OPPOSITION spokesman on finance and planning, Audley Shaw, has called for an urgent actuarial review of the National Insurance Fund (NIF).

“The National Insurance Fund is paying out more money than it is receiving, which is being augmented by income from investments and loans and which, I believe, is not a sustainable formula to run a State pension fund in the medium to long-term period,” Shaw told the House of Representatives Tuesday in his contribution to the Budget Debate.

“This urgently requires an actuarial review,” he added.

According to the opposition spokesman, the fund has been incurring a cash deficit between the recurring income (net contributions) and recurring expenditure (payments of National Insurance Scheme, benefits and administration expenses) for several years.

The cash deficit was $3.6 billion for 2013/2014 and $4.1 billion in 2014/2015, Shaw informed the House. He also disclosed that the projected cash deficit for 2015/2016 is $3.35 billion.

According to a 2010 actuarial report, the percentage of the population aged 60 or older was expected to rise from about 11 per cent to about 14.5 per cent by 2025, and the number of pensioners could almost double between 2015 and 2035.

Another actuarial review of the NIS was completed in 2013, which warned that with the NIF paying more in benefits than it collects from contributions, the fund could become insolvent if no changes are made to the system by 2020.

In a recent newspaper interview, actuary Constance Dalmadge Hall said that the funds could run out by 2020, and suggested that NIS contributions be doubled from five per cent to an average of 10 per cent, as the only viable solution to sustaining it over the long term.

With contributions lagging behind benefits by at least $3 billion, changes were made to the social security policy in January, 2013, increasing the size of contributions by: lifting the wage cap from $1 million to $1.5 million from persons earning more than a million dollars; and doubling the contribution rate among low-wage workers, voluntary contributors and self-employed persons from $50 to $100 per week.

However, for the past two years, Minister of Labour and Social Security Derrick Kellier has had to assure the House of Representatives that the fund remains viable.

In September last year, Kellier expressed full confidence in the NIF board, which had begun a new two-year term earlier that year under the chairmanship of economist/analyst Ralston Hyman.

According to the Jamaica Information Service (JIS), Kellier said that the work of the board, past and present, had resulted in a very robust economic position of the NIF, which stood at approximately $70 billion then, and led to growth in the investment portfolio of the fund.

“Already, we are investing in the areas of construction, manufacturing, tourism, financial services and real estate, and there are some huge investment projects in the pipeline,” he added.

Kellier also said that pensioners are relying on the board for the continued growth of the fund, “and from all indications it seems poised to achieve some remarkable results.”

In April 2013, Kellier had also responded to concerns about the impact of the National Debt Exchange (NDX) on the fund, and declared that the benefits of pensioners were not in jeopardy.

“Let me assure all of our pensioners that you can set your minds at ease, as you have absolutely nothing worry about. The NIF remains strong and vibrant …,” declared Kellier then.

Last year, he said that the Government — through the Fund — was pursuing the possibility of a major investment in a cement plant in St Catherine.

The NIS is a compulsory social security scheme for workers, which provides financial protection to its contributors and their families against loss of income arising from injury on the job, incapacity, retirement or death. It also has a maternity allowance for domestic workers, a health plan for all contributors, grants for funerals, widows and widowers’ pensions, and orphans’ allowance.