Working Population Urged to Begin Saving for Retirement

Today’s working population must take the necessary steps to ensure that they have sufficient funds and assets to care for themselves after retirement, said Executive Director of the Financial Services Commission (FSC), Mr. Rohan Barnett.
Addressing a recent pension seminar hosted by the FSC at the Jamaica Pegasus Hotel in Kingston, Mr. Barnett said that by putting plans in place for retirement, persons can avoid burdening loved ones with the enormous expense that comes with retiring. “We owe it to ourselves to do our best to ensure our very survival, rather than to put ourselves in a position where we wind up depending on the charity of relatives. That’s why we have to act now, to save for our retirements,” he told the gathering.
The call for Jamaicans to save for retirement is imperative, given that the population is ageing, with the working age population (15-64) and the elderly dependent (65 and over) on the increase, while those in the 0-14 age group are declining.
“The elderly dependent group is the fastest growing segment of our population, consequently, the age dependency ratio is increasing – for example the average dependency ratio increased from 10.8 per cent in 1970 to 15.3 per cent in 2007. This ratio indicates that the cost or economic burden on the working population to maintain the upbringing and the pensions of the economically dependent are in fact growing at an alarming rate,” Mr. Barnett stated.
The FSC head said this economic burden tends to be aggravated by ‘double barreled inflation,’ which not only speaks to increasing costs as a result of rising prices but other factors such as greater longevity of retirees; the prevalence of lifestyle and preventable diseases and their associated costs; the desire and tendency of retirees to establish a higher quality of life in retirement, including increased level of social activity and the need to maintain involvement in organisations to increase and ensure vitality.
Mr. Barnett pointed to a number of ways in which persons can attain income for their retirement, such as the National Insurance Scheme; approved private pension plans; specialised pension plans, and personal savings and investment.
“As at April 2009, there were approximately 1.1 million employed persons in Jamaica. There are, however, about five per cent or 67,000 individuals investing in approved private pension plans. Another 117,000 are employed in the public service and are more likely to be covered by the consolidated fund or in specified pension plans,” he informed.
Mr. Barnett noted that even though there are individuals, who are doing their personal savings and investments, many employed persons are not saving for retirement.
“The issue of being financially prepared for retirement is too critical, and the consequences of not being prepared are too grave, to not take the matter seriously and do everything we can to start to prepare today. This is imperative from the perspective of the FSC,” he stated.
Importantly, persons are advised not to save just enough to get by, and to play a more aggressive role in managing their investments in a way that will allow them to live comfortably after retirement.
“It is not sufficient for us to be saving for retirement and hoping that the accumulated amount will be enough. We must now begin to take a more active role in managing our retirement investments. This is in order to attain an amount that will meet our desired lifestyle during retirement, and this has to withstand economic challenges, illness, financial ups and downs that we all face during the course of our lives,” the Executive Director outlined.
In the US, people aged 65 and over spend some 30 per cent of their income on health care and due to economic slowdown, more individuals in the US and the UK are postponing their retirement, and returning to work.
The expo, which was held under the theme: ‘Retirement Planning: don’t wait until it’s too late’, sought to advance and improve knowledge of pension schemes, and to encourage Jamaicans to start preparing for retirement, regardless of age or status.