Sabrina N. Gordon, Business Reporter

Life of Jamaica (LOJ) on Thursday launched a new retirement savings plan, becoming the only player in the pensions industry to get the go-ahead from regulators to market such a product.

The company immediately announced that it would be lobbying for a higher cap on savings allowed under such schemes.

LOJ's 'registered retirement plan' is to be marketed at self-employed individuals and contract workers aged 18 to 60, who do not contribute to a superannuation or pension fund.

plan available at offices

The plan will be distributed through the company's sales team network, and will also be available at the head office or any of their 10 branches islandwide.

Its subscribers will be able to contribute a maximum of $6,000 into the plan on a yearly basis, with the interest being accumulated tax free.

The contribution is limited by law.

When the member reaches retirement age, the accumulation of the fund will allow the members to purchase a pension plan or an annuity plan.

LOJ says, however, that $6,000 is too small a contribution to make proper provision for retirement.

"We will be pressing the Government to change the legislation that will allow for a greater contribution to be made because $6,000 per year is too small to allow a person to make any worthwhile provision for their retirement," said Michael Fraser, chief marketing officer and deputy CEO.

The plan was launched at LOJ's High Flyer's Club luncheon in Kingston.

Under ongoing pension reforms, individuals will be allowed to make up to 20 per cent of their taxable income in contribution to a retirement scheme.

"This will be a substantial amount that individuals can contribute so that they can build up a very worthwhile nest egg for retirement," Fraser noted.

In the meantime, he urges potential subscribers not to wait on the legislation, but to start saving, saying their contributions can be easily increased once the law changes.

The retirement scheme is LOJ's third new offering in recent months.

A week ago, the company launched a new health plan, while two months ago, LOJ also rolled out its Protector series, targeted at the low-income market not normally known to invest in insurance.

"It was well timed in terms of bringing another product to the market, and we feel very proud of LOJ's position in bringing relevant products to the market which will result in a more solid population going into the future," said Fraser.

The retirement plan is not a new product, but was initially registered to Island Life, remaining dormant since the latter com-pany's 2003 merger with LOJ.

Fraser was the man in charge at Island Life at the time of the companies' marriage.

The Financial Services Commission (FSC) is now going through the process of reviewing pension plans for licensing, and has put retirement schemes on the back burner until legislation is enacted to guide their regulation.

existing schemes

However, the FSC has offered fund managers a loophole, saying existing schemes may continue to operate until the licensing process is finalised.

The pension-reform process is now in its second phase, which involves the regulation of retirement schemes, with a discussion paper drafted by the FSC in September 2006.

The Pensions Act of 2005 was the first phase in the reform, requiring all schemes to be registered and licensed by the FSC, and for pension-fund managers and trustees to take on greater fiduciary responsibility for pension funds under their care.

sabrina.gordon@gleanerjm.com