IF pension reform is going have any meaningful impact on the Jamaican economy, then pensions must be addressed from the standpoint of being a human right and also within the context of globalisation and fiscal development of the country, according to Danny Roberts, head of the Hugh Lawson Shearer Trade Union Education Institute .

“It is important to frame the discussion about pensions and the reform of our pensions system in a broader, global context, since matters relating to pensions have social and economic implications at a macro level, and Jamaica is not alone in the reforming of its pension system,” Roberts said while addressing PSOJ/Prime Asset Management Limited’s 8th Annual Pension Seminar at the Pegasus Hotel in New Kingston yesterday.

“The matter of pension, health care, and social security protection of the working population has also to be seen as part of a human rights agenda,” he continued.

The former National Workers Union vice-president said the White Paper on Public Sector Pension Reform under the current PNP Administration is “being informed by fiscal contraction rather than economic growth — the consequence of which impinges upon matters relating to human rights”.

Due to obligations to the International Monetary Fund, “the Government separates pension from the broader social security framework, sees it as a burden, a contributing factor to the country’s high debt-to-GDP ratio and an impediment to growth”, Roberts said — a position he describes as “not only counterintuitive, but even contrary to the spirit of the country’s existing labour laws”.

“An opportunity is being lost, therefore, to take a comprehensive look at social security, to give attention to welfare and human rights considerations, and to ground the reform of both public and private sector pension systems in the broader context of growth,” he said.

Quoting the figures from the Financial Services Commission, Roberts said Government’s approach to pensions can only lead to dwindling numbers in pension schemes

“The Financial Services Commission (FSC)…reported that there were 423 active pension plans as at March 2015, with a total membership of 102,222 persons, covering 9.02 per cent of the country’s employed labour force. The 2015 figure represents a decline in the number of active pension plans over the last five years, with the number in 2010 totalling somewhere in the region of 487 schemes,” he said.

But there is hope yet.

“The FSC 2004 survey showed that there were 750 pension ad retirement plans with 70,000 members. In 2009, the information on the status of the pensions industry was a total asset value of $215 billion with total membership of 66,521, a marginal decline over 2004. The good news is that even though the number of active plans has declined, the membership has increased to over 102,000 to date, resulting from a higher growth rate experienced in the membership in active pension plans,” Roberts told the gathering.

Ranked below Guyana

Nevertheless, Roberts believes that despite this improvement, there is more to be gained from improving Jamaica’s pension system, as when compared to regional partners Jamaica ranks lower than its regional counterparts in budget allocation for pension benefits and other social protection benefits.

“…Our pension coverage is below the level of developing countries… Jamaica at 21 per cent would be lowest when compared to Guyana at 27 per cent, Trinidad and Tobago at 54 per cent, Grenada at 62 per cent, and Barbados (a high-income country) at 68 per cent,” Roberts pointed out, adding that “there is a link between personal financial independence and national economic independence”, as “the World Bank 2011 Report showed…countries like Denmark, Sweden, the Netherlands and Belgium head the list”Roberts believes that having a proper pension system in Jamaica can result in “a virtuous circle that generates wealth…generates investments and leads to new jobs with higher salaries”, similar to that of Chile.

“Our reform, therefore, seems cosmetic compared to the Chilean model and does nothing to stimulate much-needed jobs and higher salaries to create growth,” he said. “In fact, nowhere in the White Paper is any mention made that pension reform is linked to economic growth.”