By Lavern Clarke, Staff ReporterACTUARY AND pensions expert, Daisy Coke, has suggested a change in the direction of the pension reform debate to centre more on post-retirement welfare.
Noting that the discussions so far have remained at the proposed portability of pension contributions when contributors change jobs, Mrs. Coke said last week that while much emphasis was given to the savings element of the schemes, there was lack of debate on the adequacy of contributions to provide a pension that affords the retiree a reasonable standard of living.
"Members ought to know intimately what the schemes do and how they work," she said, having noted that fund managers needed to be more forthcoming about how schemes were governed.
Coke, in an address to a Jamaica Institute of Management luncheon, also said there was concern that employed persons had little knowledge of the link between what they contribute and the pension amounts they would likely end up with to finance their post-work lives. Too often, she said, pensioners, especially those on social security, end up having to choose between "protein or electricity."
Drawing a parallel between Jamaica and its small neighbour Barbados, the actuary said that while Jamaicans contribute 2.5 per cent of their salary to national insurance, Barbadians pay 14 per cent. "Their pension as a result makes sense," said Coke.
Just recently, the Jamaican Government approved an increase in social security pensions, effective yesterday, from the previous range of $300-$600 per week across three categories to a new range of $450-$900.
The size of the contributions and the pension pool becomes important as life expectancy is rising. The rest of a retiree's life, says the actuary, is likely to equal the number of years she spent working. Pensions are not indexed to inflation.
Positing a number of suggestions on the reforms, Coke said the age of retirement proposed in the pension legislation as 60 years, with an allowable five year extension be examined, as persons were capable of working well beyond those years.
At the end of December 2001, the pension pool stood at $65 billion according to information out of the Development Bank of Jamaica.
The actuary did not spell it out, but the adjustment would allow for a longer time horizon for contributions to build the pension pool, while at the same time cutting back on the years of payouts to individuals in the long run.
Other countries are going the age adjustment route, she notes, citing the United States, which, she said, has proposed a pensioanble age of over 70 years. In Jamaica's case, Coke suggested that a new age limit be introduced incrementally to allow for a smooth adjustment.
