National Insurance Board GRENADA

Transcription

1 Building Intergenerational Trust GRENADA National Insurance Board Annual Report 2012

2 National Insurance Board GRENADA Annual Report 2012 Table of Contents Mission, Vision, Core Values 2 Corporate Information 3 Board of Directors 4 Investment Committee 5 Senior Management 6 Minister s Message 7 Chairman s Report 8 Director s Report 10 Statistical Tables 18 Independent Auditor s Report 22 Statement of Financial Position 23 Statement of Comprehensive Income 24 Statement of Changes in Funds 25 Statement of Cash Flows 26 Notes to Financial Statements 27 Schedule of Benefits 54 Schedule of General and Administrative Expenses 55 1

3 National Insurance Board GRENADA Annual Report 2012 MISSION STATEMENT The mission of the NIS is to provide for efficient payment of relevant benefits and provision of other services to stakeholders in a customer-focused environment through effective collection of contributions and prudent management of funds with highly trained staff using innovative technology. VISION The National Insurance Scheme will be the premier social security entity in the CARICOM region providing sustained coverage, responsive to national and global challenges. CORE VALUES Sustainability Customer Focused Accessibility Adaptability Social Responsibility Integrity Good Governance Efficiency Prudent Management Confidentiality 2

4 National Insurance Board GRENADA Annual Report 2012 Corporate Information REGISTERED OFFICE Melville Street, St. George s SUB-OFFICES Cnr Victoria & Jubilee Streets, Grenville, St. Andrew s Main Street, Hillsborough, Carriacou BANKERS Republic Bank Grenada Ltd. Melville Street, St. George s RBTT Bank Grenada Ltd. Cnr Cross & Halifax Streets, St. George s Grenada Co-operative Bank Ltd. Church Street, St. George s SOLICITORS Henry Hudson-Phillips & Co. Young Street, St. George s AUDITORS PKF Accountants & Business Advisors Grand Anse, St. George s 3

5 National Insurance Board GRENADA Annual Report 2012 Board Of Directors Mr. Philbert Lewis Government s Representative - Chairman Mr. Daniel Roberts Government s Representative Deputy Chairman Mrs. Madonna Harford Employees Representative Mr. Michael Philbert Employers Representative Mr. Benedict Brathwaite Employers Representative Mr. Bert Paterson Employees Representative 4 Mr. Alfred P. Logie Director

6 National Insurance Board GRENADA Annual Report 2012 Investment Committee Mr. Timothy Antoine Chairman Mr. Lingham Samuel Deputy Chairman Mr. Daniel Roberts Member Mr. Morris Mathlin Member Mr. Alfred P. Logie Director 5

7 National Insurance Board GRENADA Annual Report 2012 Senior Management Mr. Alfred P. Logie Director Mr. Dorset Cromwell Deputy Director Mr. Louis A. Williams Finance Manager Mrs. Janice Francis Human Resource Manager Ms. Cindian St. Bernard Investment Manager Mr. Duane Noel Information Technology Manager Ms. Marcelle Charles Board Secretary /Executive Assistant 6 Mrs. Pearl Moses-Dennis Internal Auditor (reports to Audit Committee)

8 National Insurance Board GRENADA Annual Report 2012 reserves stood at over $750 Million, with 80% held locally. It is important that as a society we make certain that our contributors, both current and future, receive benefits that are meaningful and relevant to their needs, while at the same time ensuring that the Fund remains sustainable. The only way this objective can be achieved is by all employers, self-employed and employees complying with the National Insurance Laws, thereby ensuring that all workers are covered to mitigate the loss of income associated with sickness, employment injury, childbirth, ageing, invalidity or death. Minister s Message When the National Insurance Scheme (NIS) was established in April 1983, the underlying intention was to provide a social safety net for workers and their families. From inception, the NIS has provided meaningful Social Security benefits to the people of Grenada, Carriacou and Petite Martinique. The National Insurance Fund is a significant financial pillar within the economy and its contribution to Grenada s economic and social infrastructure is evident. Over the last 30 years, the Scheme s reserves have been invested in key sectors and have assisted in national development. At the end of 2012, the NIS We must continuously engage in discussions to determine how the current social security arrangement can be improved. It is also important that the National Insurance Board exercises good governance and engages in the prudent management of its resources at all times. I take this opportunity to thank the members of the Board of Directors, Investment Committee, Appeal Tribunal, Management and Staff for their continued dedication to fulfilling the mandate of the National Insurance Scheme. Hon. Dr. Clarice Modeste-Curwen MINISTER OF HEALTH AND SOCIAL SECURITY 7

9 National Insurance Board GRENADA Annual Report 2012 GDP estimated to have declined by 0.02 per cent, attributable to lower output in key sectors such as, construction, transport, storage and communications. In 2012, the NIS earned revenue of $89.5 million, with a net surplus of $31.7 million. With rates on all available investment instruments continuing to decline in 2012, the National Insurance Board (NIB) focused on asset class diversification as a risk mitigation strategy in the present investment climate. In furtherance, of this the NIB purchased approximately $50 million in regional sovereign bonds traded internationally. Chairman s Report The National Insurance Scheme continues to grow from strength to strength even in difficult economic times. The Reserve at the end of the 2012 financial year stood at $757 million, an increase of 4.8 percent over the previous year. However, average reserve growth in the last five years has fallen to 6.2% compared with 10.4% for the previous five years, a reflection of both local and regional economic malaise. The Eastern Caribbean Currency Union (ECCU) economic review by the Governor of the Eastern Caribbean Central Bank (ECCB), highlights that that economic activity in the ECCU contracted for a fourth consecutive year in 2012 with real The report of the 9 th Actuarial Review, which was conducted by the International Labour Organization (ILO), was discussed with key stakeholders during Consensus has not yet been reached on the timing for the implementation of some critical recommendations, among them, that the pensionable age be increased over a period of time from sixty (60) to sixty five (65) years. We anticipate that decisions on these matters will be made soon. During the latter part of 2012 the NIB purchased a number of properties belonging to Government. Shares were also purchased in Cable and Wireless Grenada Limited and the Grenada Breweries Limited from Government. The NIB worked assiduously towards achieving its mission by investing in its human capital and 8

10 National Insurance Board GRENADA Annual Report 2012 appropriate technology. Many members of staff continued to pursue professional certification in areas such as Accounting, Management and Human Resource Management. Internal training continues to be a priority activity of the organization to ensure that all members of staff have the skill set required to function at the optimum level. Throughout 2012, the National Insurance Scheme continued to focus on delivering high quality service to its customers in an efficient and effective manner so that persons received their NIS pensions and other benefits when they became due. Ron J. Antoine CHAIRMAN 9

11 National Insurance Board GRENADA Annual Report 2012 The demographic changes, in particular the ageing population and the decrease in fertility, are providing challenges that need to be addressed so that the sustainability of these pension arrangements continue. The main recommendation of the Ninth Actuarial Review of the Fund, that is, increasing the pensionable age from 60 to 65 years, was widely discussed by the principal stakeholders during 2012, but consensus was not reached on the way forward. Director s Report The issue of social protection is not one that should be taken for granted and it is incumbent on everyone to ensure that each one of us contributes to the success of this societal responsibility. In this regard, the level of compliance in the formal sector continues to be acceptable but even one non-compliant employer is cause for concern as no employee should be faced with the prospect of not receiving a benefit that he or she is entitled to. OVERVIEW The theme of this year s report is Building Inter- Generational Trust. The basis for a pay-as-you-go Social Security System is that of inter-generational transfer, and there is the implicit understanding that at all times the active generation of workers would take care of those in the twilight of their years who no longer have the earning capacity of their youth and middle age. The challenging economic environment in which the National Insurance Scheme operated during the year, meant that the growth of the Fund was again constrained. Notwithstanding this, some positive results were obtained as cited hereunder: The total assets of the Fund grew by 4.7%, from $723 million in 2011 to $757 million in

12 National Insurance Board GRENADA Annual Report 2012 The net surplus for 2012 was $31.7 million, significantly up when compared to $19.1 million the previous year. Contribution income increased from $54.7 million in 2011 to $58.05 in REVIEW OF OPERATIONS Benefit Administration During the 2012 financial year 11,861 benefit claims were received. This represents a 4% increase in claims received relative to From the total claims received, 10,672 were shortterm benefit claims. The National Insurance Board continues to work towards exceeding customer expectation, paying 91.4% of all shortterm claims received within one working day. Similarly, the turn-around time for age benefits was excellent with 82% being paid within ten days. For the 2012 financial year, the number of beneficiaries totaled 17,673; this represents a 5.2% increase over Benefit expenditure for 2012 totaled $44.27 million. This amount when compared to $40.23 million paid in 2011 represents a 10% increase in expenditure. From the $44.27 million paid in benefits, $37.03 million was paid in long term benefits while $6.46 and $0.79 million were paid in Short-term and Employment Injury benefits respectively. Benefit expenditure had an average annual increase of 9.2% over the last five years. Pension expenditure continues to dominate benefit expenditure. In 2012, the National Insurance Board paid $36.07 million to pensioners which accounted for 81.5% of total benefit expenditure. Pension cost in 2012 relative to 2011 grew by 11.6%. Over the last five years pension expenditure has had an average increase of 9.9%. The number of pensioners increased from 6,902 in December 2011 to 7,267 in December 2012, an increase of 5.3%. The trend in benefit and pension expenditure is illustrated in the graph hereunder. EC ($M) No. Of Pensioners Benefit and Pension Expenditure $50.00 $44.27 $40.00 $40.23 $30.00 $20.00 $10.00 $36.22 $36.07 $33.30 $31.20 $32.31 $29.05 $26.72 $24.42 Pension Expenditure Benefit Expenditure Total Pensioners 7,600 7,267 7,200 6,902 6,618 6,800 6,468 6,277 6,400 6,000 5, Financial Year

13 National Insurance Board GRENADA Annual Report 2012 Contribution Income Contribution income for the 2012 financial year amounted to $58.05 million. This represents a 5.9% growth relative to The insurable earning limit moved from $3,500 to $4,250 effective January 1, The NIS achieved a compliance rate of 92.8% from the private sector employers in 2012, up from 91.1% in During the period 2008 to 2012 there was an average yearly increase of 5.7% in contribution income. Government continues to be tardy in making contributions payments due. Employee registration also fell by 11.7% from 2,386 in 2011 to 2,107 in ,153 persons contributed to the NIS for the first time in In 2012, this figure dropped significantly by 58.2% to 3,258. Administrative Expenses Administrative expenses totaled $7.32 million in 2012, compared with $6.56 million in 2011, an 11.5% growth. The National Insurance Board has maintained an average increase of 3.3% in administrative expenditure over the past five years. EC ($M) $60.00 $45.00 $30.00 Contribution Income $53.68 $54.79 $49.98 $50.68 $58.05 The statutory limit for administrative expenses as a percentage of contribution plus benefit is 12% and the recommended value by the Actuary is 9%. In 2012 a ratio of 7.2% was maintained up from 6.9% in $15.00 Administrative expenses as a percentage of insurable earnings went from 1.08% to 1.13%. $ Financial Year This indicates a 0.05% increase when compared to the previous year. During 2012 a total of 4,339 employers contributed to the NIS, a decrease of 1.5% relative to the 4,406 who contributed in Administrative Expenses From the total employers who contributed in 2012, 727 were self-employed. $8.00 $6.00 $6.53 $6.64 $6.56 $6.56 $7.00 Registration Activity During employers were registered with the NIS. Relative to the previous year this represents an 11.6% decline. From the 939 registered employers, 331 were self-employed indicating a 37.3% growth in the number self-employed registration relative to EC ($M) $4.00 $2.00 $ Financial Year

14 National Insurance Board GRENADA Annual Report 2012 The chart hereunder demonstrates administrative cost from 2008 to 2012 relative to contribution income and total income. EC ($M) Income & Administrative Expense $ $80.00 $60.00 $40.00 $87.26 $88.66 $89.53 $85.42 $85.66 $53.68 $54.79 $58.05 $49.98 $50.68 INVESTMENT RATIO 9.0% 0.2% 8.6% 12.1% 7.1% 1.2% 8.5% 0.2% 4.9% 9.2% 16.0% 17.8% 5.1% CASH - TERM DEPOSIT REPURCHASE AGREEMENT CASH - TREASURY BILLS US SAVING ACCOUNT BONDS-GOVERNMENT BONDS-DOMESTIC BONDS-REGIONAL LOAN - STATUTORY LOAN - DOMESTIC LOAN - MORTGAGE EQUITIES DOMESTIC EQUITIES -REGIONAL REAL ESTATE $20.00 $- $6.53 $6.64 $6.56 $6.56 $ Total Income Administrative Expenses Contribution Income Investments In the 2012 financial year, investment income earned totaled $31.17 million; this represents a 6.9% decline relative to The investment portfolio of the N.I.S totaled $ million, indicating an increase in the size of the portfolio of $6.88 million or 1% relative to During the year, the Board actively sought to diversify its portfolio and thereby mitigate the inherent risk of over-concentration in any area. Investments were made in additional regional sovereign bonds traded internationally and locally; additionally, a number of properties were purchased from Government. The pie chart above shows the composition of the portfolio by asset classes as at December 31, 2012 with 80.6% of the portfolio domiciled in Grenada. Reserve Growth The reserve of the National Insurance Board stood at $ million at the end of This represents an increase of 4.8% relative to Over the last five years, the reserve had an average growth of 6.4%. EC ($M) Reserves $ $ $ $ $ $ $ $ $ $ Financial Year In fiscal 2012, the NIS achieved a yield on reserve of 4.3%, and a real rate of return of 1.9% was realized. This compares with 4.8% and 1.8% respectively in In 2012, the National Insurance Scheme continued its quest to provide excellent service and enhanced customer satisfaction. During the year, the National Insurance Board commissioned 13

15 National Insurance Board GRENADA Annual Report 2012 its fourth comprehensive customer satisfaction survey. In 2012, overall customer satisfaction ranked at 91% indicating a high level of customer satisfaction. The following chart shows overall customer satisfaction ratings from 2009 to within three years of their pension age so that all discrepancies can be resolved well before their application for an age benefit is submitted. Additionally, the weekly NIS Awareness Programme is now aired simultaneously, on seven radio stations. COMMUNITY OUTREACH The NIB continues to be involved in the 94% 90% Customer Satisfaction Rating 92.0% 90.0% 91.0% community in an active manner. Our flagship Scholarship Programme for needy secondary school students continues with ongoing assistance to 47 students during % 84.0% The NIB also co-sponsored the primary school mathematics quiz and gave support to the Public 82% Sector retirement programme. The annual Christmas donations to children and homes for 78% the elderly continued. Our staff looks forward to spending quality time with our elderly citizens during those visits. PUBLIC EDUCATION The National Insurance Scheme, in keeping with the promise of providing excellent service to the general public, launched its Satellite Office in June Satellite offices are set up in various villages and towns around the island for one day. Through this initiative we reached over 800 persons in 2012, sensitizing them on the benefits of paying social security contributions. The satellite office has been able to update employees records and obtain statements of the contributions made on their behalf by employers. This is probably the most significant manifestation of our commitment to become more customer oriented. We are now issuing contribution statements to all persons HUMAN RESOURCES Training and Staff Development As we endeavour to provide unparalleled service to customers, the NIB continues to place great emphasis on training for the overall development of its human capital. To this end, staff members participated in a number of local and regional workshops in addition to those who continue upgrading themselves academically in programmes such as Accounts, Management and Human Resources. The areas of local training included Auditing, Credit Appraisal, Professional Development, Customer Service and Supervision. 14

16 National Insurance Board GRENADA Annual Report 2012 Staff members attended the following overseas training programmes: ECSE Credit Risk Programme - Antigua Investment of Social Security Funds seminar - Puerto Rico Workshop for Compliance Officers- Dominica NEW OFFICE COMPLEX Plans for a new office complex were finalized during the course of the year. The contract for the construction of the new building was awarded to Quinn Company Ltd. The construction period is fifty-two weeks; the building should therefore be completed by February The ground floor of the building will have twelve booths for rental to the public. ACKNOWLEDGEMENT As the National Insurance Scheme forges ahead into a new year, we wish to place on record our appreciation to the Board of Directors, Investment Committee, Management and staff. They have all demonstrated their continued dedication in ensuring that the NIS realizes its vision of being the premier Social Security entity in the CARICOM region, providing sustained coverage, responsive to national and global challenges. Alfred P. Logie DIRECTOR 15

17 The NIS Office Goes Mobile The NIS Satellite Office - A significant Manifestation of our commitment to provide unparalleled Service To Customers. 16

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19 Statistical Tables National Insurance Board GRENADA Annual Report 2012 Newly Registered Self-Employed Persons By Economic Activity INDUSTRIAL CLASSIFICATION FINANCIAL YEAR Agriculture, Hunting, Forestry & Fishing Manufacturing Electricity, Gas & Water Construction Wholesale & Retail Trade Restaurants & Hotels Transport, Storage & Communication Banking, Finance & Insurance Real Estate & Business Services Social & Related Community Services Personal & Household Services Recreation & Cultural Services Public Administration & Defense Sanitary & Similar Services TOTAL Newly Registered Employees By Parish PARISH FINANCIAL YEAR CARRIACOU ST. ANDREW'S ST. DAVID'S ST. GEORGE'S 1, ST. JOHN'S ST. MARK'S ST. PATRICK'S TOTAL 3,036 2,069 1,977 2,386 2,107 18

20 Benefit Paid by Benefit Branch National Insurance Board GRENADA Annual Report 2012 BENEFIT BRANCH FINANCIAL YEAR Long-Term Age Benefit $ 21,502,152 $ 23,474,618 $ 25,673,608 $ 28,413,016 $ 31,602,815 Survivors Benefit $ 1,887,901 $ 2,051,136 $ 2,190,720 $ 2,611,219 $ 3,041,271 Invalidity Benefit $ 1,799,592 $ 1,920,995 $ 2,043,254 $ 2,209,363 $ 2,382,240 Sub-total $ 25,189,645 $ 27,446,749 $ 29,907,582 $ 33,233,598 $ 37,026,326 Short-Term Sickness $ 2,905,522 $ 3,029,059 $ 3,110,617 $ 3,300,521 $ 3,411,381 Maternity $ 1,438,525 $ 1,488,862 $ 1,659,671 $ 2,053,673 $ 2,032,434 Funeral $ 979,024 $ 781,047 $ 923,091 $ 861,352 $ 1,013,156 Sub-total $ 5,323,071 $ 5,298,968 $ 5,693,379 $ 6,215,546 $ 6,456,971 Employment Injury Injury $ 354,657 $ 266,474 $ 277,877 $ 348,463 $ 406,920 Medical Expense $ 121,378 $ 105,248 $ 123,508 $ 287,849 $ 143,601 Disablement Grant $ 87,322 $ 77,079 $ 75,873 $ 34,507 $ 97,556 Disablement Pension $ 69,393 $ 68,692 $ 85,461 $ 73,750 $ 103,171 Death Benefit $ 57,723 $ 34,731 $ 57,049 $ 34,660 $ 35,597 Sub-total $ 690,473 $ 552,224 $ 619,768 $ 779,229 $ 786,845 GRAND TOTAL $ 31,203,189 $ 33,297,941 $ 36,220,729 $ 40,228,373 $ 44,270,142 Newly Registered Employers By Parish PARISH FINANCIAL YEAR CARRIACOU ST. ANDREW'S ST. DAVID'S ST. GEORGE'S ST. JOHN'S ST. MARK'S ST. PATRICK'S TOTAL 1,511 1,189 1,

21 National Insurance Board GRENADA Annual Report 2012 Newly Registered Employers By Economic Activity INDUSTRIAL CLASSIFICATION FINANCIAL YEAR Agriculture, Hunting, Forestry & Fishing Manufacturing Electricity, Gas & Water Construction Wholesale & Retail Trade Restaurants & Hotels Transport, Storage & Communication Banking, Finance & Insurance Real Estate & Business Services Social & Related Community Services Personal & Household Services Recreation & Cultural Services Public Administration & Defense Sanitary & Similar Services Roadside Cleaning & Maintenance 1, TOTAL 1,511 1,189 1, Newly Registered Employees By Age Group AGE GROUP FINANCIAL YEAR , , , TOTAL 3,036 2,069 1,977 2,386 2,107 20

22 National Insurance Board GRENADA Annual Report 2012 Contribution By Industrial Classification INDUSTRIAL CLASSIFICATION FINANCIAL YEAR Agriculture, Hunting, Forestry and Fishing $ 821,840 $ 713,626 $ 729,224 $ 1,131,726 $ 1,016,286 Manufacturing $ 2,641,010 $ 2,428,081 $ 2,338,471 $ 4,110,990 $ 3,446,936 Electricity, Gas & Water $ 1,693,238 $ 1,608,375 $ 1,608,020 $ 2,679,126 $ 2,556,732 Construction $ 4,768,374 $ 3,930,537 $ 4,657,072 $ 5,042,083 $ 4,107,997 Wholesale & Retail Trade $ 7,029,682 $ 7,187,175 $ 7,095,606 $ 10,723,772 $ 9,934,910 Restaurants & Hotels $ 3,557,294 $ 3,415,825 $ 3,257,383 $ 5,136,845 $ 4,927,584 Transport, Storage & Communication $ 4,264,885 $ 3,726,051 $ 3,125,825 $ 5,077,115 $ 4,796,689 Financial Intermediations $ 3,431,210 $ 3,419,095 $ 3,421,353 $ 5,399,834 $ 5,157,964 Real Estate & Business Services $ 2,518,253 $ 2,348,255 $ 2,721,971 $ 4,338,338 $ 4,255,201 Public Administration & Defense $ 15,720,481 $ 14,765,069 $ 15,157,498 $ 661,426 $ 7,550,461 Social & Related Community Services $ 4,987,401 $ 4,933,612 $ 4,878,435 $ 7,967,404 $ 8,101,935 Personal & Household Services $ 602,311 $ 592,431 $ 590,166 $ 945,721 $ 905,833 Recreation & Cultural Services $ 558,033 $ 410,366 $ 409,658 $ 610,092 $ 616,023 Sanitary & Similar Services $ 132,915 $ 137,638 $ 163,885 $ 233,303 $ 250,737 Roadside Cleaning & Maintenance $ 956,708 $ 364,406 $ 529,113 $ 735,653 $ 420,253 TOTAL $ 53,683,633 $ 49,980,541 $ 50,683,680 $ 54,793,429 $ 58,045,540 21

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24 The notes on pages 27 to 53 form an integral part of these financial statements 23

25 24 The notes on pages 27 to 53 form an integral part of these financial statements

26 25 The notes on pages 27 to 53 form an integral part of these financial statements

27 The notes on pages 27 to 53 form an integral part of these financial statements 26

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57 Notes National Insurance Board GRENADA Annual Report

58 DESIGN ARTWORK AND PRODUCTION-HARVEST STUDIOS DESIGN GRENADA National Insurance Board Website: P.O. Box 322, Melville Street, St. George s, Grenada Tel. (473) Fax (473)