Growth & Jobs | Attitudes to pension and insurance could impact future generations – Experts

INSURANCE AND pension experts say urgent reforms are needed in how Jamaicans save and prepare for retirement to stave off a crisis in the future, saying that the current culture and attitudes could impact future generations.

The experts say some of the behaviour is cultural as many Jamaicans see insurance as unaffordable and retirement as something that is not immediate. However, Desmond Johnson, director of the Pension Industry Association of Jamaica (PIAJ), said this attitude could have devastating consequences for both individuals and the country’s economy.

“Insurance is not just about protection. It’s a form of risk mitigation for your investments,” Johnson explained. “Pensions and insurance go hand in hand. If you die or suffer a serious illness, if you are insured, then you will have some protection to offset the costs and the financial impact on your family. But too many Jamaicans believe they’re too young or don’t earn enough to invest in insurance, and that is an unfortunate mindset to have.”

The PIAJ director emphasised that without a shift in behaviour and policy, Jamaica could face serious social and economic challenges. He proposed auto-enrolment into pension schemes and a more open health-insurance market, similar to Singapore’s model, to encourage early participation and broaden access.

“If we grow national savings, we reduce the need to borrow internationally,” he said. “Long-term savings from pensions and insurance can fund infrastructure, bridges, roads, development, but we need regulatory changes to make saving the default, not the exception.”

Hugh Reid, managing director, JN Life Insurance, encouraged more Jamaicans to get insurance because of the benefits that are offered as people age.

“The older you get, the more you need to visit the doctor, and insurance costs aren’t going down. If you wait until you’re 50 to get coverage, you’ll pay 100 per cent more than someone who started at 25,” Reid explained. “Also, a critical illness can occur at any age, and insurance can cushion the financial blow by providing coverage.”

He added that insurance is not just for the elderly or the wealthy.

“People think insurance is only for death or disaster,” Reid said. “But it’s also about protecting your health, your income, your future. The right policy can help you survive critical events, provide generational wealth and avoid financial ruin.”

AFTER DEATH BURDEN

Reid warned that many Jamaicans are underinsured, leaving them vulnerable to unexpected life events. And when those events happen, the burden often falls on family members or public resources.

“With Jamaica’s shrinking birth rate and changing family dynamics, which means fewer children to support ageing parents, this means that there will be increasing pressure on public resources,” he said.

“Less than 20 per cent of the labour force have retirement savings. This means that if roughly 80 per cent of the country don’t save for retirement, they’ll depend on government assistance, rely on their children if they have any, or the goodwill of others. This means that there could be a serious social crisis, especially as the country’s population ages,” he added.

The JN Life managing director reiterated his call for automatic pension enrolment for all working Jamaicans.

“Just like NIS or NHT, you should be enrolled in a pension scheme as soon as you start working,” Reid said. “You can opt out, but research shows most people won’t. It’s inertia. Once you’re in, you stay in.”

Reid pointed out that increasing national savings, especially in the areas of pension and insurance, is important to unlocking Jamaica’s economic potential.

“For decades, we’ve struggled to grow the economy because we lack investment capital,” he said. “As one prime minister said, ‘It takes cash to care’. We need more long-term savings to fund development.”

He cited data showing Jamaica’s national savings rate as just 10 per cent of gross domestic product, compared to 26 per cent in Singapore, 23 per cent in Antigua and Barbuda, and 16 per cent in Guyana.

“We’re far behind,” Reid said. “If we don’t act now, we’ll continue to borrow at high costs and miss out on opportunities to build our future. The benefits of savings and investments from pension and insurance are that the Government can borrow locally at more competitive interest rates than going overseas. It means more infrastructure projects, which will have a knock-on effect on the economy.”