Mission Statement

To provide social security and to promote social and economic development in St. Vincent and the Grenadines through prudent financial and people-centred management.

Vision Statement
To be an institution that recognises and assesses changing environmental trends and provides Social Security that adequately reflects our value system and satisfies our customers’ needs.

Mission and Vision

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Our Creed
We 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 you by providing quality service, ensuring that our procedures and policies are supported by timely research and cutting-edge technology.

NIS Creed

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The Charter
We 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 illdiscipline, 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 so enhance the individual development, wellbeing and organisational achievements.

NIS Charter

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Corporate Information
Registered Office Bay Street P.O. Box 305 Kingstown St. Vincent and the Grenadines Tel: 784-456-1514 Fax: 784-456-2604 Email: nissvg@caribsurf.com Website: nissvg.org Directors Mr. Lennox Bowman - Chairman Mr. Elroy John - Deputy Chairman Mr. Anthony George Mr. Nowell Soleyn Mr. Gideon Browne Mr. Denniston Douglas Mr. Garvin Jackson Mr. Lloyd Small Executive Director Mr. Reginald Thomas Secretary Mr. Reginald Thomas Bankers National Commercial Bank (S.V.G.) Ltd. Solicitors Hughes and Cummings Phillips & Williams Saunders & Huggins O.R. Sylvester & Company Auditors KPMG Chartered Accountants

Corporate Information
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Contents
6 8 12 13 25 25 26 28 30 31 48 51 Prime Minister’s Review Chairman’s Review Board of Directors Executive Director’s Report Executive Management Senior Management NIS Staff NIS Highlights Auditors’ Report Financial Statements Statistical Highlights Quiz

Table of Contents
5

Prime Minister’s Review

Prime Minister’s Review

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or just over 18 years the National Insurance Services has been offering quality service to the nationals of St. Vincent and the Grenadines at home and in the diaspora. As Prime Minister and Minister with responsibility 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 a global environment that is characterised by social and economic turbulence. The National Insurance has been a major player in the Government’s effort to improve the quality of life for Vincentians. This has been demonstrated time and again in its continued involvement in the National Student Loan programme. Investment in human capital is

Prime Minister’s Review (continued)
perhaps the greatest investment that any government or enterprise may undertake. This is even more effective when that is undertaken for the benefit of the young. During fiscal year 2004, the National Insurance Services assisted some 131 persons to pursue tertiary education. This type of collaborative effort that is engendered with a view of making young people “masters of their own destinies” must be applauded. Poverty alleviation is another area in which the National Insurance Services impacts positively. In 2004, the NIS increased its pension payments (Contributory and NonContributory) from $9.1 million to $9.9 million. This is significant when one considers that the NIS pension payment is the sole means of sustenance for many of our elderly folks who do not have the financial wherewithal to make alternative provisions.

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 smooth registration for all workers...

Prime Minister’s Review

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 it relates to improving the welfare of the elderly. As the NIS moves into its 19th year of operations, it will undoubtedly confront new challenges over which it has no direct control. I refer to issues such as demographic changes, 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 adequate health care. The NIS has already committed itself to providing a shared database with the Ministry of Health to effect smooth registration for all workers, as well as to providing management expertise and physical accommodation for the National Health Insurance in their new headquarters building. Fundamental to the growth and development of the NIS is the ability to keep the contributions affordable and to make the benefits socially relevant and adequate. Over the long term, both areas will be examined through a series of parametric reforms, which will 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, Management and staff, I am confident that the institution will continue to expand. Congratulations and best wishes on 18 years of successful operations. Let us endeavour to collaborate for the advancement of St. Vincent and the Grenadines.

Ralph E. Gonsalves Prime Minister and Minister With Responsibility for Social Security

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Chairman’s Review

Chairman’s Review

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he National Insurance Services is an institution that is mandated by statute. Over its 18 years of operations it has been the premier non-bank financial institution in St. Vincent and the Grenadines. The success of this institution can be attributed largely to prudent financial management, quality leadership at the level of the Board, and an efficient and effective management and staff. As Chairman of the National Insurance Board for the past four years, I am pleased to be associated with this successful institution. During my tenure as Chairman, the institution has registered growth in every conceivable area of its operations, and based on projections from 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 operations of 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 need to 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 Regulations was amended to include other categories of income as insurable earnings. The net effect of this legislative change was the increase in pension payments to employees, particularly those employed in the hotel and other service industries. This amendment took effect from May 1, 2004.

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Chairman’s Review (continued)
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 the institution 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 success of an organisation depends upon creating and retaining customers. In the short term, these decisions are likely to be concerned with efficiently meeting the needs of the customers. In the longer term, they are likely to focus more on the organisation’s need 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 in St. Vincent and the Grenadines. These attempts have been largely successful in the formal sector, but there was a marginal registration rate in the informal sector, approximate to just about 9 per cent of total registration. Also, there were some registrants and beneficiaries who 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 the creation 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 with every aspect of social security. The unit was established on July 1, 2004.

Chairman’s Review

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 officers were given the mandate to implement a marketing plan to deal with every aspect of social security.
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 a workable marketing strategy targeting specific market segments. There has also been the adoption 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 resources were integrated into its business strategy. The Human Resources Division was added to the organisational structure. Part of the focus included general and specific training, a review of the performance appraisal instrument, health and wellness programmes and an employee development programme, which was facilitated by Clinical Psychologist Dr. Dennis Lowe. There has been evidence of information sharing, team building, active participation and increased productivity as a result of these sessions. Staff also received substantial increases in uniform allowance and it was agreed in principle to offer one scholarship every five years to allow employees to pursue undergraduate training in any area that the Board identifies as a priority for the organisation’s core business.

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Chairman’s Review (continued)
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. This was 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 for healthy exchanges. 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. In 2005, the Centre at Black Point will be officially opened so that our senior citizens on that part of the island can benefit from this type of social networking.

Chairman’s Review

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.
Investment Initiatives
Fundamental to the organisation’s raison d’être is the ability to meet its pension obligations to beneficiaries in the long term. This demands seeking investment opportunities that will maximise 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 sound investment policies and seeks proper actuarial advice. During the period under review the investment policy was completed. This sets out the ways in which the funds can be invested to meet our obligations to our contributors. Among other things, consideration was given to the return requirements of the institution, bearing in mind the objectives of long-term growth (sustainability), capital preservation, solvency, economic and social utility and yield. As part of the new investment policy, the Board purchased five acres of land at Peter’s Hope to be developed in accordance with the guidelines stipulated in the national development plan.

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. to construct the new headquarters building. This ultra-modern facility comprising four storeys will house the National Insurance Services, 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 definitely complement the Government’s development plan for the capital, Kingstown, and will afford the staff more spacious accommodation within which they can undertake their functions.

During 2004, a $12 million contract was awarded to the firm Gibson Construction Company Ltd. to construct the new headquarters building. 10

Chairman’s Review (continued)
Making space available for other players in the financial services sector will be used as a launching pad to foster strategic alliances with other stakeholders. Ultimately, this can only redound to the benefit of the National Insurance Services.

Corporate Governance
Within recent times, much attention has been given to the issue of corporate governance because it is considered to be integral to the development of sound, transparent and properly functioning money and capital markets. During 2004, the Board took painstaking effort 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 fiduciary responsibility to the beneficiaries whose funds we hold in trust. As we move forward into 2005, the Board will continually monitor the NIS processes to ensure that they measure up 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 marketing research to monitor and analyse trends in the financial services industry; building strategic alliances with social partners with a view towards heightening the level of coverage among the self-employed and voluntary contributors sectors; continual differentiation and repositioning of its products; extensive training and education of its staff towards achieving best practices in human resource management and related disciplines; continually upgrading Information Technology to reduce administrative costs and enhance service delivery; extensive public outreach programmes and diversifying its investment portfolio mix to guarantee long-term sustainability.

Chairman’s Review

Commendation & Appreciation
I wish to express profound gratitude to the National Insurance Board for its support during 2004. Members made invaluable contributions at all meetings and were thus able to “add value” to the operations. I especially commend the NIS Management and Staff who through the years have given yeoman service to this noble institution. With this continued commitment the NIS can only grow from strength to strength as we work together to serve and satisfy our clientele.

Lennox Bowman Chairman

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Board of Directors
(left to right) Mr. Lennox Bowman Chairman Mr. Elroy John Deputy Chairman Mr. Reginald Thomas Executive Director

Board of Directors

(left to right) Mr. Anthony George Mr. Nowell Soleyn Mr. Gideon Browne

(left to right) Mr. Denniston Douglas Mr. Garvin Jackson Mr. Lloyd Small

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Executive Director’s Report

Executive Director’s Report

Overview
I am delighted to report that the Social Security system of St.Vincent and the Grenadines recorded yet another successful year in operation for fiscal year 2004. This success was evident in several areas including growth in the asset base, improved customer service, enhanced information technology, human resource development, heightened compliance and marketing. The institution also experienced challenges with falling interest rates and limited domestic investments. Notwithstanding, we were able to use our collective wisdom 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 regarding Social 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 the institution’s thrust for the year 2004.

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Executive Director’s Report (continued)
Financial Performance
Financial Result Net income for the year amounted to $20.72M compared to $18.95M of the previous year, an increase of 9.37%. This increase was mainly the result of increases in contribution and investment income. Contribution Income Contribution income increased from $18.95M in 2003 to $21.56M in 2004. The increase of 4% was partly due to increased registration and increases in wages and salaries in the public and private sectors. Benefit Expenditure Benefit payments have a direct link with contributions. The NIS operates the pay-as-yougo 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 previous year. As previously stated, contribution for the periods 2003 and 2004 totalled $21.56M and $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 the future, at which time arrangements would have to be made for the additional funding.
Contributions vs Benefits

Executive Director’s Report

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

Investments 2000-2005
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Executive Director’s Report (continued)
National Provident Fund Payments The National Provident Fund is the predecessor of the National Insurance Services Programme. Accounts are held for registered individuals who have saved with the fund up to December 31, 1986. In 2004 the sum of $850,669 was paid to 423 members; in the previous year (2003) the sum of $803,128 was paid to 383 members. General and Administrative Expenses General 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 during the year. There were also modest increases in other areas in keeping with budgetary plans that impacted administrative cost. However, the administrative index – the measure of operating efficiency – increased slightly from 10% in 2003 to 11.4% in 2004.
Administrative and General Expenses

Executive Director’s Report

$M

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-term investments accounts for $271.2M or 90.6%. Property, plant and equipment, investment property and interest receivable make up the remaining 9.4%.

Total Assets December 31, 2004

$M

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Executive Director’s Report (continued)
Investment Portfolio
Following the completion of the investment policy, efforts were made to change the existing asset allocation to achieve the target of the investment policy. The focus was on Fixed Income Securities with maturities between five and 10 years. Market interest rates proved a challenge as rates continued to fall. However, given our focus on fixed income securities, rates between 6% and 7.5% were achieved for these investments. By the end of 2004, the stock of investments was valued at $271.2M compared 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%, Fixed Income Securities 42%, Equities 3%.

Investment Portfolio Mix December 31, 2004

Executive Director’s Report
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Executive Director’s Report (continued)
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 in keeping with the 4th actuarial recommendation.

Reserves December 31, 2004

Executive Director’s Report

$M

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Executive Director’s Report (continued)
Economic Activity by Sector
Total Registrants by Economic Activities Growth over 5yrs 3% 3% 6% 4% -1% 5% 3% 2% 2% 1% 6% 6% 5% 4% 8% 6% 3% 33% 0% 4% Increase over 2003 4% 3% -1% 3% -12% 0% -13% 0% 5% -1% 30% -3% 4% 6% 5% 6% 4% 35% -100% 5%

Industrial Classification Agriculture, Hunting & Forestry Construction Education Electricity, Gas and Water Supply Extraterritorial Organisations Financial Intermediation Fishing Health and Social Work Hotels and Restaurants Manufacturing Mining and Quarrying Other Comm. and Social Activities Private Households Public Admin. and Social Security Real Estate, Renting and Business Activities Transport, Storage and Communication Wholesale and Retail Trade Self-employed/Voluntary Contributors Adjustments

Executive Director’s Report

Executive Director’s Report

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%

63,113 60,494 57,910 55,109 51,758

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Executive Director’s Report (continued)
New Employee Registrants by Economic Activities Growth over 5yrs 14% -1% 10% 4% 0% 1% 0% -9% -9% -6% 5% 6% -2% 10% 6% 7% 1% 18% 4% Increase over 2003 24% 6% 10% 16% -100% 30% -100% -41% 1% -9% 50% 25% -25% -7% 50% -24% -2% -10% -2% Industrial Classification Agriculture, Hunting and Forestry Construction Education Electricity, Gas and Water Supply Extraterritorial Organisations Financial Intermediation Fishing Health and Social Work Hotels and Restaurants Manufacturing Mining and Quarrying Other Comm. and Social Activities Private Households Public Admin. and Social Security Real Estate, Renting and Business Activities Transport, Storage and Communication Wholesale and Retail Trade Undetermined

Executive Director’s Report

The average increase in new employee registrants over the 5-year period was 4% per annum. However, a decrease of 2% was recorded over 2003/04. The hotel and restaurant, private households and transport, storage and communication sectors recorded a significant decline in the period under review.

3,888 3,612 3,539

2,893

2,844

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Executive Director’s Report (continued)
New Employer Registrants by Economic Activities Growth over 5yrs 11% 20% 43% -100% 0% -18% 0% -28% 7% 3% 0% -11% 7% 15% 34% -4% 0% 8% Increase over 2003 127% 77% -40% -100% 0% -79% 0% -50% -36% -44% 0% -41% -9% 0% -19% -40% 40% 2% Industrial Classification Agriculture, Hunting and Forestry Construction Education Electricity, Gas and Water Supply Extraterritorial Organisations Financial Intermediation Fishing Health and Social Work Hotels and Restaurants Manufacturing Mining and Quarrying Other Comm. and Social Activities Private Households Public Admin. and Social Security Real Estate, Renting and Business Activities Transport, Storage and Communication Wholesale and Retail Trade

Executive Director’s Report

The average increase in new employer registration totalled 8% over the years 20002004. 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.

319 305 307

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Executive Director’s Report (continued)
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 embarked upon its second strategic plan (2004-2008). Among other things, the plan sought to identify the dynamics for maintaining long-term survival and to capitalise on value-adding activities that will enhance effectiveness and efficiency. These were articulated in the crafting 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 and so it has always strived to foster and maintain good social relationships with customers and other stakeholders. One area that benefited significantly from this strategic alliance was the area of social outreach. The institution provided social and financial support to a 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 Social Security”. Several recommendations emanated, highlighting the social and economic impact that the AIDS pandemic can have on social security. Among other things, the author emphasised that it was critically important for the NIS to zealously guard its investment function since investment income would eventually become the pivotal source of funds for social security institutions, given the incidence of declining registration and increased benefit expenditure. “Less Sugar Sweeter Life” Campaign As a good corporate citizen the NIS has a responsibility to assist with improving the quality of life for all Vincentians. Over the years, diabetes had been one of the leading causes of death in St. Vincent and the Grenadines. The institution embraced the opportunity to co-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 poster received tremendous support from the Government through the Ministry of Health and the Environment 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 a major sponsor of the SVG Medical Association’s Health Fair. In April 2004 the event was celebrated with the slogan “Road safety – no accident”. The NIS used the opportunity to remind Vincentians of the relevance of NIS to their present and future needs by using the theme “Road Safety is no accident and NIS is no option.” Persons who visited the NIS booth expressed satisfaction with the display and reiterated their support for the NIS and its programme.

Executive Director’s Report
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Executive Director’s Report (continued)
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 celebrate this 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 and poems from the pensioners. Below is an excerpt from a pensioner’s submission on the name change: “Well yes, I was waiting for this day Long, long time I did know the NIS was doing a good job Man if you know how it used to hurt me, when I hear people calling the NIS a Scheme A Scheme is when people come out to cheat and deceive you But since this NIS start in 1987 I 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 money Because it certain just like how night follow day... So even though they change the name NIS is still the same You could still collect all your benefits Isn’t this something to celebrate!” (dialect)

Executive Director’s Report

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 by National Insurance institutions “can provide useful, up-to-date and reliable labour market information”. Besides providing comparative data on National Insurance in the Caribbean, the report made several recommendations that the SVG NIS will use as a basis for updating its database 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 its staff 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 career development programmes in Human Resource Management, Economics, Business Administration and Management. The NIS Board and Management extend sincere congratulations to all and encourage others to pursue similar programmes as we strive to keep the NIS in the forefront as a knowledge-driven and learning organisation.

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Executive Director’s Report (continued)
Corporate Governance
Financial institutions like the NIS have a sacred duty to be transparent and to be mindful of their fiduciary responsibility to all stakeholders. In an attempt to maintain a reputation of 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 strict adherence to Corporate Governance functions.

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

Executive Director’s Report

The main objectives of the seminar were: • • To assist participants in developing skills required to define and identify Occupational Health and Safety issues. To sensitise participants to the benefits of implementing workers’ health programmes in their workplaces and to demonstrate the benefits of such programmes to Social Security institutions. To give participants the opportunity to apply tools and techniques in designing a workable Occupational Health and Safety document/policy for use in the work environment. To apprise participants of ways/means of allocating resources for Occupational Health and Safety intervention.

We participated in the 5th Social Security CARICOM Easter games, hosted by the St. 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 the future.

Information Technology
Information Technology is an important function for organisations operating in the 21st century. All processes within the NIS are driven by information technology, therefore it is 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 reviewed salient NIS documents to assist them in charting a future path for the NIS’ Information Services Department. Among other things, the audit recommended consideration of the development of a VISOR type of corporate view for IT initiatives.

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Executive Director’s Report (continued)
Golden Years Activity Centres
The NIS of St.Vincent and the Grenadines carved its name in history when it constructed two Golden Years Activity Centres to provide an alternative for senior citizens who wish to socialise with their peers and share their skills. There are three major goals for the Golden Years Activity Centres and specific objectives within 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 their nutritional needs. Objective #2.3: To teach the aged how to evaluate changes in their dietary and health 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.

Executive Director’s Report

Our Future
The NIS is approaching its 19th year of operation. We are cognisant of the fact that more persons will qualify for a pension. At the same time there is a high incidence of declining birth rates and a decimating working population. In an effort to remain viable, sustainable and relevant, we strive to maintain a robust, vibrant and solvent social security system that will 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 continue to collaborate to keep the NIS in the consciousness of the Vincentian population.

Reginald Thomas Executive Director

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Executive Management
(left to right)

Reginald Thomas Executive Director, EMBA

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

Lennox Timm Financial Comptroller, MAAT

FCCA (Fellowship of the Association of Chartered Certified Accountants)

Mineva Glasgow Deputy Executive Director

LLB (Hons.), Management Studies (Hons.), Assoc. Degree Business Administration, Cert. Public Admin.

Executive and Senior Management

Senior Management
(left to right)

Avil Harry Manager, Registration & Records
Cert. Public Administration

Leslie Jacobs Manager, Compliance
Diploma in Social Security, Cert. Public Administration

Richard Lewis Manager, Information Services
Dip. Information Technology

ACCA (Association of Chartered Certified Accountants), B.Sc. Accounting (Hons.), Cert. Public Administration

Cornelia Quashie Internal Auditor

(left to right)

B.Sc. Electrical & Computer Engineering Dip. Electronics & Telecommunications

Richard Williams Project Officer

ACCA (Association of Chartered Certified Accountants), Dip. Business Administration

Jeremy Jackson Accountant

Sharon Ashton Manager (Ag.), Benefits Division
B.Sc. Management Studies, Cert. Business Administration

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

Dawn Small Manager, Human Resources Division

25

NIS Staff

NIS Staff
26

NIS Staff

NIS Staff
27

NIS HIGHLIGHTS
e Golden Y ars Activ ity Centr e

NIS Highlights

Codrille dan cers (Sandy Bay) at a cultural p erformance for the opening of Golden Year s Activity Centre, Bla ck Point

28

rs speaking he and Walte Ministers Beac ning of Mt. Young (ope to residents at e) Activity Centr Golden Years

ening of the owd at the op lack Point Section of cr ity Centre, B n Years Activ Golde

Lennox Bow man, Chairman N IS SVG

NIS Highlights

Owia C od the ope rille Group p ning of e the Go rforming at Activity lden Ye Centre ars at Blac k Point

Section of crowd at opening of Golden Years Activity Centre, Cane Grove

iving adougan rece e). Mrs Ingrid C an’s wif f the year man (Chairm Employee o at centre Andrea Bow Mrs Glasgow is cheque from tor Mineva utive Direc Deputy Exec

29

Auditors’ Report

To the Honourable Minister of Finance and Planning Administrative Building Kingstown We have audited the accompanying balance sheet of the National Insurance Services (formerly known as National Insurance Scheme) as of December 31, 2004 and the statements of income and expenditure, changes in reserves and cash flows for the year then ended. These financial statements are the responsibility of the management of the National Insurance Services. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, these financial statements present fairly, in all material respects, the financial position of the National Insurance Services as of December 31, 2004, and the results of its operations, changes in reserves and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

Auditors’ Report
30

Chartered Accountants Kingstown, St. Vincent and the Grenadines April 18, 2005

For the year ended December 31, 2004. With comparative figures for 2003 (Expressed in Eastern Caribbean Dollars) Notes ASSETS Cash and marketable securities Interest receivable Other assets Long-term investments Investment property Property, plant and equipment TOTAL ASSETS LIABILITIES AND RESERVES Liabilities Total Liabilities Reserves Short-term benefit Pension Employment injury benefit National Provident Fund Total Reserves TOTAL LIABILITIES AND RESERVES The accompanying notes form an integral part of these financial statements. SIGNED ON BEHALF OF THE BOARD 2004 $ 149,470,315 7,922,914 298,181 121,713,115 655,000 19,217,391 299,276,916 1,335,745 1,335,745 9,642,495 220,316,688 15,582,720 52,399,268 297,941,171 299,276,916 2003 $ 181,473,638 8,041,590 267,937 73,335,028 — 15,316,876 278,435,069 1,214,971 1,214,971 36,482,127 175,239,429 13,121,645 52,376,897 277,220,098 278,435,069

Balance Sheet

4 5 6

Balance Sheet

Chairman

Director

Secretary

31

Statement of Income and Expenditure
INCOME Contributions Employers’ contributions Insured persons’ contributions 2004 $

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

12,548,436 9,015,279 21,563,715

11,802,244 8,421,613 20,223,857 (12,936,881) 7,286,976 15,619,583 15,619,583 156,150 156,150 23,062,709 (803,128) (3,313,701) 18,945,800 80,432 2,261,044

Benefits paid SURPLUS OF CONTRIBUTIONS OVER BENEFITS Net financing income 7

(14,086,720) 7,476,995 17,849,566 17,849,566

Statement of Income and Expenditure

Other income Surcharges and other Income before administrative expenses and NPF benefits National Provident Fund benefits paid General and administrative expenses

296,324 296,324 25,622,885 (850,669) (4,051,143) 20,721,073 105,911 2,530,136

NET INCOME FOR THE YEAR The following expenses are included in the foregoing: Depreciation expense Staff costs

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

32

For the year ended December 31, 2004. With comparative figures for 2003 (Expressed in Eastern Caribbean Dollars) Short-term Benefit $ Balance as of January 01, 2003 Net income for the year Balance as of December 31, 2003 Net income for the year Transfers Balance as of December 31, 2004 33,681,652 2,800,475 36,482,127 3,160,368 (30,000,000) Pension $ 161,371,490 13,867,939 175,239,429 15,077,259 30,000,000 Employment Injury Benefit $ 10,913,244 2,208,401 13,121,645 2,461,075 — 15,582,720 National Provident Fund $ Total $

Statement of Changes in Reserves

52,307,832 258,274,218 69,065 18,945,880

52,376,897 277,220,098 22,371 — 20,721,073 —

9,642,495 220,316,688

52,399,268 297,941,171

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

Statement of Changes in Reserves
33

Statement of Cash Flows
Cash Flows from Operating Activities Net income for the year Adjustments for: Depreciation expense Interest income Operating profit before changes in Operating Assets Increase in other assets Increase in liabilities Net Cash generated from Operating Activities Cash Flows from Investing Activities Acquisition of investment property Increase in securities Increase in loans Purchase of property, plant and equipment Interest received Net Cash (used in) generated from Investing Activities Change in Net Cash and Cash Equivalents Net Cash and Cash Equivalents — beginning of year Net Cash and Cash Equivalents — end of year

For the year ended December 31, 2004. With comparative figures for 2003 (Expressed in Eastern Caribbean Dollars) 2004 $ 20,721,073 105,911 (17,050,916) 3,776,068 (30,244) 120,774 3,866,598 (655,000) (37,405,915) (10,972,172) (4,006,426) 17,169,592 (35,869,921) (32,003,323) 181,473,638 149,470,315 2003 $ 18,945,880 80,432 (15,665,067) 3,361,245 (93,210) 308,220 3,576,255 — (4,342,581) (6,439,801) (1,530,260) 14,146,088 1,833,446 5,409,701 176,063,937 181,473,638

Statement of Cash Flows
34

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

For the year ended December 31, 2004. With comparative figures for 2003 (Expressed in Eastern Caribbean Dollars) 1. Legal Status The National Insurance Services (formerly known as National Insurance Scheme) was established by the National Insurance Act, 1986 and assumed the assets and obligations of the former National Provident Fund. In March 2004, 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 with International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB).

Notes to the Financial Statements

Notes to the Financial Statements

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 assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the year. Actual results could differ significantly from those reported. The significant accounting policies adopted 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 to write 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 purposes not yet determined, are carried at cost, less any identified impairment loss. Cost includes professional fees and, 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, commences when the assets are ready for their intended use. The following annual rates are used: Buildings Furniture and fixtures Office equipment Computer equipment (b) Foreign Currencies Foreign currencies are translated into Eastern Caribbean dollars at the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date 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 and liabilities denominated in foreign currencies, which are stated at historical costs, are translated to Eastern Caribbean dollars at the foreign exchange rate ruling at the date of transaction. (c) Recognition of Income and Expenses i. ii. 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. All other income and expenses are accounted for on the accrual basis. 2% 15% 15 – 20% 20 – 33%

(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 to the 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 expenditure on 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 are incurred.

35

Notes to the Financial Statements
3. Significant Accounting Policies (continued) (e) Impairment of Assets

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

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 impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, National Insurance Services estimates the recoverable amount of the cash-generating unit to which the asset belongs. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, 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 buildings at 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 to maturity are stated at cost less impairment losses. (g) Investment Property Investment property comprises lands transferred from National Properties Limited in lieu of payment on a loan. It is recorded at fair value. (h) Financial Instruments Financial assets and financial liabilities are recognised on National Insurance Services’ balance sheet when 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 statement as 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 flow statement, cash and cash equivalents comprise cash on hand, deposits held with banks and other shortterm highly liquid investments. 4. Cash and Marketable Securities 2004 $ Cash Deposits payable after notice Term deposits Treasury bills 202,531 1,998,925 147,268,859 — 149,470,315 2003 $ 808,294 5,611,420 173,173,924 1,880,000 181,473,638

Notes to the Financial Statements
36

For the year ended December 31, 2004. With comparative figures for 2003 (Expressed in Eastern Caribbean Dollars) 5. Long-term Investments These comprise: 2004 $ 87,273,750 34,439,365 121,713,115 Debt Securities — held to maturity a) 7% Government of St. Vincent and the Grenadines Development Bonds having a nominal value of $4,165,900 with interest payable on February 01 and August 01 of each year to maturity, August 2007. 7 % Government of St. Vincent and the Grenadines Development Bonds having a nominal value of $5,628,000 with interest payable on March 16 and September 16 of each year to maturity, March 2012. 63⁄4% Eastern Caribbean Home Mortgage Bank Bonds having a nominal value of $2,000,000 with interest payable on April 18 and October 18 of each year to maturity, October 2009. 7% Eastern Caribbean Home Mortgage Bank Bonds having a nominal value of $3,500,000 with interest payable on January 15 and July 15 of each year to maturity, July 2008. 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. 81⁄2% St. Lucia Electricity Services Limited (LUCELEC) Bonds having a nominal value of $2,364,576 with interest payable on January 20, April 20, July 20 and October 20 of each year to maturity, October 2010. 8% St. Christopher Air and Sea Port Bonds having a nominal value of $1,625,000, with interest payable on May 23 and November 23 of each year to maturity, November 2006. 8% St. Lucia Mortgage Finance Company Development Bonds having a nominal value of $750,000 with interest payable on April 26 of each year to maturity, April 2007. 6.245% Government of Turks and Caicos Bonds having a nominal value of $814,435 with interest payable on maturity, August 2007. 6.335% Government of Turks and Caicos Bonds having a nominal value of $789,751 with interest payable on maturity, November 2007. 3% Government of Dominica Mortgage Finance Bonds having a nominal value of $1,358,450 with interest payable on April 29 and October 29 of each year to maturity, October 2005. 6.9% Government of St. Lucia Bonds having a nominal value of $934,090 with interest payable on maturity, April 2007. 2003 $ 49,867,835 23,467,193 73,335,028

Notes to the Financial Statements

Securities Loans

4,165,900

4,165,900

b)

Notes to the Financial Statements

5,628,000

5,628,000

c)

2,000,000

d)

3,500,000

e)

2,000,000

f)

2,364,577

2,868,595

g)

1,625,000

1,625,000

h)

750,000 814,435

750,000 814,435

i) j)

789,751

789,751

k)

1,358,450 934,090 3,378,981 21,809,183

1,358,450 934,090 3,378,981 29,813,202

l)

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

37

Notes to the Financial Statements
5. Long-term Investments (continued) 2004 $ 21,809,183

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

2003 $ 29,813,202

b/f Debt Securities — held to maturity n) 7.5% Government of St. Kitts and Nevis Bonds having a nominal value of $2,688,000 with interest payable on May 25 and November 25 of each year to maturity, November 2012. 5.86% Government of Barbados Bonds having a nominal value of $365,398 with interest payable on maturity, June 2008 5.96% Government of Barbados Bonds having a nominal value of $352,984 with interest payable on maturity, December 2008. 6.18% Government of Barbados Bonds having a nominal value of $338,077 with interest payable on maturity, June 2009. 5.5% Eastern Caribbean Home Mortgage Bank Bonds having a nominal value of $1,000,000 with interest payable on March 30 and September 30 of each year to maturity, September 2004. 10% Government of Belize Bonds having a nominal value of $2,870,919 with interest payable in February, May, August and November of each year to maturity, August 2010. 6.421% Government of Turks and Caicos Bonds having a nominal value of $937,303 with interest payable on maturity, August 2006. 6.514% Government of Turks and Caicos Bonds having a nominal value of $910,134 with interest payable on maturity, November 2006. 6.5% Government of St. Vincent Bonds having a nominal value of $2,114,727. Interest payable on maturity, May 2010.

2,688,000 365,398 352,984 338,077

2,688,000 365,398 352,984 338,077

o) p) q) r)

Notes to the Financial Statements

1,000,000

s)

2,870,919

t)

937,303

937,303

u)

910,134 2,114,727 1,825,834 1,722,251 1,614,218 2,688,200 1,344,100

910,134 — — — — — —

v)

w) 6.98% Government of St. Vincent Bonds having a nominal value of $1,825,834. Interest payable on maturity, May 2011. x) y) z) 6.97% Government of St. Vincent Bonds having a nominal value of $1,722,251. Interest payable on maturity, November 2011. 6.967% Government of St. Vincent Bonds having a nominal value of $1,614,218. Interest payable on maturity, May 2012. 5.75% Government of Australia Bonds having a nominal value of $2,688,200. Interest payable on maturity, May 2005.

aa) MAN RMF Multistyle Ltd USD class Bonds having a nominal value of $1,344,100. Maturity date, May 2016. ab) Eastern Caribbean Home Mortgage Bank Bonds having a nominal value of $1,000,000 with interest payable on March 19 and September 19 of each year to maturity, September 2012. ac) 9.95% Government of Belize Bonds having a nominal value of $2,629,987 with interest payable on April 25 and October 25 to maturity, October 2014. ad) 9.95% Government of Belize Bonds having a nominal value of $5,376,400 with interest payable on April 25 and October 25 to maturity, August 2014.

1,000,000

2,629,987

38

5,376,400

For the year ended December 31, 2004. With comparative figures for 2003 (Expressed in Eastern Caribbean Dollars) 5. Long-term Investments (continued) Debt Securities — held to maturity 2004 $ 2003 $

Notes to the Financial Statements

ae) 8.25% Princess Julianna International Operating Company Bonds having a nominal value of $15,401,274 with interest payable on February 28, May 28, August 28 and November 28 of each year to maturity, May 28, 2009. af) 6% Government of St. Lucia Bonds having a nominal value of $2,000,000 with interest payable on maturity, November 2010. ag) 7% Government of St. Vincent Bonds having a nominal value of $6,000,000 with interest payable on February 10 and August 10 to maturity, August 2014. ah) 6.52% Government of St. Vincent Bonds having a nominal value of $2,369,455. Interest payable on maturity, May 2009. ai) 6.51% Government of St. Vincent Bonds having a nominal value of $2,249,545. Interest payable on maturity, November 2009. aj) 7.45% Government of St. Vincent and the Grenadines Bonds having a nominal value of $1,948,718 with interest payable on March 31, June 30, September 30 and December 31 of each year to maturity, March 2013. 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. Total Debt Securities Equity Securities - available for sale Eastern Caribbean Securities Exchange Eastern Caribbean Financial Holding Company (holding company for National Commercial Bank (St. Lucia) Limited) — 460,000 shares Campden Park Container Port Limited — 27,000 shares East Caribbean Home Mortgage Bank Limited — 1,431 shares Total Equity Securities Total Securities

15,401,274

2,000,000

6,000,000 2,369,445

Notes to the Financial Statements

2,249,545

1,743,590

1,948,718

2,000,000 79,480,650 1,500,000 3,450,000 2,700,000 143,100 7,793,100 87,273,750

2,000,000 43,224,735 1,500,000 2,300,000 2,700,000 143,100 6,643,100 49,867,835

As at December 31, 2004 the maturity distribution of the securities was as follows: 2004 $ 10,689,750 21,819,937 36,707,583 18,056,480 87,273,750 2003 $ 1,000,000 21,882,426 20,342,309 6,643,100 49,867,835

Maturity Within 1 year 1 – 5 years 6 – 10 years Over 10 years

39

Notes to the Financial Statements
5 Long-term Investments (continued) Loans a) Loans guaranteed by the Government of St. Vincent and the Grenadines Development Corporation — 71⁄4% per annum Development Corporation — 6% per annum Government of St. Vincent and the Grenadines — 51⁄2% per annum Government of St. Vincent and the Grenadines — 5% per annum National Commercial Bank (SVG) Limited — 6% per annum St. Vincent and the Grenadines Development Bank — 6% per annum St. Vincent and the Grenadines Development Bank — 5% per annum National Commercial Bank (SVG) Limited — 6% per annum 2004 $

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

2003 $

— — 550,000 698,536 2,354,363 2,000,000 5,000,000 10,000,000 20,602,899 1,085,993 2,700,976 1,545,691 2,496,800 7,829,460

200,000 50,000 550,000 698,536 2,546,313 2,000,000 5,000,000 — 11,044,849 1,113,731 2,176,342 1,621,531 1,500,000 6,411,604 31,480

Notes to the Financial Statements

b) Loans secured by mortgage St. Vincent Union of Teachers Co-operative Credit Union Limited — 71⁄2% per annum Staff — 7% – 9% per annum Kingstown Co-operative Credit Union Limited — 8% per annum National Lotteries Authority - 8.5% per annum

c)

Unsecured staff loans

27,746

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. Total Loans

5,979,260 34,439,365

5,979,260 23,467,193

As at December 31, 2004 the maturity distribution of the loans were as follows: Maturity Within 1 year 1 – 5 years 6 – 10 years Over 10 years

2004 $

2003 $ 730,016 2,176,342 10,525,573 10,035,262 23,467,193

1,248,536 — 12,830,423 20,360,406 34,439,365

40

For the year ended December 31, 2004. With comparative figures for 2003 (Expressed in Eastern Caribbean Dollars) 6. Properties, Plant and Equipment Freehold Construction Furniture Office Computer Property Work in and Equipment Equipment Progress Fixtures $ $ $ $ $ Motor Vehicles $ Total $

Notes to the Financial Statements

Cost As of December 31, 2003 Additions Transfer to freehold property

13,671,100 1,310,142 269,011

1,491,060 2,345,012 (269,011)

322,438 23,416 —

301,567 3,446 —

1,143,579 201,580 —

— 122,830 —

16,929,744 4,006,426 —

As of December 31, 2004 15,250,253 Accumulated Depreciation As of December 31, 2003 Charge for the year As of December 31, 2004

3,567,071

345,854

305,013

1,345,149

122,830

20,936,170

Notes to the Financial Statements

37,933 —

— —

299,903 7,288

251,430 16,069

1,023,602 57,988

— 24,566

1,612,868 105,911

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 As of December 31, 2004 15,212,320

1,491,060

22,535

50,137

119,977

— 15,316,876

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 administrative headquarters; construction costs incurred up to the balance sheet date totalled $3,567,071 (2003: $1,222,049). 7. Net Financing Income Interest on Government bonds Interest on other bonds Interest on treasury bills Interest on loans Interest on deposits Dividend income Foreign exchange loss Available for sale investments: Revaluation to fair value

2004 $ 1,264,809 2,587,505 92,192 2,465,261 10,383,039 258,110 17,050,916 (351,350) 1,150,000 17,849,566

2003 $ 743,037 2,109,067 204,096 1,519,295 10,706,262 383,310 15,665,067 (45,484) — 15,619,583

41

Notes to the Financial Statements
8. Reserves

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

Section 20 of the National Insurance Scheme Finance and Accounting Regulations, 1996 stipulates that at the end of the year, the excess of income over expenditure for each branch be transferred to a separate reserve fund to finance the approved benefits. 9. Apportionment of Income Section 18 of the National Insurance Scheme Finance and Accounting Regulations, 1996 stipulates that income from contributions be apportioned to the benefit branches in accordance with the approved recommendations of the actuarial reports, and that investment income be apportioned to the various benefit branches in proportion to 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 Scheme Finance and Accounting Regulations, 1996.

Notes to the Financial Statements

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 by Colonial Life Insurance Company (Trinidad) Limited (CLICO) for all of its employees. Under the provisions of the plan, National Insurance Services and its employees are required to contribute 6% and 3% respectively of the employees’ basic monthly salary towards the plan. During the year, National Insurance Services’ contribution to 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 with the view to hedging any risk exposure. National Insurance Services, however, will continuously monitor its operating 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 National Insurance Services. The amount of National Insurance Services’ maximum exposure to credit risk is indicated by the carrying value of its financial assets. National Insurance Services is engaged in the provision of social security services, and the financial assets which potentially expose National Insurance Services to concentrations of credit risks consist primarily of 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 Services to interest rate risk. National Insurance Services’ exposure and interest rates on its financial assets are disclosed in Notes 4 and 5. Maturities of the National Insurance Services’ financial assets are as follows: 2004 $ Financial Assets One to five years (1–5) Over five years (>5) 191,151,452 87,954,892 279,106,344 2003 $ Financial Assets 215,304,012 47,546,244 262,850,256

42

For the year ended December 31, 2004. With comparative figures for 2003 (Expressed in Eastern Caribbean Dollars) 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 quoted market 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 a currency other than Eastern Caribbean dollars. Financial assets that are subject to currency risk are as follows: 2004 2003 $ $ Non-Eastern Caribbean Dollar Denominated Assets Investments Marketable securities Interest receivables 21,563,760 21,049,975 1,367,287 43,981,022 14. Staff Costs 11,692,070 1,600,000 844,716 14,136,786

Notes to the Financial Statements

Notes to the Financial Statements

2004 $ 52,650 2,145,563 150,715 81,591 99,617 2,530,136

2003 $ 48,693 1,947,968 117,029 53,898 93,456 2,261,044 53

National Insurance contributions Salaries and wages Staff training Staff uniforms and insurance Retirement benefit contributions

Number of employees at balance sheet date 15. Comparative Figures

53

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.

43

Additional Comments of Auditors

To the Directors The accompanying schedules II to IV are presented as supplementary information only. In this respect, they do not form 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 these schedules has been subject to audit procedures only to the extent necessary to express an opinion on the financial statements of National Insurance Services and, in our opinion, is fairly presented in all respects material to those financial statements.

Additional Comments of Auditors
44

Chartered Accountants Kingstown, St. Vincent and the Grenadines April 18, 2005

Short-Term Benefits 2004 2003 $ $

Long-Term Benefits 2004 2003 $ $

Employment Injury National Provident Fund 2004 2003 2004 2003 $ $ $ $

Total 2004 $

Total 2003 $

INCOME 17,380,354 13,911,502 (680,425) 238,837 30,850,268 27,980,639 2,826,976 2,493,319 873,040 125,857 24,892 13,117 — — 872,193 (683,350) (50,950) (46,214) 873,040 872,193 12,237,703 1,041,682 827,612 — — 17,849,566 — 296,324 39,709,605 16,300,429 1,811,352 1,698,804 — — 21,563,715 20,223,857 15,619,583 — 156,150 35,999,590

Contributions

2,372,009

2,224,624

Net financing income (142,629) 17,176

2,896,382

2,554,268

Interest on National Provident Fund

(141,665)

Other

32,595

Total income

5,159,321

4,653,439

EXPENDITURE 12,390,046 3,382,963 15,773,009 15,077,259 13,867,939 2,461,075 14,112,700 365,901 284,918 2,208,401 2,763,032 222,168 180,220 11,349,668 143,733 104,698 850,669 — 850,669 22,371 803,128 — 803,128 69,065 14,937,389 4,051,143 18,988,532 20,721,073 13,740,009 3,313,701 17,053,710 18,945,880

Benefits 370,449

1,552,941

1,482,515

Administrative expenses

446,012

Total expenditure

1,998,953

1,852,964

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

Schedule of Branch Operations

Net income for the year

3,160,368

2,800,475

Schedule of Branch Operations

45

46
Long-Term Benefits 2004 2003 $ $ — — — 815,400 307,623 1,165,506 7,829,651 237,515 — — — 2,034,351 12,390,046 11,349,668 143,733 2,203,413 — — 35,917 — 90,682 52,799 19,098 — 104,698 — 17,134 32,801 217,673 — — — — — — — 850,669 6,981,007 — — 725,912 926,980 — — 89,538 121,020 667,469 — — — — — 803,128 292,595 — — 35,219 14,639 728,000 — — — — — — — — — 241,501 815,400 342,842 1,255,044 8,555,563 237,515 17,134 90,682 35,917 2,034,351 14,937,389 — — — — — 662,734 — — — — 648,706 594,580 634,435 253,500 728,000 307,234 1,048,000 7,648,476 217,673 32,801 52,799 19,098 2,203,413 13,740,009 Employment Injury National Provident Fund 2004 2003 2004 2003 $ $ $ $ Total 2004 $ Total 2003 $ 594,580 634,435 253,500 — — — — — — — — — For the year ended December 31, 2004. With comparative figures for 2003 (Expressed in Eastern Caribbean Dollars)

Schedule of Benefits

Short-Term Benefits 2004 2003 $ $

Sickness benefit

648,706

Maternity benefit

662,734

Maternity grant

241,501

Funeral grant

Invalidity benefit

Survivor’s benefit

Age benefit

Schedule of Benefits

Age grant

NIS employment injury medical

NIS employment injury

NIS employment disablement

Noncontributory assistance age pension

Total expenditure

1,552,941

1,482,515

Schedule of General and Administrative Expenses
For the year ended December 31, 2004. With comparative figures for 2003 (Expressed in Eastern Caribbean Dollars) 2004 $ Actuarial fees Advertising and promotion Annual awards dinner Audit fees Bank charges Depreciation expense Directors’ fees and expenses Donation/community supported projects Electricity expense Insurance Miscellaneous expenses National Health Insurance expenses National Insurance contributions Office expenses Retirement benefit contributions Postage and stationery Professional fees Repairs and maintenance Salaries Seminar expenses Staff training Subscriptions Uniforms and medical insurance Telephone and fax Travel and allowances Security 16,578 188,833 36,885 30,000 89,866 105,911 114,972 74,352 57,975 28,972 2,936 41,925 52,650 22,476 99,617 128,828 19,907 261,658 2,145,563 45,268 150,715 45,101 81,591 65,699 130,911 11,954 4,051,143 2003 $ 16,578 157,573 — 30,000 65,065 80,432 108,477 18,010 55,215 22,798 5,043 — 48,693 20,036 93,456 77,630 3,763 184,604 1,947,968 — 117,029 35,434 53,898 48,582 123,417 — 3,313,701

Schedule of Expenses
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Statistical Highlights
Active Employees by Economic Classification Economic Sector Agriculture Construction Education Electricity, Gas & Water Extraterritorial Organisations Financial Intermediation Fishing Health & Social Work Hotel/Restaurants Manufacturing Mining and Quarrying Private Households Public Admin, & Defence Real Estate Social/Personal Services Transport, Storage & Communication Wholesale & Retail Trade 2000 658 2,456 1,088 674 17 1,209 0 281 2,501 1,770 122 600 9,614 1,117 1,189 1,582 3,648 28,526 2001 491 2,342 668 839 20 1,053 4 355 2,138 1,963 122 989 12,246 1,257 2,265 1,403 3,478 31,633 2002 573 3,393 438 731 31 1,028 3 482 1,889 2,060 87 787 12,328 1,545 1,344 1,833 3,818 32,370 2003 543 3,205 439 893 16 1,005 0 259 2,103 1,935 93 572 13,864 1,516 1,278 1,536 4,006 33,263 2004 560 3,344 444 879 11 1,242 0 253 2,391 1,951 144 624 13,286 1,538 1,153 1,719 4,243 33,782

Statistical Highlights

Active Employers1 by Industrial Classification Economic Sector Agriculture, Hunting & Forestry Construction Education Electricity, Gas & Water Supply Extraterritorial Organisations Financial Intermediation Fishing Health & Social Work Hotels & Restaurants Manufacturing Mining & Quarrying Other Comm. & Social Activities Private Households Public Admin. & Social Security Real Estate, Renting & Business Activities Transport, Storage & Communication Wholesale & Retail Trade 2000 50 101 59 7 3 68 0 88 154 125 5 134 381 3 112 73 333 1,696 2001 55 120 64 8 3 69 0 91 154 138 5 151 408 7 119 76 352 1,820 2002 57 135 70 7 3 75 1 67 158 137 8 157 445 11 130 81 360 1,902 2003 63 140 79 6 3 80 0 71 161 141 5 158 455 12 136 87 350 1,947 2004 74 228 78 6 3 74 0 70 164 136 6 154 455 11 137 86 362 2,044

Employers1 with at least 1 month’s payment in the year

48

Statistical Highlights
Benefit Expenditure by Type (in thousands) 2000 Pensions Age Employment Injury - Survivors Invalidity NIS Employment Disablement Non-Contributory Assistance Age Survivors 2001 2002 2003 2004

4,392 0 130 12 1,371 618 6,523

5,278 0 162 32 1,318 705 7,495

5,998 0 219 34 1,582 810 8,644

6,981 0 270 19 2,203 922 10,396

7,830 0 308 36 2,034 1,162 11,370

Grants Age Funeral Invalidity Maternity National Provident Fund NIS Employment Disablement NIS Employment Injury Medical Survivors Grant

117 396 0 202 896 0 20 0 1,631

186 465 0 228 794 0 37 0 1,711

152 598 0 239 724 0 183 0 1,896

218 728 22 254 803 0 33 4 2,062

238 815 0 242 851 0 17 3 2,165

Statistical Highlights

Other Benefits Maternity Allowance NIS Employment Injury Sickness

598 48 565 1,210 9,365

691 61 600 1,352 10,557

620 46 559 1,224 11,764

634 53 595 1,282 13,740

663 91 649 1,402 14,937

Grants (Amounts paid in 2004) Amount Age Funeral Invalidity Maternity National Provident Fund NIS Employment Disablement NIS employment Injury Medical Survivors Grant 237,515 815,400 0 241,501 850,669 0 17,134 3,254 2,165,473 No of claims 73 294 0 499 423 0 84 9 1,382 Avg per claim 3,254 2,773 0 484 2,011 0 204 362 1,567

49

Statistical Highlights
Other Benefits (Claims processed during 2004) B/f Received Total Approved Disapproved C/f Payments Avg approved Per Claim Avg of Bene Days 13 58 6 77

Employment Injury Maternity Sickness

11 51 317 379

241 494 4,464

252 545 4,779

191 444 3,442 4,077

44 17 25 76 970 367

91,426 645,893 651,655

479 1,455 189 2,123

5,199 5,576

1,039 460 1,388,974

Pensioners on Roll for Jan - Dec 2004 (Claims processed during 2004) B/f Entries Exits As at Dec 31 2003 1,864 71 5 1,505 442 0 3,887 Avg As a % of avg wkly pmt wkly insurance earnings 84.63 89.72 151.26 25.95 57.45 0 68.17 40% 43% 72% 12% 27% 33%

Statistical Highlights

Age Invalidity NIS Employment Disablement Non-Contributory Assistance Age Pension Survivors Survivors - Employment Injury

1,698 61 5 1,573 401 0 3,738

207 16 0 26 49 0 298

41 6 0 94 8 0 149

50

QUIZ
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 Services and 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.

Quiz

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’ll take it further.” 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

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NOTES

NOTES
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