JAMAICANS need to save approximately 20 per cent of pre-taxed income throughout their entire working life, should they hope to meet the financial needs for retirement under current economic conditions, according to former Governor General Professor Sir Kenneth Hall.

Speaking yesterday at the ‘Personal Pension’ launch of BPM Financial, formerly Barita Portfolio Management Ltd (BPML), Hall said that “with greater life expectancy, better health and robustness, retirement planning must now be seriously engaged in”.

Yesterday’s launch was a move to capture a portion of the 94 per cent of the labour force not currently contributing to any private pension scheme.

The product, BPM says, aims to help “individuals who do not have a company- sponsored pension fund to participate in and save up to 20 per cent of their pre-tax income for their retirement”.

Subscribers to the plan will also be able to create a personalised portfolio and diversify investments.

“With the aid of a BPM investment advisor, individuals are able to choose from a range of investments to suit their risk tolerance and time horizon,” said BPM in a press statement. “Additionally, contributions to Personal Pension are deducted before tax is applied to income.”

“The reality today is that our notion of retirement no longer reflects the contemporary expectations of retirees as a result of the rapidly changing demographics,” the former governor general said. “It is now widely acknowledged that post-retirement could last for up to thirty years requiring retirement benefits to be sufficiently large to maintain retirees at the standard of living that would meet their expectations.

“Unfortunately, neither the private nor public insurance schemes today are sufficiently funded to meet the current and future needs of retirees. In these circumstances the expectation that retirement income would be derived primarily from pension schemes, some savings and national insurance programmes is disappointingly unrealistic.”

BPM managing director Peta-Rose Hall said that only one in 16 persons in the working population of Jamaica is enrolled in an active private pension scheme, or 75,000 of 1.2 million people. Furthermore, only a small percentage of members in company- sponsored pension funds make the maximum contribution allowed and take the full advantage of taxfree benefit allowed.

“Thanks to a retirement saving tax break, up to 20 per cent of your income may be invested in a registered retirement scheme before income tax is calculated,” BPM’s CEO noted at the launch held at the Terra Nova Hotel in Kingston yesterday. “By saving for retirement you can lower your tax bill during your working years by simply doing what you ought to be doing anyway.”

She added that “with the benefit of compounding interest the earlier you start the less will be your outlay”.

The approved retirement scheme allows for a $2,000 minimum start-up.