THE reform of the pension system in Jamaica to include the entire working population could contribute significantly to national economic growth and ensure coverage for thousands who are currently without, as has been the experience in Chile since 1981.

This was mooted recently by Rezworth Burchenson, managing director of Prime Asset Management Limited, during the inaugural Victoria Mutual Economic Forum which examined the link between personal financial independence and national economic independence.

He was speaking against the background of 60 per cent of the Jamaican workforce being without a pension including the National Insurance Scheme, and only 18 per cent of private sector employees benefiting from one. The situation is aggravated, Burchenson pointed out, by increasing numbers of people living up to 25 years beyond retirement age, as indicated by the National Population Census 2011.

With 350,000 people projected to retire in 12 years and many of whom will not have a pension plan, Burchenson suggested that Jamaica — Government and private sector together — should start a discussion on pension reform. He then presented the Chilean compulsory pension model which has resulted in significant benefits to individuals and the national economy, and has been adopted by other countries in Latin America.

Between 1980 and 2000 pension reform had a 49 per cent compounded effect on the 4.63 per cent average growth in the Gross Domestic Product (GDP) of Chile. Savings, investments, employment and productivity grew. Between 1994 and 2004 the value of pension fund assets under management as a percentage of GDP doubled between 1994 and 2004.

Speaking earlier during the economic forum, Richard Powell, president and CEO of Victoria Mutual Group, highlighted the role that the financial sector plays nationally and internationally in promoting economic growth and reducing poverty. He pointed to supporting data published by the Planning Institute of Jamaica indicating that the financial sector contributed 11.2 per cent to real GDP in 2014, up from 10.8 per cent in 2010.

Powell noted that the Victoria Mutual Group has positioned itself as the home of financial independence and will guide clients to achieve this status over time by using its suite of products and services. These include savings, mortgages, securities trading and brokerage, asset management, money transfer, pension fund management and administration, real estate services and access to general insurance products.

In his remarks at the forum, chairman of Victoria Mutual Group Michael McMorris said that the country’s economic challenges will not be solved by the government single-handedly, as this requires public-private partnership as well as personal accountability for financial independence. He stated that financially independent citizens are crucial to Jamaica achieving economic independence as a nation.