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Minister of Finance and the Public Service, Audley Shaw, has said that the current public sector pension programme is to be reformed to make it a contributory scheme, for all public sector workers, including Parliamentarians.
“As of now it is not a contributory scheme, but I have to indicate that in due course we are going to have to reform the public sector pensions programme to make it a contributory scheme, and that includes all public sector workers, including politicians who are Members of Parliament,” Minister Shaw stated, stressing, “it must become contributory so that we can afford that.”
Noting the importance of a vibrant pensions industry to the welfare of the country and the quality of life of Jamaicans, the Finance Minister drew attention to the need for reform in both the private and public sectors.
“Let me indicate to you,” he said, “not only in the private sector pensions industry that we need to sharpen up and get our act together; the truth is that the public sector pensions programme also has to undergo urgent review”.
To indicate the basis for such urgency, Minister Shaw cited a recent study. “The World Bank has recently carried out a study for us on the public sector insurance programme and the truth is, at the present rate at which we are embarking (the reform), in not too long from now we are not going to be able to afford a public sector pensions scheme, without it becoming a contributory scheme,” he warned.
With reference to private sector pension schemes, he informed of the imminent passage of the second phase of the 2004 Pension Act, that will allow for portability and mergers, among others things.
Minister Shaw also informed of the decision being contemplated to speed up the process of approval and registration of pension schemes, by granting conditional approval to schemes that have achieved a minimum requirement, which will be clearly stated.
“Cabinet will be considering an amendment to the existing legislation to the extent that it can speed up the process; we are looking at the possibility of a conditional approval,” he said.
Beyond the approvals however, the Finance Minister appealed to pension fund managers to see “what is happening in the world right now as a constant reminder to us, that regulation is not to be seen as just obstructive, bureaucratic headache, but as something important in order for us to maintain the kind of financial integrity in our system.”
Noting that the regulation also includes the types of investments and the threshold set for the amount to be invested in each type, he implored the sector not to consider those to be intrusive.
“I put it to you that the objective is not intrusiveness; I put it to you that the objective is fiscal prudence and the objective is for you to spread your risk and to ensure that you manage your risk in such a way, that you are not unduly overly exposed to any one particular area of investment opportunity,” he said.