Modern banking practices, which will see pensioners’ funds paid directly into their accounts, is expected to shave about $20 million off the National Insurance Scheme’s administrative costs.

The system, which is expected to come on stream by next June, will see funds being placed in accounts at any commercial bank, building society or credit union.

“This will not only provide a better service to pensioners at no cost to them, but also has the potential to reduce the administrative costs of NIS by some $20 million,” said Horace Dalley, the minister of labour and social security.

He was speaking at the recent launch of the NIGold Health Plan, which will provide medical insurance for pensioners under the NIS.

When pensioners are sent their NIGold Health Cards by mail, they will also be sent a form asking them to specify their preferred method of payment, which they should complete and return when registering.

Presently, NIS pension payments are disbursed fortnightly through the postal service and the National Commercial Bank. Pensioners or their agents are required to attend, in person, to encash their vouchers and this often involves long waits. In addition, pensioners often cash several vouchers at the same time and sometimes adequate funds are not immediately available at their specific locations.

Over the years, Dalley said, the NIS had evolved into the largest and one of the most effective social security schemes in the region with its assets currently standing at $27 billion, representing 30 per cent of all pension fund assets in the country.

The fund has a diversified portfolio that includes investments in all major sectors of the economy such as manufacturing, communications, tourism, financial services and real estate.

Attributing the success of the fund to prudent management, the minister said over the last five years, the fund had recorded significant growth that had outpaced the rate of inflation.

He reminded employers and employees that the continued success of the fund and the timely payment of benefits required prompt remittance of contributions and submission of annual returns.