Avia Collinder, Business Reporter
The Government collects an estimated J$5.9 billion from the salaries of civil servants, annually, for a family benefits scheme from which proceeds are paid to relatives of civil servants who pass away.
However, the Accountant General's Department, to which Wednesday Business was referred, has not responded to queries about the extent of benefits disbursed over the last decade under the scheme.
Wayne Jones, deputy financial secretary in the Strategic Human Resources Management Division of the Ministry of Finance and Planning, said proceeds collected are not placed into any special fund and invested on behalf of beneficiaries, but instead placed in the Consolidated Fund.
"It is a dependent pension benefit paid to surviving dependents if the contributor dies," Jones told Wednesday Business.
"The funds are not placed in a fund and invested. The benefit is determined by formulae prescribed by the Pensions (Civil Service Family Benefits) Act," he added.
The act also provides that payments be made without interest.
However, even as it admitted that the family benefits funds are not invested, the Government is planning new pension arrangements under which additional deductions will be taken to a contributory pension scheme to be established for the group.
Pensions to retired civil servants are paid from the Consolidated Fund, through the Accountant General's Department.
Public-sector workers have not been required to make contributions to those payments, but could soon be expected to start.
Jones said sums deducted for family benefits totalled four per cent of gross individual's salary, but said "it is difficult to estimate the portion of the public-sector labour force that contributes to the fund".
He said, however, that "it is to be noted that it is primarily central- government employees and employees of government departments and agencies (whose relatives) are entitled to pension benefits in accordance with the Pensions Act and who are required to contribute. These employees must be permanently appointed to a pensionable office."
Contributions by both private- and public-sector workers to the National Insurance Scheme (NIS) are pooled and invested under the National Insurance Fund (NIF).
That fund was valued at J$63 billion, at April 2013, after it took a J$6-billion loss following the National Debt Exchange in February.
NIS contributions for fiscal year ending March 2013 were projected at J$12.06 billion. There were payouts of J$12.58 billion to beneficiaries. The gap of J$520 million was covered from NIF investments.
Family benefits deduction
The family benefits deduction is not a pension contribution, but payable to the relatives - spouses and children - in case of death of the contributor. The deductions and payment arrangements are outlined under the Pensions (Civil Service Family Benefits) Act 1976.
Totalling about $5.9 billion out of a projected wage bill of approximately J$147.6 billion for fiscal year 2013/2014, the money is deducted monthly, or fortnightly, as workers are paid. None of the fund is refundable to workers who make it to retirement.
The act states that, for the benefit of their relatives, civil servants may continue to contribute to the scheme after retirement.