Social Security: NIS AR 2004

8/14/2019 Social Security: NIS AR 2004

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N A T

I O N A

L I N S U R A N C E

S E R V

I C E S

S T

.

V I N

C E N T

& TH E G R E N A D

I N E S

M i s s i o n a n d V i s i o n

MissionStatement

To provide social security andto promote social and economic

development in St. Vincent and

the Grenadines through prudent

financial and people-centred

management.

VisionStatementTo be an institution that

recognises and assesses changing

environmental trends and provides

Social Security that adequately

reflects our value system andsatisfies our customers’ needs.



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N A T

I O N A

L I N S U R A N C E

S E R V

I C E S

S T

.

V I N

C E N T

& TH E G R E N A D

I N E S

Our CreedWe believe in you and will

prioritise your needs. We

will ensure that you receive

the quality service that is

tailored specifically to your

circumstances, providing

workable solutions

towards safeguarding your

wellbeing.

We will listen diligently for

your concerns and not just

to your words.

We pledge to be honest,

confidential and thrifty

and to safeguard by high

ethical standards the Social

Security trust fund.

We will be strongly

committed to youby providing quality

service, ensuring that our

procedures and policies

are supported by timely

research and cutting-edge

technology.

N I S C r e e d



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N I S C h a r t e r

N A T

I O N A

L I N S U R A N C E

S E R V

I C E S

S T

.

V I N

C E N T

& TH E G R E N A D

I N E S

The CharterWe are a team who

believe that it is not what

we learn that is new.

It is what learning does in

terms of our own renewal.

We will be committed to

learning and to taking the

necessary steps to allow

the knowledge gained to

influence our thinking and

behaviour.

We will strive for

excellence in everything

we do.

We will recognise the

diversity among us and so

support, coach, counsel and

lead one another regarding

what is right.

We will seek for

personal transformation,

understanding well that it is

essential for organisational

transformation. Our actions

will be fair and just.

We will respect ourselves

and respect others. In so

doing we commit to reward

excellent efforts, exemplary

conduct and visionary

leadership.

We believe that we can

create a future so we pledge

to work to derive the best

solutions to critical issues.

We will be hard on ill-discipline, non-performance

and any behaviour which

impacts negatively on the

work, the relationship

and the results.

We will heighten our efforts

towards safeguarding

our values and soenhance the individual

development, wellbeing

and organisational

achievements.



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C o r p o r a t e I n f o r m a t i o n

Corporate Information

Registered OfficeBay Street

P.O. Box 305KingstownSt. Vincent and the GrenadinesTel: 784-456-1514Fax: 784-456-2604Email: [email protected]: nissvg.org

DirectorsMr. Lennox Bowman - ChairmanMr. Elroy John - Deputy ChairmanMr. Anthony GeorgeMr. Nowell SoleynMr. Gideon Browne

Mr. Denniston DouglasMr. Garvin JacksonMr. Lloyd Small

Executive DirectorMr. Reginald Thomas

Secretary Mr. Reginald Thomas

BankersNational Commercial Bank(S.V.G.) Ltd.

SolicitorsHughes and CummingsPhillips & WilliamsSaunders & HugginsO.R. Sylvester & Company

AuditorsKPMG CharteredAccountants



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Contents

6 Prime Minister’s Review

8 Chairman’s Review

12 Board of Directors

13 Executive Director’s Report

25 Executive Management

25 Senior Management

26 NIS Staff

28 NIS Highlights

30 Auditors’ Report

31 Financial Statements

48 Statistical Highlights

51 Quiz

T a b l e o f C o n t e n t s



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Prime Minister’s Review

P r i m e M i n i s t e r ’ s R e v i e w

For just over 18 years the National Insurance Services has been offeringquality service to the nationals of St. Vincent and the Grenadinesat home and in the diaspora. As Prime Minister and Minister withresponsibility for National Insurance, I am especially pleased with

the progress that this noble institution has made and I am encouraged by the strides that it has accomplished in financial management, administrative

accountability and corporate governance. All this has been achieved in aglobal environment that is characterised by social and economic turbulence.

The National Insurance has been a major player in the Government’s effort to improve thequality of life for Vincentians. This has been demonstrated time and again in its continuedinvolvement in the National Student Loan programme. Investment in human capital is



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Prime Minister’s Review (continued)

perhaps the greatest investment that any government or enterprise may undertake. Thisis even more effective when that is undertaken for the benefit of the young. During fiscalyear 2004, the National Insurance Services assisted some 131 persons to pursue tertiaryeducation. This type of collaborative effort that is engendered with a view of makingyoung people “masters of their own destinies” must be applauded.

Poverty alleviation is another area in which the National Insurance Services impactspositively. In 2004, the NIS increased its pension payments (Contributory and Non-Contributory) from $9.1 million to $9.9 million. This is significant when one considersthat the NIS pension payment is the sole means of sustenance for many of our elderly folkswho do not have the financial wherewithal to make alternative provisions.

The construction of the Golden Years Activity Centres was yet another demonstration of the NIS’ active participation in the social development of our nation, particularly as itrelates to improving the welfare of the elderly.

As the NIS moves into its 19th year of operations, it will undoubtedly confront newchallenges over which it has no direct control. I refer to issues such as demographicchanges, technological advances and changes in the nature, structure and functioning of social security institutions and their product offerings.

The NIS is strategically poised to confront these challenges if and when they arise.

Of crucial concern is the need to ensure that all our citizens are given access to adequatehealth care. The NIS has already committed itself to providing a shared database with theMinistry of Health to effect smooth registration for all workers, as well as to providingmanagement expertise and physical accommodation for the National Health Insurance intheir new headquarters building.

Fundamental to the growth and development of the NIS is the ability to keep thecontributions affordable and to make the benefits socially relevant and adequate. Overthe long term, both areas will be examined through a series of parametric reforms, whichwill have a domino effect on the beneficiaries as well as the wider Vincentian society.

Given the foresight, versatility and adroitness of the National Insurance Board, Managementand staff, I am confident that the institution will continue to expand.

Congratulations and best wishes on 18 years of successful operations. Let us endeavourto collaborate for the advancement of St. Vincent and the Grenadines.

Ralph E. GonsalvesPrime Minister and Minister

With Responsibility for Social Security

Of crucial concern is the need to ensure that all our

citizens are given access to adequate health care.

The NIS has already committed

itself to providing a shared database with

the Ministry of Health to effect smoothregistration for all workers... P

r i m e M i n i s t e r ’ s R e v

i e w



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The National Insurance Services is an institution that is mandatedby statute. Over its 18 years of operations it has been the premiernon-bank financial institution in St. Vincent and the Grenadines. Thesuccess of this institution can be attributed largely to prudent financial

management, quality leadership at the level of the Board, and an efficient andeffective management and staff.

As Chairman of the National Insurance Board for the past four years, I am pleased to beassociated with this successful institution. During my tenure as Chairman, the institutionhas registered growth in every conceivable area of its operations, and based on projectionsfrom the last actuarial review, it is poised to continue this level of sustainability and growth,notwithstanding the recessionary domestic economic environment within which it operates.

It is therefore with a sense of pride that I provide a retrospective overview of the operationsof the National Insurance Services for the financial year 2004.

Legislative Amendments

The NIS operates within a legal and regulatory framework. We are cognisant of the needto continually review and amend the legislative requirements to reflect social adequacy

and relevance to the needs of our stakeholders.

Based on this consciousness, Section 4 Sub-section (4) of the Contribution Regulationswas amended to include other categories of income as insurable earnings. The net effectof this legislative change was the increase in pension payments to employees, particularlythose employed in the hotel and other service industries. This amendment took effect fromMay 1, 2004.

Chairman’s Review

C h a i r m a n ’ s R e v i e w



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Name Change

An amendment was also made to the Principal Act, National Insurance Scheme Act #33 of 1986, to change the name National Insurance “Scheme” to National Insurance“Services”. This change had the dual effect of removing the negative perception of the

institution as one that is designed to defraud its beneficiaries, as well as positioning theinstitution as one that is customer friendly and service oriented.

New Marketing and Human Resource Division

Marketing as a business activity has developed as a result of recognising that the successof an organisation depends upon creating and retaining customers.

In the short term, these decisions are likely to be concerned with efficiently meeting theneeds of the customers. In the longer term, they are likely to focus more on the organisation’sneed to respond to the ever-changing expectations of the users of its services.

Through the years, the NIS has been making attempts to reach all categories of workers inSt. Vincent and the Grenadines. These attempts have been largely successful in the formalsector, but there was a marginal registration rate in the informal sector, approximate to justabout 9 per cent of total registration. Also, there were some registrants and beneficiarieswho were still not fully aware of their rights as members of the NIS. Given the NIS’objective of providing total coverage and offering quality service, the Board felt that thecreation of a marketing unit was a pivotal arm of this initiative. Under this new unit,marketing officers were given the mandate to implement a marketing plan to deal withevery aspect of social security. The unit was established on July 1, 2004.

As at December 2004, registration in the informal sector increased from 1,251 to 1,498,and greater emphasis has been placed on public education and awareness through aworkable marketing strategy targeting specific market segments. There has also been theadoption of a marketing mix, tailored to meet the needs of the diverse groups.

During 2004, the Board made a concerted effort to ensure that the human resourceswere integrated into its business strategy. The Human Resources Division was added tothe organisational structure. Part of the focus included general and specific training, a

review of the performance appraisal instrument, health and wellness programmes andan employee development programme, which was facilitated by Clinical PsychologistDr. Dennis Lowe. There has been evidence of information sharing, team building, activeparticipation and increased productivity as a result of these sessions.

Staff also received substantial increases in uniform allowance and it was agreed in principleto offer one scholarship every five years to allow employees to pursue undergraduatetraining in any area that the Board identifies as a priority for the organisation’s corebusiness.

Given the NIS’ objective of providing total coverage

and offering quality service, the Board felt that the

creation of a marketing unit was a pivotal arm of this

initiative. Under this new unit, marketing officerswere given the mandate to implement a marketing

plan to deal with every aspect of social security.

Chairman’s Review (continued)

C h a i r m a n’ s R e v i e w



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Golden Years Activity Centres

The desire to maintain a good social relationship ranks high on our corporate agenda.Last year, we were able to complete the Golden Years Activity Centre at Cane Grove. Thiswas officially opened on November 2, 2004. This centre has provided an ideal place for

camaraderie and socialisation for 15 elderly persons who meet three days a week forhealthy exchanges.

Fostering these social relationships and preserving the rich cultural heritage which residesin our older folk is arguably the best way that the National Insurance Board can pay tributeto our nation-builders who have laid a foundation upon which the younger generationcan build.

In 2005, the Centre at Black Point will be officially opened so that our senior citizens onthat part of the island can benefit from this type of social networking.

Investment Initiatives

Fundamental to the organisation’s raison d’être is the ability to meet its pension obligationsto beneficiaries in the long term. This demands seeking investment opportunities that willmaximise returns on the reserves that have been built up over the years.

To ensure that best practices are adhered to in this regard, the Board pursues soundinvestment policies and seeks proper actuarial advice. During the period under reviewthe investment policy was completed. This sets out the ways in which the funds can beinvested to meet our obligations to our contributors. Among other things, considerationwas given to the return requirements of the institution, bearing in mind the objectivesof long-term growth (sustainability), capital preservation, solvency, economic and socialutility and yield.

As part of the new investment policy, the Board purchased five acres of land at Peter’s Hopeto be developed in accordance with the guidelines stipulated in the national developmentplan.

New Headquarters Building

As the National Insurance continues to improve its services and augment its scope of operations, the need for expansion of the physical structure is obvious. During 2004,a $12 million contract was awarded to the firm Gibson Construction Company Ltd. toconstruct the new headquarters building.

This ultra-modern facility comprising four storeys will house the National InsuranceServices, the National Health Insurance (NHI) and a state-of-the-art Conference Centre,and will provide rentable space for other businesses within the financial services sector.

This project, which is scheduled to be completed in the year 2007, will definitelycomplement the Government’s development plan for the capital, Kingstown, and willafford the staff more spacious accommodation within which they can undertake theirfunctions.


Fostering these social relationships and preserving

the rich cultural heritage which resides in our

older folk is arguably the best way that the

National Insurance Board can pay tribute to our

nation-builders who have laid a foundation upon

which the younger generation can build.

During 2004, a $12 million contract was awarded

to the firm Gibson Construction Company Ltd. to

construct the new headquarters building.

C h a i r m a n ’ s R e v i e w



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Making space available for other players in the financial services sector will be used asa launching pad to foster strategic alliances with other stakeholders. Ultimately, this canonly redound to the benefit of the National Insurance Services.

Corporate Governance

Within recent times, much attention has been given to the issue of corporate governancebecause it is considered to be integral to the development of sound, transparent andproperly functioning money and capital markets. During 2004, the Board took painstakingeffort to ensure that there was full disclosure and transparency in all of its operations.

All decisions were undertaken with the full consciousness that we had a fiduciaryresponsibility to the beneficiaries whose funds we hold in trust. As we move forward into2005, the Board will continually monitor the NIS processes to ensure that they measureup to best international practices.

Future Directions

The Board will employ strategies to ensure that the NIS remains financially viable,

actuarially sound and sustainable. Emphasis will be placed on continual marketingresearch to monitor and analyse trends in the financial services industry; building strategicalliances with social partners with a view towards heightening the level of coverageamong the self-employed and voluntary contributors sectors; continual differentiation andrepositioning of its products; extensive training and education of its staff towards achievingbest practices in human resource management and related disciplines; continuallyupgrading Information Technology to reduce administrative costs and enhance servicedelivery; extensive public outreach programmes and diversifying its investment portfoliomix to guarantee long-term sustainability.

Commendation & Appreciation

I wish to express profound gratitude to the National Insurance Board for its support during2004. Members made invaluable contributions at all meetings and were thus able to “addvalue” to the operations.

I especially commend the NIS Management and Staff who through the years have givenyeoman service to this noble institution. With this continued commitment the NIS can onlygrow from strength to strength as we work together to serve and satisfy our clientele.

Lennox Bowman

Chairman


C h a i r m a n’ s R e v i e w



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Board of Directors(left to right)

Mr. Lennox BowmanChairman

Mr. Elroy John

Deputy Chairman

Mr. Reginald ThomasExecutive Director

(left to right)

Mr. Anthony George

Mr. Nowell Soleyn

Mr. Gideon Browne

(left to right)

Mr. Denniston Douglas

Mr. Garvin Jackson

Mr. Lloyd Small

B o a r d o f D i r e c t o r s



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E x e c u t i v e D i r e c t o r ’ s R e p o r t

Executive Director’s Report

Overview

I am delighted to report that the Social Security system of St.Vincent and the Grenadinesrecorded yet another successful year in operation for fiscal year 2004. This success wasevident in several areas including growth in the asset base, improved customer service,enhanced information technology, human resource development, heightened complianceand marketing. The institution also experienced challenges with falling interest ratesand limited domestic investments. Notwithstanding, we were able to use our collectivewisdom and insight to ensure that our motto “Quality Service and Financial Soundness”maintained pride of place.

At the commencement of operation for fiscal year 2004 the institution embraced the

theme “Bridging the Gap” and presented the key imperatives to stakeholders regardingSocial Security and its benefits and the issues which were to be confronted in fulfilment of the International Labour Organisation (ILO) global campaign on coverage for all.

The quest for universal coverage and sustained financial viability underpinned theinstitution’s thrust for the year 2004.



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E x e c

u t i v e D i r e c t o r ’ s R e p o r t

Executive Director’s Report (continued)

Financial Performance

Financial Result Net income for the year amounted to $20.72M compared to $18.95M of the previousyear, an increase of 9.37%. This increase was mainly the result of increases in contribution

and investment income.

Contribution IncomeContribution income increased from $18.95M in 2003 to $21.56M in 2004. The increaseof 4% was partly due to increased registration and increases in wages and salaries in thepublic and private sectors.

Benefit ExpenditureBenefit payments have a direct link with contributions. The NIS operates the pay-as-you-go system of funding in that current contributions are used to pay current benefits.

During the year benefits paid amounted to $14.09M compared to $12.94M in the previousyear. As previously stated, contribution for the periods 2003 and 2004 totalled $21.56Mand $20.22M respectively, giving a surplus of contributions over benefits of $7.48M and$7.29M. Although there is seemingly a positive yield, it is projected to decline in thefuture, at which time arrangements would have to be made for the additional funding.

0

50

100

150

200

Investments 2000-2005

Contributions vs Benefits

Investment IncomeThe NIS Investment Policy was implemented in 2004. The policy paved the way foran investment portfolio that matches the needs of the institution. In 2004, returns oninvestment amounted to $17.85M and $15.62M in 2003. With this level of income theNIS achieved a yield on the portfolio of 6.8% compared to 6.5% in 2003.

$ M



15


National Provident Fund PaymentsThe National Provident Fund is the predecessor of the National Insurance ServicesProgramme. Accounts are held for registered individuals who have saved with the fund upto December 31, 1986.

In 2004 the sum of $850,669 was paid to 423 members; in the previous year (2003) thesum of $803,128 was paid to 383 members.

General and Administrative ExpensesGeneral and administrative expenses increased from $3.31M in 2003 to $4.05M in 2004.The increased focus on the public outreach programme resulted in increased cost duringthe year. There were also modest increases in other areas in keeping with budgetary plansthat impacted administrative cost.

However, the administrative index – the measure of operating efficiency – increasedslightly from 10% in 2003 to 11.4% in 2004.


Administrativeand General Expenses

Total AssetsDecember 31, 2004

Financial Position

Total Assets

Total assets of the NIS increased from $278.4M in 2003 to $299.3M in 2004,an increase of 7.5%. Growth in cash and marketable securities and long-terminvestments accounts for $271.2M or 90.6%. Property, plant and equipment,investment property and interest receivable make up the remaining 9.4%.

$ M

$ M



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E x e c



Investment Portfolio

Following the completion of the investment policy, efforts were made to change theexisting asset allocation to achieve the target of the investment policy. The focus was onFixed Income Securities with maturities between five and 10 years.

Market interest rates proved a challenge as rates continued to fall. However, givenour focus on fixed income securities, rates between 6% and 7.5% were achieved forthese investments. By the end of 2004, the stock of investments was valued at $271.2Mcompared to $254.8M of the previous year. Yields were then 6.8% and 6.5% (2003).

The distribution of the portfolio at the end of the year was Cash and Deposits 55%, FixedIncome Securities 42%, Equities 3%.

Investment Portfolio Mix December 31, 2004



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Reserves

At the end of the year the reserves were as follows:

Short-term benefits - $9.6M or 3.2%

Pension - $120.3M or 4%Employment injury - $15.6M or 5.2%National Provident Fund - $52.4M or 17.6%

During the year the sum of $30M was transferred from short-term benefits to pension inkeeping with the 4th actuarial recommendation.

Reserves December 31, 2004

$ M



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Economic Activity by Sector

Total Registrants by Economic Activities

Growth IncreaseIndustrial Classification over 5yrs over 2003

Agriculture, Hunting & Forestry 3% 4%

Construction 3% 3%

Education 6% -1%

Electricity, Gas and Water Supply 4% 3%

Extraterritorial Organisations -1% -12%

Financial Intermediation 5% 0%

Fishing 3% -13%

Health and Social Work 2% 0%

Hotels and Restaurants 2% 5%

Manufacturing 1% -1%Mining and Quarrying 6% 30%

Other Comm. and Social Activities 6% -3%

Private Households 5% 4%

Public Admin. and Social Security 4% 6%

Real Estate, Renting and Business Activities 8% 5%

Transport, Storage and Communication 6% 6%

Wholesale and Retail Trade 3% 4%

Self-employed/Voluntary Contributors 33% 35%

Adjustments 0% -100%

4% 5%

Total growth in employee registration averaged 4% per annum over the years 2000-2004.Registration in the following sectors contributed significantly to the growth:

• Financial Sector, i.e. real estate, renting and business activities 8%• Self-employed/Voluntary Contributors 33%

51,758

55,109

57,910

60,494

63,113



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Agriculture, Hunting and Forestry 14% 24%

Construction -1% 6%

Education 10% 10%

Electricity, Gas and Water Supply 4% 16%

Extraterritorial Organisations 0% -100%

Financial Intermediation 1% 30%

Fishing 0% -100%

Health and Social Work -9% -41%

Hotels and Restaurants -9% 1%

Manufacturing -6% -9%

Mining and Quarrying 5% 50%

Other Comm. and Social Activities 6% 25%Private Households -2% -25%

Public Admin. and Social Security 10% -7%

Real Estate, Renting and Business Activities 6% 50%

Transport, Storage and Communication 7% -24%

Wholesale and Retail Trade 1% -2%

Undetermined 18% -10%

4% -2%


New Employee Registrants by Economic Activities

The average increase in new employee registrants over the 5-year period was 4% perannum. However, a decrease of 2% was recorded over 2003/04. The hotel and restaurant,

private households and transport, storage and communication sectors recorded a significantdecline in the period under review.

2,8932,844

3,888

3,6123,539



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E x e c


New Employer Registrants by Economic Activities


Agriculture, Hunting and Forestry 11% 127%

Construction 20% 77%

Education 43% -40%

Electricity, Gas and Water Supply -100% -100%

Extraterritorial Organisations 0% 0%

Financial Intermediation -18% -79%

Fishing 0% 0%

Health and Social Work -28% -50%

Hotels and Restaurants 7% -36%

Manufacturing 3% -44%

Mining and Quarrying 0% 0%

Other Comm. and Social Activities -11% -41%Private Households 7% -9%

Public Admin. and Social Security 15% 0%

Real Estate, Renting and Business Activities 34% -19%

Transport, Storage and Communication -4% -40%

Wholesale and Retail Trade 0% 40%

8% 2%

The average increase in new employer registration totalled 8% over the years 2000-2004. Registration in the construction sector increased markedly in 2004 to 99 vs. 56

over 2003/04. This contributed significantly to the 20% average increase of the period.However, due to the size of the numbers no meaningful comparisons can be made.


218

319

305 307313



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Programme Highlights

Second Strategic Plan

Being cognisant of the need to position the institution as a business leader and the premier

non-bank financial institution in St. Vincent and the Grenadines, the institution embarkedupon its second strategic plan (2004-2008). Among other things, the plan sought toidentify the dynamics for maintaining long-term survival and to capitalise on value-addingactivities that will enhance effectiveness and efficiency. These were articulated in thecrafting of a new mission statement, charter, creed, vision and expanded goals.

Strategic Alliances

The National Insurance Services is fully conscious of its role in social development andso it has always strived to foster and maintain good social relationships with customersand other stakeholders. One area that benefited significantly from this strategic alliancewas the area of social outreach. The institution provided social and financial support toa student to pursue a dissertation in fulfilment of the requirement for a Master of Science(MSc) degree in Economics. The thesis focused on the “impact of HIV/AIDS on SocialSecurity”. Several recommendations emanated, highlighting the social and economicimpact that the AIDS pandemic can have on social security. Among other things, the authoremphasised that it was critically important for the NIS to zealously guard its investmentfunction since investment income would eventually become the pivotal source of fundsfor social security institutions, given the incidence of declining registration and increasedbenefit expenditure.

“Less Sugar Sweeter Life” Campaign As a good corporate citizen the NIS has a responsibility to assist with improving the qualityof life for all Vincentians. Over the years, diabetes had been one of the leading causesof death in St. Vincent and the Grenadines. The institution embraced the opportunity toco-sponsor a project for Miss Shermalon Kirby on the theme “Less Sugar Sweeter Life” in

partial fulfilment of the requirement for her course of study in Social Marketing. The posterreceived tremendous support from the Government through the Ministry of Health and theEnvironment and also from the private sector. The poster promotion also boosted the NIS’image as a key player in health and wellness issues.

Health Fair Participation

In keeping with our commitment to promote active, healthy living, the NIS has been amajor sponsor of the SVG Medical Association’s Health Fair. In April 2004 the event wascelebrated with the slogan “Road safety – no accident”. The NIS used the opportunity toremind Vincentians of the relevance of NIS to their present and future needs by using thetheme “Road Safety is no accident and NIS is no option.” Persons who visited the NISbooth expressed satisfaction with the display and reiterated their support for the NIS andits programme.




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Pensioners Appreciation Day and Name Change

Pensioners Appreciation Day has been indelibly etched on the NIS’ calendar of events.Every year hundreds of pensioners and well-wishers converge at the NIS to celebratethis day with the Minister of Social Security, the Board of Directors and staff. Last year’s

programme coincided with the name change from “National Insurance Scheme” to“National Insurance Services”. Part of the day’s highlights included songs, drama andpoems from the pensioners. Below is an excerpt from a pensioner’s submission on thename change:

“Well yes, I was waiting for this dayLong, long time I did know the NIS was doing a good jobMan if you know how it used to hurt me,when I hear people calling the NIS a SchemeA Scheme is when people come out to cheat and deceive youBut since this NIS start in 1987I know is ah good they doing for the people of St. Vincent and the Grenadines...

So tell me, you ain’t see the NIS doing a good service?Even me too could put on me pot and wait for the NIS moneyBecause it certain just like how night follow day... So even though they change the nameNIS is still the sameYou could still collect all your benefitsIsn’t this something to celebrate!” (dialect)

Labour Market Issues

The NIS participated in the Caribbean Labour Market Information System (CLMIS) Project.This project, which was spearheaded by the International Labour Organisation (ILO),was designed specifically to assess the labour market potential of the NIS’ database.

The assessment concluded that, in spite of the shortcomings, the data generated byNational Insurance institutions “can provide useful, up-to-date and reliable labour marketinformation”.

Besides providing comparative data on National Insurance in the Caribbean, the reportmade several recommendations that the SVG NIS will use as a basis for updating itsdatabase to ensure that our data are timely, accurate and reliable.

Administration and Human Resources

Managers in the 21st century must ensure that the base of their organisations is the people.A pivotal part of their business strategy should be the integration of their human resources.Being fully aware of this mandate, the NIS invested in people competence by exposing itsstaff to training in the following areas:

• Project Management – Florida• CAOSA Training – Chile• Institute of Internal Auditors – United Kingdom• Social Security options for financing – Anguilla• Pension Reform – United Kingdom• Compliance and Insurability Status – Belize

Additionally, several of our employees pursued and successfully completed careerdevelopment programmes in Human Resource Management, Economics, BusinessAdministration and Management. The NIS Board and Management extend sincerecongratulations to all and encourage others to pursue similar programmes as we strive tokeep the NIS in the forefront as a knowledge-driven and learning organisation.




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Corporate Governance

Financial institutions like the NIS have a sacred duty to be transparent and to be mindfulof their fiduciary responsibility to all stakeholders. In an attempt to maintain a reputationof integrity, trustworthiness and morality, the NIS Directors and senior staff participated in

local seminars in Corporate Governance in 2004.

The Internal Audit and External Audit functions also served as integral pillars in the strictadherence to Corporate Governance functions.

Regional Initiatives

Social Security institutions recognise that fraternity is paramount in helping them to achieveconsensus and to set a platform for cooperation and collaboration in espousing the tenetsof the CARICOM Reciprocal Agreement, and by extension the Caribbean Single Marketand Economy (CSME). To this end, the SVG NIS welcomes any opportunity to participatein regional events. In February 2004, the SVG NIS hosted regional counterparts from 29member countries for the regional seminar on Occupational Health and Safety (OHS).

The main objectives of the seminar were:

• To assist participants in developing skills required to define and identifyOccupational Health and Safety issues.

• To sensitise participants to the benefits of implementing workers’ healthprogrammes in their workplaces and to demonstrate the benefits of suchprogrammes to Social Security institutions.

• To give participants the opportunity to apply tools and techniques in designinga workable Occupational Health and Safety document/policy for use in the workenvironment.

• To apprise participants of ways/means of allocating resources for OccupationalHealth and Safety intervention.

We participated in the 5th Social Security CARICOM Easter games, hosted by theSt. Lucia National Insurance Corporation. Although we placed in the cellar position,the camaraderie was great and we look forward to participating in similar events in thefuture.

Information Technology

Information Technology is an important function for organisations operating in the 21stcentury. All processes within the NIS are driven by information technology, therefore itis imperative that the institution keeps on the cutting edge. In an attempt to ensure that

our information system is adequately fulfilling its functions, an Information Services (IS)Audit was conducted with assistance from the Social Security Administration (SSA), USA.The team comprising Miss Patty Suchy and Mr. Daryl Redd interviewed staff and reviewedsalient NIS documents to assist them in charting a future path for the NIS’ InformationServices Department. Among other things, the audit recommended consideration of thedevelopment of a VISOR type of corporate view for IT initiatives.




24

E x e c


Golden Years Activity Centres

The NIS of St.Vincent and the Grenadines carved its name in history when it constructedtwo Golden Years Activity Centres to provide an alternative for senior citizens who wishto socialise with their peers and share their skills.

There are three major goals for the Golden Years Activity Centres and specific objectiveswithin each of these goals.

Goal # 1: To improve the quality of life of the aged in St. Vincent and the Grenadines.Objective #1.1: To reduce the incidence of loneliness/isolation among the aged.Objective #1.2: To provide the aged with a facility for socialisation and

companionship.

Goal # 2: To provide nutritional (balanced) meals for the aged.Objective #2.1: To cater for particular nutritional needs among the aged, particularly

those who are suffering from diseases that affect the aged(e.g. hypertension, diabetes).

Objective #2.2: To assist the aged in learning how to effectively deal with theirnutritional needs.

Objective #2.3: To teach the aged how to evaluate changes in their dietary andhealth status/needs.

Goal # 3: To effectively utilise the skills/resources of retirees.Objective #3.1: To engage the services of aged persons who have retired but who are

willing to share their skills with others of similar standing.Objective #3.2: To provide a skills bank among the aged that can be tapped by the

wider community.Objective #3.3: To provide ancillary funding for the administration of the

Golden Years Activity Centre.

The institution received highest commendation from local and overseas officials and was

encouraged to continue its quest to add years to life for all senior citizens.

Our Future

The NIS is approaching its 19th year of operation. We are cognisant of the fact that morepersons will qualify for a pension. At the same time there is a high incidence of decliningbirth rates and a decimating working population. In an effort to remain viable, sustainableand relevant, we strive to maintain a robust, vibrant and solvent social security system thatwill meet our obligations in the 21st century and beyond.

Conclusion

I must express my sincerest appreciation to all our stakeholders. Our commitment to“Bridging the Gap” and “Looking Out for Your Benefits” is enshrined in our charter and our

creed and you can count on us; we will be there for you. The Board and staff will continueto collaborate to keep the NIS in the consciousness of the Vincentian population.

Reginald ThomasExecutive Director




25

E

x e c u t i v e a n d S e n i o r M a n

a g e m e n t

Executive Management

Senior Management

(left to right)

Reginald ThomasExecutive Director, EMBAB.Sc, Public Administration (Hons.),Cert. Public Administration

Lennox TimmFinancial Comptroller, MAATFCCA (Fellowship of the Association of Chartered Certified Accountants)

Mineva GlasgowDeputy Executive DirectorLLB (Hons.), Management Studies (Hons.),Assoc. Degree Business Administration,Cert. Public Admin.

(left to right)

Avil Harry Manager, Registration & Records

Cert. Public Administration

Leslie JacobsManager, ComplianceDiploma in Social Security,Cert. Public Administration

Richard LewisManager, Information Services

Dip. Information Technology

Cornelia QuashieInternal Auditor

ACCA (Association of CharteredCertified Accountants),

B.Sc. Accounting (Hons.),Cert. Public Administration

(left to right)

Richard WilliamsProject Officer

B.Sc. Electrical & Computer EngineeringDip. Electronics & Telecommunications

Jeremy JacksonAccountant

ACCA (Association of CharteredCertified Accountants),

Dip. Business Administration

Sharon AshtonManager (Ag.), Benefits Division

B.Sc. Management Studies,Cert. Business Administration

Dawn SmallManager, Human Resources Division

MBA (Emphasis on Human Resource Management),Assoc. Degree Small Business Management



26

NIS Staff

N I S S t a f f



27

NIS Staff

N I S S t a f f



28

NIS HIGHLIGHTS

N I S H i g h l i g h t s

Minis ters Beac he and Wa l ters spea kin

g

to residen ts a t M t. Young (op

ening o f

Go lden Years Ac ti vi t y Cen tre )

C o d r i l l e d anc e r s ( Sand y Bay ) at a c ul t ur al pe r f o r manc e f o r t he o pe ni ng o f Go l d e n Y e ar s Ac t i v i t y C e nt r e , Bl ac k P o i nt

Go l de n Ye a r s Ac t i v i t

y Ce n t re



29

N I S H i g h l i g h t s

Sec tion o f cro wd a t t he open

ing o f t he

Go lden Years Ac ti vi t y Cen tre

, B lac k Poin t

O w i a C o d r i l l e G r o u p p e r f o r m i n g at

t h e o p e n i n g o f t h e G o l d e n Y e ar s Ac t i v i t y C e n t r e at B l ac k P o i n t

Le nnox Bow man,

C hai r man NIS SV G

Section of crowd at opening of Golden Years

Activity Centre, Cane Grove

Emp lo yee o f t he year Mr

s Ingr id Cadougan rece i v in

g

c heque from Mr s Andrea

Bo wman (C ha irman ’ s w i f

e ).

Depu t y E xecu t i ve D irec to

r M ine va G la sgo w i s a t ce

n tre



30

Auditors’ Report

To the Honourable Minister of Finance and PlanningAdministrative BuildingKingstown

We have audited the accompanying balance sheet of the National Insurance Services (formerly known as NationalInsurance Scheme) as of December 31, 2004 and the statements of income and expenditure, changes in reservesand cash flows for the year then ended. These financial statements are the responsibility of the management of theNational Insurance Services. Our responsibility is to express an opinion on these financial statements based on ouraudit.

We conducted our audit in accordance with International Standards on Auditing. Those standards require that weplan and perform an audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used and significant estimates madeby management, as well as evaluating the overall financial statement presentation. We believe that our audit providesa reasonable basis for our opinion.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the NationalInsurance Services as of December 31, 2004, and the results of its operations, changes in reserves and its cash flowsfor the year then ended in accordance with International Financial Reporting Standards.

Chartered AccountantsKingstown, St. Vincent and the Grenadines

April 18, 2005

A u d i t o r s ’ R e p o r t



31

For the year ended December 31, 2004. With comparative figures for 2003 (Expressed in Eastern Caribbean Dollars)

Balance Sheet

Notes 2004 2003$ $

ASSETSCash and marketable securities 4 149,470,315 181,473,638

Interest receivable 7,922,914 8,041,590Other assets 298,181 267,937Long-term investments 5 121,713,115 73,335,028Investment property 655,000 —Property, plant and equipment 6 19,217,391 15,316,876 TOTAL ASSETS 299,276,916 278,435,069 LIABILITIES AND RESERVESLiabilities 1,335,745 1,214,971

Total Liabilities 1,335,745 1,214,971Reserves Short-term benefit 9,642,495 36,482,127

Pension 220,316,688 175,239,429Employment injury benefit 15,582,720 13,121,645National Provident Fund 52,399,268 52,376,897 Total Reserves 297,941,171 277,220,098 TOTAL LIABILITIES AND RESERVES 299,276,916 278,435,069

The accompanying notes form an integral part of these financial statements.

SIGNED ON BEHALF OF THE BOARD

Chairman Director

Secretary

B a l a n c e S h e e t



32


Statement of Income and Expenditure

2004 2003$ $

INCOME

Contributions

Employers’ contributions 12,548,436 11,802,244Insured persons’ contributions 9,015,279 8,421,613

21,563,715 20,223,857 Benefits paid (14,086,720) (12,936,881)

SURPLUS OF CONTRIBUTIONS OVER BENEFITS 7,476,995 7,286,976 Net financing income 7 17,849,566 15,619,583

17,849,566 15,619,583

Other incomeSurcharges and other 296,324 156,150 296,324 156,150 Income before administrative expenses and NPF benefits 25,622,885 23,062,709National Provident Fund benefits paid (850,669) (803,128)General and administrative expenses

(4,051,143) (3,313,701)

NET INCOME FOR THE YEAR 20,721,073 18,945,800 The following expenses are included in the foregoing:

Depreciation expense 105,911 80,432Staff costs 2,530,136 2,261,044

The accompanying notes form an integral part of these financial statements. S t a t e m e n t o f I n c o m e a n d E x p e n d i t u r e



33


Short-term Pension Employment National TotalBenefit Injury Benefit Provident

Fund$ $ $ $ $

Balance as of January 01, 2003 33,681,652 161,371,490 10,913,244 52,307,832 258,274,218

Net income for the year 2,800,475 13,867,939 2,208,401 69,065 18,945,880 Balance as of December 31, 2003 36,482,127 175,239,429 13,121,645 52,376,897 277,220,098 Net income for the year 3,160,368 15,077,259 2,461,075 22,371 20,721,073

Transfers (30,000,000) 30,000,000 — — —

Balance as of December 31, 2004 9,642,495 220,316,688 15,582,720 52,399,268 297,941,171


Statement of Changes in Reserves

S

t a t e m e n t o f C h a n g e s i n R e s e r v e s



34


Statement of Cash Flows

2004 2003$ $

Cash Flows from Operating Activities Net income for the year 20,721,073 18,945,880

Adjustments for: Depreciation expense 105,911 80,432Interest income (17,050,916) (15,665,067) Operating profit before changes in Operating Assets 3,776,068 3,361,245Increase in other assets (30,244) (93,210)Increase in liabilities 120,774 308,220

Net Cash generated from Operating Activities 3,866,598 3,576,255 Cash Flows from Investing Activities Acquisition of investment property (655,000) —Increase in securities (37,405,915) (4,342,581)

Increase in loans (10,972,172) (6,439,801)Purchase of property, plant and equipment (4,006,426) (1,530,260)Interest received 17,169,592 14,146,088 Net Cash (used in) generated from Investing Activities (35,869,921) 1,833,446 Change in Net Cash and Cash Equivalents (32,003,323) 5,409,701Net Cash and Cash Equivalents — beginning of year 181,473,638 176,063,937 Net Cash and Cash Equivalents — end of year 149,470,315 181,473,638


S t a

t e m e n t o f C a s h F l o w s



35

N

o t e s t o t h e F i n a n c i a l S t a t e m e n t s


1. Legal Status

The National Insurance Services (formerly known as National Insurance Scheme) was established by the NationalInsurance Act, 1986 and assumed the assets and obligations of the former National Provident Fund. In March2004, the organisation changed its name to National Insurance Services.

2. Principal Activity

The principal activity of the National Insurance Services is to provide social security services in the state of St. Vincent and the Grenadines.

3. Significant Accounting Policies

These financial statements are stated in Eastern Caribbean dollars and have been prepared in accordance withInternational Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board(IASB).

The preparation of the financial statements in conformity with IFRS requires management to make estimates and

assumptions that could affect the reported amounts of assets and liabilities and disclosures of contingent assetsand liabilities at the date of the financial statements, and the reported amounts of revenues and expendituresduring the year. Actual results could differ significantly from those reported. The significant accounting policiesadopted in the preparation of these statements by National Insurance Services are as follows:

(a) Property, Plant and Equipment

Property, plant and equipment are recorded at cost less accumulated depreciation and impairment losses.Depreciation is charged to the income statement on a straight-line basis at rates which are expected towrite off the cost of the assets over their estimated useful lives.

Properties in the course of construction for production, rental or administrative purposes, or for purposesnot yet determined, are carried at cost, less any identified impairment loss. Cost includes professional feesand, for qualifying assets, borrowing costs capitalised in accordance with National Insurance Services’

accounting policy. Depreciation of these assets, on the same basis as other property assets, commenceswhen the assets are ready for their intended use.

The following annual rates are used:

Buildings 2%Furniture and fixtures 15%Office equipment 15 – 20%Computer equipment 20 – 33%

(b) Foreign Currencies

Foreign currencies are translated into Eastern Caribbean dollars at the rate of exchange ruling at the dateof the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheetdate are translated into Eastern Caribbean dollars at the exchange rate ruling at that date. Foreign exchange

differences arising from translation are recognised in the income statement. Nonmonetary assets andliabilities denominated in foreign currencies, which are stated at historical costs, are translated to EasternCaribbean dollars at the foreign exchange rate ruling at the date of transaction.

(c) Recognition of Income and Expenses

i. Contributions and surcharges reflect only amounts received from members at the balance sheet date,and do not include amounts due to National Insurance Services which had not been received.

ii. All other income and expenses are accounted for on the accrual basis.

(d) Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets

that necessarily take a substantial period of time to get ready for their intended use or sale are added tothe cost of those assets, until such time as the assets are substantially ready for their intended use or sale.Investment income earned on the temporary investment of specific borrowing pending their expenditureon qualifying assets is deducted from the cost of those assets.

All other borrowing costs are recognised in net income and expenditure in the period in which they areincurred.

Notes to the Financial Statements



36

N o t e s t o t h e F i n a n c i a l S t a t e m e n

t s


3. Significant Accounting Policies (continued)

(e) Impairment of Assets

At each balance sheet date, National Insurance Services reviews the carrying amounts of its tangible and

intangible assets to determine whether there is any indication that those assets have suffered an impairmentloss. If any such indication exists, the recoverable amount of the asset is estimated in order to determinethe extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of anindividual asset, National Insurance Services estimates the recoverable amount of the cash-generating unitto which the asset belongs.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carryingamount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount.Impairment losses are recognised as an expense immediately, unless the relevant asset is land or buildingsat a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

(f) Investments

Investments in debt and equity securities.

Investments with fixed maturity that National Insurance Services has the intent and ability to hold tomaturity are stated at cost less impairment losses.

(g) Investment Property

Investment property comprises lands transferred from National Properties Limited in lieu of payment on aloan. It is recorded at fair value.

(h) Financial Instruments

Financial assets and financial liabilities are recognised on National Insurance Services’ balance sheetwhen National Insurance Services has become a party to the contractual provisions of the instrument.

(i) Retirement Benefit Costs

Contributions to defined contribution pension plans are recognised as an expense in the income statementas incurred.

(j) Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities are stated at their cost.

(k) Cash and Cash Equivalents

Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flowstatement, cash and cash equivalents comprise cash on hand, deposits held with banks and other short-term highly liquid investments.

4. Cash and Marketable Securities

2004 2003$ $

Cash 202,531 808,294

Deposits payable after notice 1,998,925 5,611,420

Term deposits 147,268,859 173,173,924

Treasury bills — 1,880,000

149,470,315 181,473,638




37

N



5. Long-term Investments

These comprise: 2004 2003

$ $

Securities 87,273,750 49,867,835 Loans 34,439,365 23,467,193

121,713,115 73,335,028

Debt Securities — held to maturity

a) 7% Government of St. Vincent and the Grenadines DevelopmentBonds having a nominal value of $4,165,900 with interest payableon February 01 and August 01 of each year to maturity, August2007. 4,165,900 4,165,900

b) 7 % Government of St. Vincent and the Grenadines Development

Bonds having a nominal value of $5,628,000 with interest payableon March 16 and September 16 of each year to maturity,March 2012. 5,628,000 5,628,000

c) 63 ⁄ 4% Eastern Caribbean Home Mortgage Bank Bonds having a

nominal value of $2,000,000 with interest payable on April 18and October 18 of each year to maturity, October 2009. — 2,000,000

d) 7% Eastern Caribbean Home Mortgage Bank Bonds having a

nominal value of $3,500,000 with interest payable on January 15and July 15 of each year to maturity, July 2008. — 3,500,000

e) 7% Eastern Caribbean Home Mortgage Bank Bonds having a

nominal value of $2,000,000 with interest payable on March 19

and September 19 of each year to maturity, September 2010. — 2,000,000

f) 81 ⁄ 2% St. Lucia Electricity Services Limited (LUCELEC) Bondshaving a nominal value of $2,364,576 with interest payable on January 20, April 20, July 20 and October 20 of each year tomaturity, October 2010. 2,364,577 2,868,595

g) 8% St. Christopher Air and Sea Port Bonds having a nominal value

of $1,625,000, with interest payable on May 23 and November 23of each year to maturity, November 2006. 1,625,000 1,625,000

h) 8% St. Lucia Mortgage Finance Company Development Bonds

having a nominal value of $750,000 with interest payable onApril 26 of each year to maturity, April 2007. 750,000 750,000

i) 6.245% Government of Turks and Caicos Bonds having a nominal

value of $814,435 with interest payable on maturity, August 2007. 814,435 814,435

j) 6.335% Government of Turks and Caicos Bonds having a nominalvalue of $789,751 with interest payable on maturity,November 2007. 789,751 789,751

k) 3% Government of Dominica Mortgage Finance Bonds having anominal value of $1,358,450 with interest payable on April 29 andOctober 29 of each year to maturity, October 2005. 1,358,450 1,358,450

l) 6.9% Government of St. Lucia Bonds having a nominal value of

$934,090 with interest payable on maturity, April 2007. 934,090 934,090

m) 7% Government of St. Lucia Bonds having a nominal value of $3,378,981 with interest payable on maturity, October 2007. 3,378,981 3,378,981

c/f 21,809,183 29,813,202




38


t s


5. Long-term Investments (continued) 2004 2003

$ $

b/f 21,809,183 29,813,202

Debt Securities — held to maturity

n) 7.5% Government of St. Kitts and Nevis Bonds having a nominalvalue of $2,688,000 with interest payable on May 25 andNovember 25 of each year to maturity, November 2012. 2,688,000 2,688,000

o) 5.86% Government of Barbados Bonds having a nominal value

of $365,398 with interest payable on maturity, June 2008 365,398 365,398

p) 5.96% Government of Barbados Bonds having a nominal valueof $352,984 with interest payable on maturity, December 2008. 352,984 352,984

q) 6.18% Government of Barbados Bonds having a nominal value

of $338,077 with interest payable on maturity, June 2009. 338,077 338,077

r) 5.5% Eastern Caribbean Home Mortgage Bank Bonds having anominal value of $1,000,000 with interest payable on March 30and September 30 of each year to maturity, September 2004. — 1,000,000

s) 10% Government of Belize Bonds having a nominal value of

$2,870,919 with interest payable in February, May, August andNovember of each year to maturity, August 2010. — 2,870,919

t) 6.421% Government of Turks and Caicos Bonds having a

nominal value of $937,303 with interest payable on maturity,August 2006. 937,303 937,303

u) 6.514% Government of Turks and Caicos Bonds having a nominalvalue of $910,134 with interest payable on maturity,November 2006. 910,134 910,134

v) 6.5% Government of St. Vincent Bonds having a nominal value

of $2,114,727. Interest payable on maturity, May 2010. 2,114,727 —

w) 6.98% Government of St. Vincent Bonds having a nominal valueof $1,825,834. Interest payable on maturity, May 2011. 1,825,834 —

x) 6.97% Government of St. Vincent Bonds having a nominal valueof $1,722,251. Interest payable on maturity, November 2011. 1,722,251 —

y) 6.967% Government of St. Vincent Bonds having a nominal valueof $1,614,218. Interest payable on maturity, May 2012. 1,614,218 —

z) 5.75% Government of Australia Bonds having a nominal valueof $2,688,200. Interest payable on maturity, May 2005. 2,688,200 —

aa) MAN RMF Multistyle Ltd USD class Bonds having anominal value of $1,344,100. Maturity date, May 2016. 1,344,100 —

ab) Eastern Caribbean Home Mortgage Bank Bonds having a

nominal value of $1,000,000 with interest payable onMarch 19 and September 19 of each year to maturity,September 2012. 1,000,000 —

ac) 9.95% Government of Belize Bonds having a nominalvalue of $2,629,987 with interest payable on April 25and October 25 to maturity, October 2014. 2,629,987 —

ad) 9.95% Government of Belize Bonds having a nominalvalue of $5,376,400 with interest payable on April 25and October 25 to maturity, August 2014. 5,376,400 —




39

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5. Long-term Investments (continued)

Debt Securities — held to maturity 2004 2003

$ $

ae) 8.25% Princess Julianna International Operating CompanyBonds having a nominal value of $15,401,274 with interestpayable on February 28, May 28, August 28 andNovember 28 of each year to maturity, May 28, 2009. 15,401,274 —

af) 6% Government of St. Lucia Bonds having a nominalvalue of $2,000,000 with interest payable on maturity,November 2010. 2,000,000 —

ag) 7% Government of St. Vincent Bonds having a nominal

value of $6,000,000 with interest payable on February 10and August 10 to maturity, August 2014. 6,000,000 —

ah) 6.52% Government of St. Vincent Bonds having a nominalvalue of $2,369,455. Interest payable on maturity, May 2009. 2,369,445 —

ai) 6.51% Government of St. Vincent Bonds having a nominal

value of $2,249,545. Interest payable on maturity,November 2009. 2,249,545 —

aj) 7.45% Government of St. Vincent and the GrenadinesBonds having a nominal value of $1,948,718 with interestpayable on March 31, June 30, September 30 andDecember 31 of each year to maturity, March 2013. 1,743,590 1,948,718

ak) 5.97% Government of St. Vincent and the Grenadines

Bonds having a nominal value of $2,000,000 with

interest payable payable on maturity, December 2006. 2,000,000 2,000,000

Total Debt Securities 79,480,650 43,224,735

Equity Securities - available for sale Eastern Caribbean Securities Exchange 1,500,000 1,500,000Eastern Caribbean Financial Holding Company

(holding company for NationalCommercial Bank (St. Lucia) Limited) — 460,000 shares 3,450,000 2,300,000

Campden Park Container Port Limited — 27,000 shares 2,700,000 2,700,000East Caribbean Home Mortgage Bank Limited — 1,431 shares 143,100 143,100

Total Equity Securities 7,793,100 6,643,100

Total Securities 87,273,750 49,867,835

As at December 31, 2004 the maturity distribution of the securities was as follows:

2004 2003$ $

Maturity

Within 1 year 10,689,750 1,000,0001 – 5 years 21,819,937 21,882,4266 – 10 years 36,707,583 20,342,309

Over 10 years 18,056,480 6,643,100

87,273,750 49,867,835




40


t s


5 Long-term Investments (continued)2004 2003

$ $ Loans

a) Loans guaranteed by the Government of St. Vincent and theGrenadinesDevelopment Corporation — 71 ⁄ 4% per annum — 200,000Development Corporation — 6% per annum — 50,000Government of St. Vincent and the Grenadines — 51 ⁄ 2% per annum 550,000 550,000Government of St. Vincent and the Grenadines — 5% per annum 698,536 698,536National Commercial Bank (SVG) Limited — 6% per annum 2,354,363 2,546,313St. Vincent and the Grenadines Development Bank —

6% per annum 2,000,000 2,000,000St. Vincent and the Grenadines Development Bank —

5% per annum 5,000,000 5,000,000National Commercial Bank (SVG) Limited — 6% per annum 10,000,000 —

20,602,899 11,044,849

b) Loans secured by mortgage St. Vincent Union of Teachers Co-operative Credit UnionLimited — 71 ⁄ 2% per annum 1,085,993 1,113,731Staff — 7% – 9% per annum 2,700,976 2,176,342Kingstown Co-operative Credit Union Limited — 8% per annum 1,545,691 1,621,531National Lotteries Authority - 8.5% per annum 2,496,800 1,500,000

7,829,460 6,411,604

c) Unsecured staff loans 27,746 31,480

d) Other loans

101 ⁄ 2% St. Maarten Harbour Cargo Facilities N.V syndicated loan.Maturity date May 2010. The loan is secured by legal mortgage

and a fixed and floating charge over the company’s assets. 5,979,260 5,979,260

Total Loans 34,439,365 23,467,193

As at December 31, 2004 the maturity distribution of the loans were as follows:2004 2003

$ $Maturity

Within 1 year 1,248,536 730,0161 – 5 years — 2,176,3426 – 10 years 12,830,423 10,525,573Over 10 years 20,360,406 10,035,262

34,439,365 23,467,193




41

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6. Properties, Plant and Equipment

Freehold Construction Furniture Office Computer Motor TotalProperty Work in and Equipment Equipment Vehicles

Progress Fixtures

$ $ $ $ $ $ $Cost As of

December 31,2003 13,671,100 1,491,060 322,438 301,567 1,143,579 — 16,929,744

Additions 1,310,142 2,345,012 23,416 3,446 201,580 122,830 4,006,426Transfer to

freeholdproperty 269,011 (269,011) — — — — —

As of December 31,2004 15,250,253 3,567,071 345,854 305,013 1,345,149 122,830 20,936,170

AccumulatedDepreciation

As of December 31,2003 37,933 — 299,903 251,430 1,023,602 — 1,612,868

Charge forthe year — — 7,288 16,069 57,988 24,566 105,911

As of December 31,2004 37,933 — 307,191 267,499 1,081,590 24,566 1,718,779

Net Book Value As of

December 31,2003 13,633,167 1,491,060 22,535 50,137 119,977 — 15,316,876

As of

December 31,2004 15,212,320 3,567,071 38,663 37,514 263,559 98,264 19,217,391

Property, Plant and Equipment under Construction

During the previous year, National Insurance Services commenced construction of its new administrativeheadquarters; construction costs incurred up to the balance sheet date totalled $3,567,071 (2003:$1,222,049).

7. Net Financing Income 2004 2003

$ $Interest on Government bonds

1,264,809 743,037Interest on other bonds 2,587,505 2,109,067Interest on treasury bills 92,192 204,096Interest on loans 2,465,261 1,519,295Interest on deposits 10,383,039 10,706,262Dividend income 258,110 383,310

17,050,916 15,665,067

Foreign exchange loss (351,350) (45,484)

Available for sale investments:

Revaluation to fair value 1,150,000 —

17,849,566 15,619,583




42


t s


8. Reserves

Section 20 of the National Insurance Scheme Finance and Accounting Regulations, 1996 stipulates that at theend of the year, the excess of income over expenditure for each branch be transferred to a separate reserve fundto finance the approved benefits.

9. Apportionment of Income

Section 18 of the National Insurance Scheme Finance and Accounting Regulations, 1996 stipulates that incomefrom contributions be apportioned to the benefit branches in accordance with the approved recommendationsof the actuarial reports, and that investment income be apportioned to the various benefit branches in proportionto the balances of the reserve funds.

10. Classification of Benefits

Benefits are classified to benefit branches in accordance with Section 3 of the National Insurance SchemeFinance and Accounting Regulations, 1996.

11. Income Tax

National Insurance Services is exempt from the payment of income tax under the Income Tax Act, 1979.

12. Pension Plan

The National Insurance Services provides retirement benefits under a defined contribution plan administered byColonial Life Insurance Company (Trinidad) Limited (CLICO) for all of its employees. Under the provisions of theplan, National Insurance Services and its employees are required to contribute 6% and 3% respectively of theemployees’ basic monthly salary towards the plan. During the year, National Insurance Services’ contributionto the pension plan amounted to $99,617 (2003-$93,456). This amount was charged to operations.

13. Fair Value Disclosure of Financial Instruments

National Insurance Services does not believe that its operations are subject to any significant concentration of price, credit, liquidity or cash flow risks. As a result, it has not entered into any contractual arrangement withthe view to hedging any risk exposure. National Insurance Services, however, will continuously monitor itsoperating environment and assess its exposure to various risks with the view to mitigating any potential loss.

Financial assets of National Insurance Services include cash and marketable securities, interest receivable,securities and loans. Financial liabilities include accounts payable and accrued liabilities.

(a) Credit Risk

Credit risk arises from the possibility that counterparties may default on their obligations to NationalInsurance Services. The amount of National Insurance Services’ maximum exposure to credit risk isindicated by the carrying value of its financial assets.

National Insurance Services is engaged in the provision of social security services, and the financial assetswhich potentially expose National Insurance Services to concentrations of credit risks consist primarilyof receivables and investments. Receivables are presented net of the allowance for doubtful receivables.Management does not believe significant credit risk exists as of December 31, 2004.

(b) Interest Rate Risk

Differences in contractual repricing or maturity dates and changes in interest rates may expose the Servicesto interest rate risk. National Insurance Services’ exposure and interest rates on its financial assets aredisclosed in Notes 4 and 5. Maturities of the National Insurance Services’ financial assets are as follows:

2004 2003$ $

Financial FinancialAssets Assets

One to five years (1–5) 191,151,452 215,304,012Over five years (>5) 87,954,892 47,546,244

279,106,344 262,850,256




43

N



13. Fair Value Disclosure of Financial Instruments (continued)

(c) Fair Value

Fair value amounts represent estimates of the consideration that would currently be agreed upon between

knowledgeable, willing parties who are under no compulsion to act and is best evidenced by a quotedmarket value, if one exists. Estimated fair values are assumed to approximate their carrying values.

(d) Currency Risk

National Insurance Services incurs foreign currency risk on financial assets that are denominated in acurrency other than Eastern Caribbean dollars. Financial assets that are subject to currency risk are asfollows: 2004 2003

$ $Non-Eastern Caribbean Dollar Denominated Assets Investments 21,563,760 11,692,070

Marketable securities 21,049,975 1,600,000Interest receivables 1,367,287 844,716

43,981,022 14,136,786

14. Staff Costs 2004 2003

$ $

National Insurance contributions 52,650 48,693Salaries and wages 2,145,563 1,947,968Staff training 150,715 117,029Staff uniforms and insurance 81,591 53,898

Retirement benefit contributions 99,617 93,456

2,530,136 2,261,044

Number of employees at balance sheet date 53 53

15. Comparative Figures

Certain comparative figures have been reclassified to confirm with the presentation used in the current year.

16. Capital Commitment

As of the balance sheet date, the board of directors approved capital expenditure amounting to $15 million.




44

To the Directors

The accompanying schedules II to IV are presented as supplementary information only. In this respect, they do notform part of the financial statements of the National Insurance Services (formerly known as National Insurance Scheme)for the year ended December 31, 2004 and hence are excluded from the opinion expressed in our report dated April

18, 2005 to the Honourable Minister of Finance and Planning on such financial statements. The information in theseschedules has been subject to audit procedures only to the extent necessary to express an opinion on the financialstatements of National Insurance Services and, in our opinion, is fairly presented in all respects material to thosefinancial statements.

Chartered AccountantsKingstown, St. Vincent and the GrenadinesApril 18, 2005

Additional Comments of Auditors

A d d i t i o

n a l C o m m e n t s o f A u d i t o

r s



45


Schedule of Branch Operations

S h o r t - T e r m

B e n e fi t s

L o n g - T e r m

B e n e fi t s

E m p l o y m e n t I n j u r y

N a t i

o n a l P r o v i d e n t F u n d

T o t a l

T o t a l

2 0 0 4

2 0 0 3

2 0 0 4

2 0 0

3

2 0 0 4

2 0 0 3

2 0 0 4

2 0 0 3

2 0 0 4

2 0 0 3

$

$

$

$

$

$

$

$

$

$

I N C O M E

C o n t r i b u t i o n s

2 , 3 7 2 , 0 0 9

2

, 2 2 4 , 6 2 4

1 7 , 3 8 0 , 3 5 4

1 6 , 3 0 0 , 4 2

9

1 , 8 1 1 , 3 5 2

1 , 6 9 8 , 8 0 4

—

—

2 1 , 5 6 3 , 7 1 5

2 0 , 2 2 3 , 8 5 7

N e t fi n a n c i n g i n c o m e

2 , 8 9 6 , 3 8 2

2

, 5 5 4 , 2 6 8

1 3 , 9 1 1 , 5 0 2

1 2 , 2 3 7 , 7 0

3

1 , 0 4 1 , 6 8 2

8 2 7 , 6 1 2

—

—

1 7 , 8 4 9 , 5 6 6

1 5 , 6 1 9 , 5 8 3

I n t e r e s t o n N a t i o n a l

P r o v i d e n t

F u n d

( 1 4 1 , 6 6 5 )

( 1 4 2 , 6 2 9 )

( 6 8 0 , 4 2 5 )

( 6 8 3 , 3 5

0 )

( 5 0 , 9 5 0 )

( 4 6 , 2 1 4 )

8 7 3 , 0 4 0

8 7 2 , 1 9 3

—

—

O t h e r

3 2 , 5 9 5

1 7 , 1 7 6

2 3 8 , 8 3 7

1 2 5 , 8 5

7

2 4 , 8 9 2

1 3 , 1 1 7

—

—

2 9 6 , 3 2 4

1 5 6 , 1 5 0

T o t a l i n c o m e

5 , 1 5 9 , 3 2 1

4

, 6 5 3 , 4 3 9

3 0 , 8 5 0 , 2 6 8

2 7 , 9 8 0 , 6 3

9

2 , 8 2 6 , 9 7 6

2 , 4 9 3 , 3 1 9

8 7 3 , 0 4 0

8 7 2 , 1 9 3

3 9 , 7 0 9 , 6 0 5

3 5 , 9 9 9 , 5 9 0

E X P E N D I T

U R E

B e n e fi t s

1 , 5 5 2 , 9 4 1

1

, 4 8 2 , 5 1 5

1 2 , 3 9 0 , 0 4 6

1 1 , 3 4 9 , 6 6

8

1 4 3 , 7 3 3

1 0 4 , 6 9 8

8 5 0 , 6 6 9

8 0 3 , 1 2 8

1 4 , 9 3 7 , 3 8 9

1 3 , 7 4 0 , 0 0 9

A d m i n i s t r a t i v e e x p e n s e s

4 4 6 , 0 1 2

3 7 0 , 4 4 9

3 , 3 8 2 , 9 6 3

2 , 7 6 3 , 0 3

2

2 2 2 , 1 6 8

1 8 0 , 2 2 0

—

—

4 , 0 5 1 , 1 4 3

3 , 3 1 3 , 7 0 1

T o t a l e x p e

n d i t u r e

1 , 9 9 8 , 9 5 3

1

, 8 5 2 , 9 6 4

1 5 , 7 7 3 , 0 0 9

1 4 , 1 1 2 , 7 0

0

3 6 5 , 9 0 1

2 8 4 , 9 1 8

8 5 0 , 6 6 9

8 0 3 , 1 2 8

1 8 , 9 8 8 , 5 3 2

1 7 , 0 5 3 , 7 1 0

N e t i n c o m

e f o r t h e y e a r

3 , 1 6 0 , 3 6 8

2

, 8 0 0 , 4 7 5

1 5 , 0 7 7 , 2 5 9

1 3 , 8 6 7 , 9 3

9

2 , 4 6 1 , 0 7 5

2 , 2 0 8 , 4 0 1

2 2 , 3 7 1

6 9 , 0 6 5

2 0 , 7 2 1 , 0 7 3

1 8 , 9 4 5 , 8 8 0

S c h e d u l e o f B r a n c h O p e

r a t i o n s



46


S h o r t - T e r m

B e n e fi t s

L o n g - T e r m

B e n e fi t s

E m p l o y m e n t I n j u r y

N a t i

o n a l P r o v i d e n t F u n d

T o t a l

T o t a l

2 0 0 4

2 0 0 3

2 0 0 4

2 0 0

3

2 0 0 4

2 0 0 3

2 0 0 4

2 0 0 3

2 0 0 4

2 0 0 3

$

$

$

$

$

$

$

$

$

$

S i c k n e s s b e n e fi t

6 4 8 , 7 0 6

5 9 4 , 5 8 0

—

—

—

—

—

6 4 8 , 7 0 6

5 9 4 , 5 8 0

M a t e r n i t y b e n e fi t

6 6 2 , 7 3 4

6 3 4 , 4 3 5

—

—

—

—

—

—

6 6 2 , 7 3 4

6 3 4 , 4 3 5

M a t e r n i t y g r a n t

2 4 1 , 5 0 1

2 5 3 , 5 0 0

—

—

—

—

—

—

2 4 1 , 5 0 1

2 5 3 , 5 0 0

F u n e r a l g r a n t

—

—

8 1 5 , 4 0 0

7 2 8 , 0 0

0

—

—

—

—

8 1 5 , 4 0 0

7 2 8 , 0 0 0

I n v a l i d i t y b e n e fi t

—

—

3 0 7 , 6 2 3

2 9 2 , 5 9

5

—

—

3 5 , 2 1 9

1 4 , 6 3 9

3 4 2 , 8 4 2

3 0 7 , 2 3 4

S u r v i v o r ’ s b e n e fi t

—

—

1 , 1 6 5 , 5 0 6

9 2 6 , 9 8

0

—

—

8 9 , 5 3 8

1 2 1 , 0 2 0

1 , 2 5 5 , 0 4 4

1 , 0 4 8 , 0 0 0

A g e b e n e fi t

—

—

7 , 8 2 9 , 6 5 1

6 , 9 8 1 , 0 0

7

—

—

7 2 5 , 9 1 2

6 6 7 , 4 6 9

8 , 5 5 5 , 5 6 3

7 , 6 4 8 , 4 7 6

A g e g r a n t

—

—

2 3 7 , 5 1 5

2 1 7 , 6 7

3

—

—

—

—

2 3 7 , 5 1 5

2 1 7 , 6 7 3

N I S e m p l o y

m e n t

i n j u r y m e d i c a l

—

—

—

—

1 7 , 1 3 4

3 2 , 8 0 1

—

—

1 7 , 1 3 4

3 2 , 8 0 1

N I S e m p l o y

m e n t i n j u r y

—

—

—

—

9 0 , 6 8 2

5 2 , 7 9 9

—

—

9 0 , 6 8 2

5 2 , 7 9 9

N I S e m p l o y

m e n t d i s a b l e m e n t

—

—

—

—

3 5 , 9 1 7

1 9 , 0 9 8

—

—

3 5 , 9 1 7

1 9 , 0 9 8

N o n c o n t r i b u t o r y

a s s i s t a n c e

a g e p e n s i o n

—

—

2 , 0 3 4 , 3 5 1

2 , 2 0 3 , 4 1

3

—

—

—

—

2 , 0 3 4 , 3 5 1

2 , 2 0 3 , 4 1 3

T o t a l e x p e

n d i t u r e

1 , 5 5 2 , 9 4 1

1

, 4 8 2 , 5 1 5

1 2 , 3 9 0 , 0 4 6

1 1 , 3 4 9 , 6 6

8

1 4 3 , 7 3 3

1 0 4 , 6 9 8

8 5 0 , 6 6 9

8 0 3 , 1 2 8

1 4 , 9 3 7 , 3 8 9

1 3 , 7 4 0 , 0 0 9

Schedule of Benefits

S

c h e d u l e o f B e n e fi t s



47

2004 2003$ $

Actuarial fees 16,578 16,578

Advertising and promotion 188,833 157,573

Annual awards dinner 36,885 —

Audit fees 30,000 30,000

Bank charges 89,866 65,065

Depreciation expense 105,911 80,432

Directors’ fees and expenses 114,972 108,477

Donation/community supported projects 74,352 18,010

Electricity expense 57,975 55,215

Insurance 28,972 22,798

Miscellaneous expenses 2,936 5,043

National Health Insurance expenses 41,925 —

National Insurance contributions 52,650 48,693

Office expenses 22,476 20,036

Retirement benefit contributions 99,617 93,456

Postage and stationery 128,828 77,630

Professional fees 19,907 3,763

Repairs and maintenance 261,658 184,604

Salaries 2,145,563 1,947,968

Seminar expenses 45,268 —

Staff training 150,715 117,029

Subscriptions 45,101 35,434

Uniforms and medical insurance 81,591 53,898

Telephone and fax 65,699 48,582

Travel and allowances 130,911 123,417

Security 11,954 —

4,051,143 3,313,701

Schedule of General andAdministrative ExpensesFor the year ended December 31, 2004. With comparative figures for 2003 (Expressed in Eastern Caribbean Dollars)

S c h e d u l e o f E x p e n s

e s



48

Economic Sector 2000 2001 2002 2003 2004

Agriculture 658 491 573 543 560Construction 2,456 2,342 3,393 3,205 3,344

Education 1,088 668 438 439 444

Electricity, Gas & Water 674 839 731 893 879

Extraterritorial Organisations 17 20 31 16 11

Financial Intermediation 1,209 1,053 1,028 1,005 1,242

Fishing 0 4 3 0 0

Health & Social Work 281 355 482 259 253

Hotel/Restaurants 2,501 2,138 1,889 2,103 2,391

Manufacturing 1,770 1,963 2,060 1,935 1,951

Mining and Quarrying 122 122 87 93 144

Private Households 600 989 787 572 624

Public Admin, & Defence 9,614 12,246 12,328 13,864 13,286

Real Estate 1,117 1,257 1,545 1,516 1,538

Social/Personal Services 1,189 2,265 1,344 1,278 1,153

Transport, Storage & Communication 1,582 1,403 1,833 1,536 1,719

Wholesale & Retail Trade 3,648 3,478 3,818 4,006 4,243

28,526 31,633 32,370 33,263 33,782

Economic Sector 2000 2001 2002 2003 2004

Agriculture, Hunting & Forestry 50 55 57 63 74

Construction 101 120 135 140 228

Education 59 64 70 79 78

Electricity, Gas & Water Supply 7 8 7 6 6

Extraterritorial Organisations 3 3 3 3 3

Financial Intermediation 68 69 75 80 74

Fishing 0 0 1 0 0

Health & Social Work 88 91 67 71 70

Hotels & Restaurants 154 154 158 161 164

Manufacturing 125 138 137 141 136

Mining & Quarrying 5 5 8 5 6

Other Comm. & Social Activities 134 151 157 158 154

Private Households 381 408 445 455 455

Public Admin. & Social Security 3 7 11 12 11

Real Estate, Renting & Business Activities 112 119 130 136 137

Transport, Storage & Communication 73 76 81 87 86

Wholesale & Retail Trade 333 352 360 350 362

1,696 1,820 1,902 1,947 2,044

Statistical Highlights

Active Employees by Economic Classification

Active Employers1 by Industrial Classification

S

t a t i s t i c a l H i g h l i g h t s

Employers1

with at least 1 month’s payment in the year



49

2000 2001 2002 2003 2004

Pensions Age 4,392 5,278 5,998 6,981 7,830

Employment Injury - Survivors 0 0 0 0 0

Invalidity 130 162 219 270 308

NIS Employment Disablement 12 32 34 19 36

Non-Contributory Assistance Age 1,371 1,318 1,582 2,203 2,034

Survivors 618 705 810 922 1,162

6,523 7,495 8,644 10,396 11,370

Grants

Age 117 186 152 218 238

Funeral 396 465 598 728 815

Invalidity 0 0 0 22 0

Maternity 202 228 239 254 242

National Provident Fund 896 794 724 803 851

NIS Employment Disablement 0 0 0 0 0

NIS Employment Injury Medical 20 37 183 33 17

Survivors Grant 0 0 0 4 3

1,631 1,711 1,896 2,062 2,165

Other Benefits

Maternity Allowance 598 691 620 634 663

NIS Employment Injury 48 61 46 53 91

Sickness 565 600 559 595 6491,210 1,352 1,224 1,282 1,402

9,365 10,557 11,764 13,740 14,937

Amount No of claims Avg per claim

Age 237,515 73 3,254Funeral 815,400 294 2,773

Invalidity 0 0 0

Maternity 241,501 499 484

National Provident Fund 850,669 423 2,011

NIS Employment Disablement 0 0 0

NIS employment Injury Medical 17,134 84 204

Survivors Grant 3,254 9 362

2,165,473 1,382 1,567


Benefit Expenditure by Type (in thousands)

Grants (Amounts paid in 2004)

S t a t i s t i c a l H i g h l i g h

t s



50

B/f Received Total Approved Disapproved C/f Payments Avg Avgapproved Per Claim of Bene

Days

Employment Injury 11 241 252 191 44 17 91,426 479 13

Maternity 51 494 545 444 25 76 645,893 1,455 58

Sickness 317 4,464 4,779 3,442 970 367 651,655 189 6

379 5,199 5,576 4,077 1,039 460 1,388,974 2,123 77

B/f Entries Exits As at Avg As a % of avgDec 31 wkly pmt wkly insurance

2003 earnings

Age 1,698 207 41 1,864 84.63 40%

Invalidity 61 16 6 71 89.72 43%

NIS Employment Disablement 5 0 0 5 151.26 72%

Non-Contributory Assistance Age Pension 1,573 26 94 1,505 25.95 12%

Survivors 401 49 8 442 57.45 27%

Survivors - Employment Injury 0 0 0 0 0 -

3,738 298 149 3,887 68.17 33%

Pensioners on Roll for Jan - Dec 2004 (Claims processed during 2004)

Other Benefits (Claims processed during 2004)


S

t a t i s t i c a l H i g h l i g h t s



51

QUIZ

Q u i z

Instructions:

Lurking somewhere in the passage below are 20 words

connected with the NIS operations. Can you find them?

The words may be hidden in another word or you may have

to ignore punctuation and spaces to find them. Have fun

searching.

Passage

A young man of some acclaim, dressed in vest and shorts,

approached a clerical officer at the National Insurance Servicesand demanded attention. On noticing his attire, the clerk

instructed him that he should leave and return since it was not

appropriate for him to be dressed that way.

He replied, “I am a gentleman. What does my clothing have to

do with it? Is that the way you speak to your customers? Your

action leaves a lot to be desired. I came here to check on my

pension. If there’s no money to my account, let me speak to

the person in charge. If he doesn’t show any interest, then I’lltake it further.”

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.



NOTES

N O T E S

Social Security: NIS AR 2004

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Transcript of Social Security: NIS AR 2004