GOJ targets ‘minimum 1,800’ for early retirement
Government employees who fall within the age range of 50 to 59 years have up to February 16, or three more weeks, to accept their employer's offer of early retirement, the Ministry of Finance & The Public Service said Tuesday.
The ministry said it is hoping that at least 1,800 or more, out of a total 8,100 employees who fall within the age range, will take up the offer under the Special Early Retirement Programme, or SERP.
The early-retirement scheme is part of the Government of Jamaica's strategy to cut its large wage bill by March 2018, in line with commitments made under its economic adjustment programme. In supplementary budget estimates released in December, the finance ministry allocated $983 million to cover the cost of the programme.
The agreement under the International Monetary Fund-backed programme is that the wage bill should shrink to nine per cent of GDP by fiscal year 2018-19. The Government is also targeting the trimming of some 170 allowances available to public-sector workers, in line with that goal.
In a release in mid-January, the Ministry of Finance noted that organisations will be able to replace approved SERP participants only up to the value of 15 per cent of the savings generated by the programme. Further, re-employment of persons who retire under SERP will be restricted.
On Tuesday, the finance ministry told the Financial Gleaner that the actual budget for the early-retirement project was not yet finalised. "This information is not currently available," it said.
SERP "is being offered at this point in light of the recently passed Pensions (Public Service) Act 2017, which adjusts the terms under which public sector workers will retire. The new act, among other things, will gradually increase the retirement age from 60 to 65 years; facilitate mandatory contributions by all pensionable officers towards their pension; and harmonise the legislation governing public sector pensions in a single statute," the ministry noted.
Workers falling within the age category for early retirement number 8,100. The SERP offer excludes teachers, healthcare professionals, security forces and correctional officers. As to its target for acceptances, the ministry said a "minimum 1,800".
Applicants for early pension must be permanently employed to the Government of Jamaica; have 10 years' qualifying service; and be eligible to retire early as per the rules of the Pensions Act. The final payment will depend on a number of factors, such as annual salary, number of qualifying years of service, whether or not the person has a loan, the number of days they have outstanding for vacation leave, or if they requested an advance on their pension gratuity, the ministry told the Financial Gleaner.
"Among the incentives included in the SERP is the offer of two weeks' salary for each year of service up to a maximum of one year's salary and payment in lieu of accumulated vacation leave," the ministry noted.
The finance ministry also provided a scenario of what the payout would look like. It involves a 54-year-old who earns an annual gross salary of $1.6 million, does not earn allowances, has been employed to the Ministry of Finance for 25 years and six months, has no outstanding loans or indebtedness to his employer, is owed 40 days vacation leave and has opted to retire on April 30.
Under SERP, he would receive a $1.54-million incentive tax-free; another $241,721, taxable, in lieu of leave; and pension payment of $908,364 annually or $75,697 monthly for the rest of his life, if he opts for full pension.
If he opts for a gratuity and reduced pension, he would receive $2.83 million for gratuity tax-free, and $681,273 annually or $56,772 monthly for 12.5 years of retirement. He would then revert to full pension and so receive $75,697 monthly for the rest of his life, the finance ministry said.