PUBLIC EDUCATION PROGRAMME ON PENSION BILL COMING
KINGSTON, March 20 (JIS):
A public education programme will be implemented soon, to inform persons about measures being proposed under the Pensions (Superannuation Funds and Retirement Schemes) Licensing and Registration Bill.
The Bill is an attempt by government to reform Jamaica’s pension system, by ensuring that a proper legislative and regulatory framework is instituted to secure the interests of pensioners. At present, there is no legislation in place to govern the operation of the over 1,500 registered pension schemes in Jamaica.
The fact that these schemes are not subject to close scrutiny under the law, could have serious implications for retirees, as was evidenced in the 1990’s, when numerous pension funds were imprudently invested and had to be assisted by FINSAC.
Under the proposed law, all approved pension schemes must be registered with the regulatory agency, Financial Services Commission (FSC). All managers and administrators of pension funds must be licenced and all trustees must be registered by the FSC. The FSC would also be required to monitor the operations of the various schemes and there should be full disclosure of information to the FSC and Fund members.
Speaking at a JIS Think Tank session on Wednesday (March 19), Research Economist at the Ministry of Finance and Planning, Marguerite Chambers said the public education programme, which was being funded by the Caribbean Development Bank, was aimed at “highlighting the need for the reform…the benefits to be expected and the new role of the stakeholders under the reform system”.
Miss Chambers pointed out that public comments and responses were taken into consideration some time ago when a Green Paper on the reform was circulated. She added that this had led to the drafting of a White Paper on Pension Reform, which had been generally accepted save for the issue of vesting and portability.
The proposed vesting and portability regulation is to ensure that persons are adequately prepared for retirement and it prevents them from claiming any refund of their contribution before retirement. Thus, persons who are changing jobs or who have had their services terminated after completing five years membership in a pension scheme, must allow their contributions to remain in the plan or to have these transferred to another approved retirement scheme. However, this provision is only applicable to contributions made after the passing of the Act. Contributions made before such time will be refunded before retirement upon request.
Strong opposition to the issue of vesting had been expressed, particularly by the trade unions, which have contended that persons should be allowed to claim for refunds, if they so desired.
Miss Chambers mentioned that Cabinet took a decision to concentrate on the supervision and regulatory aspect of the legislation, while at the same time, embarking on a public education programme to sensitise persons on the importance of the proposed reforms. “Once fully satisfied that the Jamaican public has an understanding of the pension reforms, the controversial issues of vesting and portability will be addressed,” she stated.
Other provisions being considered for the proposed National Pension Act include: investment limits; the enabling of self-employed persons and persons in non-pensionable employment to provide for retirement income at levels commensurate with the provisions of Occupational Pension Schemes; funding for parental pensions by children; and voluntary indexation.
Miss Chambers pointed out that the National Insurance Scheme (NIS) is being enhanced “to complement the [pension] reform initiative”.
The Bill is now before the Chief Parliamentary Council for the incorporation of suggestions and once a final draft is prepared, it is expected that it will be tabled in Parliament before being referred to a Joint Select Committee for further examination and debate.