER, REGISTRATION HELP.

    UNITY LIARS PARTY, ULP.

    WAKE UP AND SMELL THE SULPHUR

    Posted by Peter | February 14, 2012, 18:02
  5. Given the deatils of the acturial report, I definitely agree that “[Mr] Eustace was wrong in saying that according to the latest actuarial review, released in 2008, unless the 8 per cent contribution rate is revised, the NIS would not have enough money to cover its expenses after 2016″ because he did not include the use of the investment income and reserves so that would be a half-truth. However, I am not surprised by his focus or even that of Mr Browne’s. The opposition wants to highlight 2016 (without saying explicitly that the year signals only the time when contributions would be insufficient to cover operating expenses) whereas the government prefers to point to 2040 (a later date when the sum total of contributions, investment income and reserves would be insufficient to cover the operations of the NIS). I have no problem with anyone using either date but I would prefer if he/she would include the necessary caveats, which explain the full truth on the matter. Case closed :) Next!

    Posted by HONESTY | February 16, 2012, 15:19
  6. Luke the fluke you make us puke. You need rebuke you a Kingstown spook.

    Posted by Peter | February 16, 2012, 21:05

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