NIF offers more cash despite gloomy future
DESPITE WARNINGS from his opposition counterpart to stop treating the National Insurance Fund (NIF) as a pool from which welfare is provided, Derrick Kellier, social security minister, has announced a 500 per cent increase in loan limits provided under a special scheme.
Kellier said the NIF has taken the decision to increase the individual loan limit to borrowers from $5 million to $30 million in an effort to stimulate job creation and increase opportunities for skilled workers.
The NIF is funded by national insurance contributions and is the source from which pensions and financial benefits are offered to workers under the National Insurance Scheme (NIS). Under a NIF/SME credit facility, sub-borrowers are able to access funds for job creation among the agricultural, agro-processing, manufacturing, manufacturing services, work study, service and trading sectors.
The NIF had increased its loan value to the small and medium enterprise sector under the NIF/SME credit facility from $1 billion to $1.5 billion, but with a recent actuarial report stating that it is facing a test of viability, Pearnel Charles, opposition spokesman on social security, has urged the Government to discontinue the practice.
"Given the very high rates of return on members' contributions, it is reasonable to expect that the scheme would not be sustainable with the current benefits and contributions," the report tabled in Parliament last month said. It added that the scheme "is in an untenable position".
Tuesday, Charles said the "Government must stop using the Fund to finance good works or needy causes or to invest in risky undertakings where smart people, with smart money are reluctant to go.
"The NIF is not a social welfare endowment or a venture capital fund. It is a pension fund and must be managed as a pension fund," he added.
The opposition spokesman further said when the "Government sees a need to provide cheap loans to small and medium enterprise and diverts $1.5 billion of NIS money to do so on which it earns a return of only four per cent, it is a classic case of good cause, but bad remedy".
Meanwhile, Kellier said that the NIS is "far from being insolvent or approaching anything resembling bankruptcy". He said the Fund has net assets of $71.2 billion, an increase of five per cent over the year ending March 2014.
He said the recommendations made in the actuarial report are being reviewed by a committee appointed by the Cabinet, and once it has completed its work, the Cabinet will receive a report and decisions taken thereafter.