This article is the third, in a series of five, contributed by PricewaterhouseCoopers, looking at the worldwide retirement tourism industry and the opportunities it offers Jamaica. Today, we look at the steps that countries across the world have already taken to cash in on this lucrative industry.

RETIREMENT! A time to kick back, relax and enjoy the fruits of our labours. Most of us spend our days working, planning and saving for the day when we will be able to take life at an easier pace, and spend more time doing the things we’ve always wanted to do but never got around to. In the past, this simply used to mean staying at home and taking up a new hobby or two. Today’s retirees however, are a much more adventurous bunch. For a growing contingent, the lure of moving to a warmer climate overseas is becoming an ever popular choice.

This growing trend for retirees to move abroad, especially amongst US citizens, has opened up a slew of economic opportunities for well-positioned countries. As a result, several destinations in the Caribbean and other parts of the world are vigorously encouraging development of their retirement tourism industry, often through the introduction of industry-supporting legislation and/or the roll-out of international marketing programmes.

Costa Rica, one of the first countries to introduce a retirement incentives programme for foreigners, began its pensionados (retiree) program in the 80s. Under this scheme, retirees are required to demonstrate that they have a minimum, permanent income such as a pension, of at least US$600 per month, which allows them to reside in the country as a retired person. Alternatively, under the rentista programme, individuals (including retirees) who can prove that they have a reliable source of income of $1,000 per month for a period of at least five years, are given permission to stay. It has been estimated that a total of 11,000 retirees have pensionado status and a total of 20,000 foreign retirees are living in Costa Rica.

It is worth noting that the pensionado scheme originally gave foreign retirees an exemption from import duties on their household goods as well as a personal vehicle. However, these incentives were discontinued in 1992, which has, to some extent at least, affected the influx of retirees to the country. This effect was documented in a study, completed in 2006, in which focus group participants who were interested in retiring in Costa Rica reported that they opted to live in Panama instead due to Costa Rica’s lack of incentives.

Panama has been ranked as the retirement destination with the best incentive programme by many retirement information sources, including International Living, a magazine that reports on retirement destinations globally. There is no doubt that Panama deserves this commendation as its government introduced numerous direct incentives for the retiree to make the destination more inviting and the cost of living more affordable. These incentives fall under the Panamanian pensionado programme which grants retirees discounts on Copa airline flights, some recreational activities, prescription drugs, doctor’s visits and utility bills. In addition, retirees can bring in all their household goods free of taxes and import a new car every two years for private use.

To qualify as a pensionado, retirees are required to be in good health(including being HIV-negative), have an up-to-date passport from their country of citizenship and a verifiable monthly pension income of at least $1,000 per month for an individual, $1,250 for a couple, plus $250 for each additional dependent. Foreigners who become pensionados are eligible to own property and enjoy the same rights and protections as Panamanians. In addition, retirees benefit from a no-tax policy on income earned outside of Panama. In 2005, it was estimated that Panama had more than 2,500 retirees in its relatively new retiree programme. In 2004, approximately 500 retiree visas were issued.

Mexico has been rated the number one retirement destination for two consecutive years (2007 and 2008) by International Living’s Global Retirement Index. Mexico’s census data for the year 2000 counted 28,247 US-born resident retirees over 54 years of age. Since that time it is estimated that between 40,000 and 80,000 US retirees live in Mexico. The 2008 Global Retirement Index cited a number of reasons why Mexico topped the ranking, including easy access to residence visas and that “the services, amenities and discounts offered to retirees are just as bountiful as in Panama”.

Of the top five retirement destinations Mexico ranked second in terms of its health care. The cost of a health-care plan in Mexico with no limits, no deductibles, free medicines, tests, X-rays, eyeglasses, and dental work is $250 or less a year, a sum far less than the cost of an equivalent plan in the US. Mexico does not market a complete pensionado programme but a foreign retiree on one of two types of retiree visas can bring in their household goods duty-free.

A number of other countries outside of the Americas are also pursuing strategies to attract retired foreigners to retire in their countries. This includes Malaysia. Malaysia has implemented a number of policies under the rubric “Malaysia: My Second Home” (MM2H) These policies are geared towards making Malaysia one of the best places to retire in Southeast Asia. The programme, which has been running since 2002, is promoted by the Government of Malaysia to allow foreigners who fulfil certain criteria, to stay in the country for as long as possible on a multiple-entry social visit pass.

The MM2H programme allows the retiree to take up part-time work, invest in businesses, and also gives him/her the ability to purchase a home and import a motor vehicle duty-free. The programme also requires that the retiree must be able to support himself with about US$2,500 per month or an initial deposit of $40,000. The Malaysian government has also invested heavily in improvements in health care, which has contributed to a shift in its appeal from just a medical tourism destination in cosmetic and medical procedures to a destination with international accreditation in acute and long-term hospital care.

The common thread running through these top retirement destinations is an incentive scheme that will make retirement in these countries easier, fun, hassle-free and, perhaps most importantly of all, cheaper than the retiree’s home country. If Jamaica is to position itself competitively against destinations such as Panama and Mexico, it needs to critically assess its comparative advantages and then apply incentive packages which will make us an attractive and realistic alternative for retirees looking for a new place to live.

This article was written by Darren Singh and Keisha Tingling, of PricewaterhouseCoopers. For further information, contact darren.j.singh@jm.pwc.com.

Next week we look at the economic and social opportunities that the successful development of the retirement tourism industry would offer Jamaica.