THE GOVERNMENT is about to have Parliament approve the regulations for the Pensions Act 2004, before the legitimate concerns of the stakeholders have been mutually resolved.
It would be useful to examine some specifics. The Pensions Act unnecessarily makes trustees subject to criminal liability. Most trustees act out of a sense of public spirit, either without payment or for a pittance. The new potential liability to criminal prosecution must lead to many public-spirited persons refusing to act as trustees or demanding expensive insurance coverage and fees reflective of this liability. These costs would have to be paid for from the pension fund, thus reducing pensions payable.
The Pensions Act sets up a structure for regulating pension schemes, but at an annual cost of over $100 million per annum. Again, all of this to be paid out of pension funds, so reducing the funds available to pay pensions.
The proposal that changes to pension schemes require the universal support of all members is quite unworkable. Inevitably, this will lead to the interest of the majority being held to ransom by a minority.
The new substantial costs now proposed to be charged to pension funds will be used to make a massive new bureaucracy of the Financial Services Commission (FSC). The FSC has yet to justify its existence having presided over the collapse of Dyoll Insurance.
It would be less costly and more practical to have the Bank of Jamaica regulate pension schemes. Indeed closure of the FSC should be contemplated.
A sensible Government would work out the necessary changes with stakeholders before approval of these regulations.
THE OPINIONS ON THIS PAGE, EXCEPT FOR THE ABOVE, DO NOT NECESSARILY REFLECT THE VIEWS OF THE GLEANER.
