Stricter controls coming for pension funds
FINANCE AND Planning Minister, Dr. Omar Davies, has said that the Financial Services Commission would be embarking on a process of formality licensing persons or organisations, which could be involved in the management of pension funds.
"That is an area of activity that has been somewhat haphazard in terms of who qualify to manage pension funds. There is going to be a more formal approach to the issue of licensing and management of pension funds," Dr. Davies said.
Speaking at the official opening of the GSB Co-operative Credit Union branch on Dominica Drive in Kingston, the Minister said it has been established that the same "fit and proper" criteria governing deposit-taking institutions or insurance companies would also be applied to those who manage pension funds.
He pointed out that Jamaica has an ageing population with an increasing percentage of the people falling in the age group 60 years and over, and this had important implications, such as how services are packaged. "In our instance we're packaging services to encourage people to save towards educating their children, but increasingly, we have to take cognisance of the increased life expectancy," the Minister said.
In light of this, he suggested that the GSB could embark on a programme to assist members in planning for retirement. "Not just in terms of how you handle those savings, but how you can add to your basic pension, that is, saving additionally towards retirement age. Very few persons have specialised in that and I think that's an area where the credit union movement is admirably suited to provide help," he said.
He urged the GSB not to relinquish its orientation classes, which are still mandatory prior to anyone being admitted. "In the credit union there is a philosophy underpinning the credit union movement and I urge you never to seek simply to expand membership without ensuring that each potential member understands clearly what the movement is about," he said.
"I say this because if you examine what has happened in the financial sector, it is of significance that the problems which characterised much of the other elements of the financial sector - the deposit taking institutions like the banking sector or the insurance sector - none of these problems hurt the credit union movement and this is significant for a group of institutions with an asset base of $17 billion and savings in excess of $14 billion. It is also of significance that during that period when there was so much turmoil in the sector, the credit union movement remained strong," Dr. Davies said.
He pointed out that a critical element which helped the credit union movement to handle that difficult period, was the self-policing mechanism of the movement.
With regard to the future of the financial sector, Dr. Davies indicates that there were certain inevitable developments, which institutions such as the GSB had to take into consideration. "Already you see this... there is a broadening in the range of services and facilities being offered to the public," he said.
However, he cautioned that even as "institutions seek to offer a greater menu of facilities to members, let us ensure that the basic credit union principles remain predominant in all our actions."
"Even as we seek to offer our facilities as a 'one-stop-shop' ...let us ensure that all the basic principles which have kept us going to this day, let us continue to preserve them," he stressed.
The Minister also noted that one area that would become increasingly important was the matter of pension fund management. "This relates to assisting persons, either formally employed with the Government service or even those doing their own activities, to start making provisions for the period of retirement," Dr. Davies said.