Dr. Omar Davies, Minister of Finance, caught in a reflective mood during the opening of the 2007/08 Budget Debate at Gordon House, Kingston, on April 12. Davies said government had a better estimate of the size of the pension industry following the registration drive in 2006. - Rudolph Brown/Chief Photographer

The Financial Services Commission (FSC) now estimates the size of the private pension industry at about $132 billion, suggesting that the size of the sector had been grossly underestimated by about a third by its players and policymakers.

"Where we formerly guessed, we now have hard data," said Finance Minister Dr. Omar Davies as he opened the 2007/08 Budget Debate in parliament.

"Based on the applications for formal registration submitted to the FSC, we now know that there are approximately 520 pensionschemes and the size of the pensions portfolio is approximately $132 billion.

Previous estimates had valued the sector at $100 billion, prior to the September 29, 2006 registration drive, and that there were approximately 800 funds in operation. The new figures put the average asset base per scheme at $254.1 million.

The FSC, in response to Wednesday Business queries, said there was no prescribed asset limit under the new Pensions (Superannuation Funds and Retirement Schemes) Act and its attendant regulations.

Exploring insurance coverage

The new law prescribes sanctions against pension fund managers, trustees and officers for breach of fiduciary duty, a development that is already being explored as a business opportunity in the insurance sector.

Billy Craig Insurance Brokers, a Montego Bay-based business, is ready to go to market with PenTrust, which offers insurance coverage to overseers of pension funds against personal loss.

The brokerage, however, which had hoped to secure subscribers mainly from funds with asset base of $650 million or more and had priced the policy accordingly, but said it was prepared to negotiate business with smaller players.

Meantime, the FSC communications head, Nadene Newsome, said the regulator was still finalising registration of the pensions schemes.

Overall, the combined pensions industry tops $186 billion, inclusive of the state operated $54.2 billion National Insurance Fund.

business@gleanerjm.com