Pension crisis - Startling figures suggest Jamaican workers neglecting to save for future
Frightening figures from the country's private pension scheme regulator have shown that only a handful of the Jamaican population have a pension plan, leading experts to warn of the possibility of an old-age poverty crisis if there isn't a significant expansion in the membership of pension plans.
With increasing life expectancy, the reliance of older Jamaicans on those in the workforce - referred to as the dependency rate - projected to double by 2050, the situation appears even more serious.
According to the Financial Services Commission (FSC) end-of-September quarterly report, "Pension coverage in Jamaica now stands at 9.45 per cent of the employed labour force as a result of no growth in plan membership coupled with an increase in the employed labour force as at July 31, 2017."
It represents a decline in the numbers, which had stood at 10 per cent for several years. There have been booming employment numbers, but the FSC has suggested that those being employed are not necessarily enrolling in a pension scheme.
"It should be noted that despite the growth in the employed labour force, there was no growth in the retirement scheme segment during the quarter," the regulatory body said, highlighting that 11,400 individuals gained employment during the period.
In addition, Audrey Deer Williams, senior director of investments at the National Insurance Fund, has said that only 46 per cent of the Jamaican workforce was contributing to the state-operated National Insurance Scheme, which pays out benefits after age 65.
Speaking with The Gleaner yesterday on the issue, financial analyst and money management expert Claudette Crooks said that the numbers as presented by the FSC highlight a serious problem.
"We have to look at it from the per capita earning perspective, and also the fact that some people just simply do not know that they will need a pension to survive," Crooks said.
"I believe that we should go further to do an analysis of the minimum wage and assess whether that, for example, gives people enough disposable income for them to save towards their future," she continued. Crooks noted that some professionals, including lawyers, doctors, and engineers, have not seen the need to enrol in a pension scheme either.
Crooks also suggested that the Government look at ways to incentivise pension enrolment through taxation measures.