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Minister: NIB ‘non-compliance’ taken seriously

Shane Gibson suggests need for ‘checks’ on ministers’ behavior with respect to board
  • Shane Gibson.


Published: Oct 10, 2013

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The minister of labor has responded to recent comments contained in the Ninth Actuarial Review of the National Insurance Board (NIB), suggesting that NIB takes non-compliance “very seriously” and noting efforts underway to improve good governance at the board.

His comments come shortly after the review, which covers the period 2007 to December 31, 2011, said the fund is not financially sustainable in the long term and has been challenged with a lack of political will to penalize non-compliant businesses and a deficiency of good governance.

Gibson said that while NIB is “challenged with compliance” the National Insurance Act provides a means to address this in the form of interest assessed on outstanding contributions, and this assessment of interest is “automatic, transparent, and consistently applied”.

Derek Osborne’s review had suggested that the interest charged is not high enough, and should be adjusted upwards.

Gibson said that NIB takes the issue of non-compliance “very seriously”.

“Our commitment in this regard was evidenced by the fact that the organization added to the Legal Department’s complement two qualified attorneys,” he said in the House of Assembly. “Again, prosecution is a last resort but it is employed consistently where needed.

“Continued non-compliance does, indeed, result in prosecutions as evidenced by the performance over the last several years. Between 2011 and 2012, for example, the National Insurance Board commenced prosecutions of some 1,509 cases.

“In addition, 133 matters were dealt with by means of civil recovery in the Magistrates Courts.”

In relation to Osborne’s findings of a lack of good governance at the NIB, Gibson said that this was an “inescapable conclusion” of the actuary.

“It has only recently come to light that, notwithstanding the fanfare surrounding the implementation of the National Prescription Drug Plan, important governance requirements in the legislation were not activated,” Gibson said.

“The National Insurance (Chronic Diseases Prescription Drug Fund) Act provides for the establishment of a high-level Strategic Planning and Evaluation Committee charged with the two-fold function of: undertaking assessments of the operation of the plan in relation to its mandate, objectives and performance; and making recommendations for enhancing the efficiency and future development of the plan.

“Further, this same act mandated that the first actuarial review of the Prescription Drug Fund should have occurred as at December 31, 2011. No preparations were made by the former administration to meet either of these obligations.”

Gibson said that he supports good governance at the board and a modern policy and procedures framework for the administration of national insurance is under construction.

“The new director recently produced a governance document, she called a ‘handbook’, based on the National Insurance legislation. The legislation provides for the framework that was put in place for NIB’s administration by the ILO back in the early seventies. This handbook laid out the governance framework under the national insurance legislation, which clearly sets out distinctly separate, but complementary, roles for the minister, the board and management,” he added.

Gibson suggested that “confusion surrounding the essence of the National Insurance program have tended to arise most often when NIB falls within the portfolio of the minister of finance, who, under the act also pretty much directs the investments of the board”.

“By contrast there appears to be less misunderstanding when NIB, as originally established, falls within the portfolio of the minister with responsibility for labor or a minister other than the minister of finance,” he said.

“This separation provides an inherent check on the behavior of the minister of labor by preserving the requirement that he always consult on investment matters with the minister of finance.”

With respect to investments, Gibson said that given that successive actuarial reviews have urged a diversification of NIB’s investment portfolio, NIB will be “closely examining updates to its investment policy framework [and] will also be exploring options for a more conducive structure to better manage its growing real estate investment portfolio”.


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