The Government’s planned reform of the public sector pension scheme will obviously encounter resistance from its employees. In fact, a few of the bargaining units have already voiced concern about the measure.

However, the leaders of the unions representing State employees should bear in mind that the Administration has no choice but to implement the reform as part of a broad range of measures to reduce cost to the Government.

As it now stands, public sector pension liabilities are paid from the Consolidated Fund, instead of from money set aside for that purpose.

So, for example, Government expenditure on public sector pensions rose from $16.7 billion (6.2 per cent of total non-debt expenditure) in 2010/2011 to $24.1 billion (8.8 per cent of non-debt budget) in the fiscal year 2012/2013.

That is unsustainable. As such, the Pensions (Public Service) Bill tabled in Parliament by Finance Minister Dr Peter Phillips is most appropriate and should be treated with urgency, given the country’s need to cut costs.

Essentially, the Bill is seeking to establish a defined benefit contributor scheme to which all pensionable officers will contribute five per cent of salary; establish a segregated fund for the contributions at a time to be determined by the minister; gradually increase the retirement age to 65 years; harmonise the legislation governing public sector pension in a single statute; and repeal several enactments which previously dealt with pension.

The Bill also seeks to make consequential amendments to the relevant pension provisions in several pieces of legislation.

It is also accompanied by a second Bill — short-titled the Constitution (Amendment) (established fund) (Payment of Pensions) Act, 2015 — which will seek to amend the Constitution to provide for the payment of the pensions, gratuities and other allowances out of a fund established by law, other than the Consolidated Fund.

The second Bill notes that the Constitution only allows for pensions, gratuities and other allowances for public sector employees to be charged and paid out of the Consolidated Fund.

However, the Pensions (Public Service) Act 2015 will establish a defined benefit contributory scheme, which contemplates the establishment of a pension fund into which shall be paid all contributions made by pensionable officers and contributions made by the Government, as an employer.

The Bill, we reiterate, makes perfect sense and is critical to the country’s drive to achieve economic growth.

We understand the unions’ concerns about the cost to their members, who, after absorbing a wage freeze for five years, will be required to contribute five per cent of their salaries to the scheme.

However, the unions would offer their members greater value in ensuring that the Government establishes proper governance structures in the scheme to ensure maximum returns to contributors.

Moreover, a contributory pension scheme merely brings public sector workers in line with the rest of the working population. The real benefits will be realised at retirement, an event for which many, including those who only receive gratuities upon completion of contract, do not adequately prepare, and consequently suffer needlessly when they can no longer work.