Pension lobby group calls on regulator to loosen restrictions

Pension lobby group calls on regulator to loosen restrictions

Senior staff reporter

Wednesday, November 13, 2019

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THE Pension Industry Association of Jamaica (PIAJ) is calling for the Financial Services Commission (FSC), which regulates approved pension schemes in Jamaica, to facilitate a more harmonious relationship with industry stakeholders.

The call came from head of the membership and lobby group, Sanya Goffe, at this week's Jamaica Observer Monday Exchange at the newspaper's Beechwood Avenue headquarters in St Andrew.

“We would all agree that after 15 years you have seen a clear appetite and posture of investment managers and trustees...I think trustees, generally, are conservative, they do their due diligence, they operate within the context of their fiduciary responsibilities, by and large, and so it's important that the FSC, as the regulator, recognises that and partners with the industry as we move forward, because we can't move to a more robust environment if there isn't some give on the part of the regulator,” Goffe emphasised.

She said that while the PIAJ acknowledges that there is a move towards more risk-based assessment of players, rather than a one-size-fits-all regulatory regime, it is important that the FSC responds to how the industry has been operating and loosen some of the current restrictions.

This includes “widening investments to Caricom (Caribbbean Community) territories, loosening some of the investment limits...We have had recent amendments [to pensions legislation] but the appetite is for more”, Goffe said.

She said that while it is important in a regulated industry that there be a healthy degree of tension between the regulator and the entities it supervises, it must also be understood that an oppressive regime negatively impacts the industry.

“...I think it's important for the regulator to appreciate that they regulate the industry, and the stakeholders of pension funds consists not just of pension funds, but your investment managers and administrators. So if there is a regulatory regime that is oppressive, difficult to work in, investment managers will close shop, and some of the good investment managers will decide that this line item in their balance sheet is just not worth it. Similarly, sponsors will decide that [they] are going to take this off the table, as part of compensation package for employees, because it is just too difficult to deal with the regulator,” she outlined.

Goffe argued that it was therefore important to give thought to all industry interests, for proper integration of the system. She said phase two of the pension reform regime should, therefore, take this into consideration in order to improve the operation of the legal framework.

The PIAJ president also described the current legislative framework as “solid”, but noted that there are operational gaps and inefficiencies that will have to be addressed in the changes to the legislation. She pointed out that 13 years have elapsed since the implementation of phase one of the reform, even though a two-year timeline was given for the initiation of phase two.

Cornelia Harper Peck, senior director, Pensions, at FSC, agreed with the concerns about the regulation of the industry.

“My position has always been that, at the end of the day, there is partnership. Some amount of accord must be struck. We do understand that we are your supervisor so we will not be your best friends, but nonetheless...there is a relationship that must be maintained and that relationship is inclusive of consultation, consideration of the interests across the board, and also to ensure that what we are doing is effective and the best for all the stakeholders that participate in the industry,” she stated.

Harper Peck further noted that there is a March 2020 timeline for phase two of amendments to the Pensions Bill, followed by proposals for amendments to the accompanying regulations.

The Pensions (Superannuation Funds and Retirement Schemes) (Investment) (Amendment) Regulations, 2019, which was adopted by Parliament in August, seek to modernise legislation that was passed in 2006 to drive pension reform.

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