In spite of the strange claims by Jagdeo, including claims to have been trained in Economics, NIS contributions from active workers is not the source of funding for the monthly payments the Insurance Scheme makes to its policyholders. It is in fact the money deposited by the workers over their careers that the NIS invests and then returns to the workers.
More so the “learned” Vice President should have known that a pension firm that uses money from new policyholders to pay the benefits it owes to older policyholders would be a Ponzi Scheme and not an Insurance Scheme. The current state of NIS is thus the result of what investments were made and not how many contributions they get today.
Insurance companies put the money they receive from customers into very diversified investments and would almost never put too much of their money into one project. NIS followed this principle until 2006 when, under pressure from the PPP, NIS invested a large portion of its portfolio into the Berbice Bridge Project. The NIS after that was used as a slush fund for PPP government projects all over Guyana, many of which never made any profits and left the NIS struggling to cover its debts. According to former Finance Minister Jordan, NIS also invested GUY$5.6 billion into CLICO, which later collapsed.
NIS reportedly lost GUY$1.8 billion between 2009 and 2015. The company has been the recipient of government bailouts ever since. Unsurprisingly, there have been mounting complaints from policyholders that NIS has been using all possible bureaucratic loopholes to avoid paying benefits to policyholders recently, as the company struggles to stay afloat.
It is insulting to the Guyanese people that Jagdeo would blame the bankrupt state of NIS on reduced contributions. Once again, your contributions to an insurance company is not the source of funding for payments to policyholders. NIS is not a Ponzi Scheme. Is it?
More, In The Ring.
