Second Phase of Pension Legislation to Deal With Vesting and Portability

Minister of Finance and Planning, Dr. Omar Davies, has said that the vesting and portability of pension funds, were two critical areas of the Pension Act, which would be dealt with during the new legislative year.
Dr. Davies, who was speaking at the Financial Services Commission (FSC) pension seminar, held today (Jan. 26) at the Jamaica Pegasus Hotel in Kingston, said that both issues, together, would form the basis of intense deliberations in the second phase of the pension legislation.
In terms of the vesting of pension rights, he indicated that the government was in the process of putting forward a proposal to ensure that persons made adequate preparations for their retirement.
He said that many persons, having left their jobs, opted to take a refund of their pension contributions rather than [wait for] the accrued pension to start at retirement age. Typically in such instances, he noted, persons ended up broke within a few months.
“The fact is that it is a very dangerous act and we have to stop it as there are many persons not even at the stage of becoming a retiree, who are broke because they are given access to their pension funds prematurely, and vesting will preclude that,” Minster Davies pointed out.
He noted however, that vesting would not be made retroactive, but those schemes “coming under the legislation when we bring the vesting in place will have to abide by the rules.”
On the matter of portability, Minister Davies explained that the measure would allow persons to move their contributions from one job to the other. “We have not finalised the details in terms of portability because there can be a certain level of instability if somebody wants to make a change ever so often.”
He countered that portability should give pensioners flexibility to make determinations, as well as “force pension managers to demonstrate to their membership that they were utilising their resources as efficiently as possible and the returns that were brought, were not being gambled with, but are maximising the returns on these investments.”
Minister Davies told the seminar he was desirous of inserting a proposal whereby a worker could save in excess of his stipulated pension contributions.
“I want to put in a proposal for a worker to voluntarily add to the amounts over and above which is prescribed by the pensions scheme,” he said, adding, “what we want to do is encourage a worker to start thinking about making adequate provisions for his/her retirement years.”