Children are not your pension!
FOR many Jamaicans, retirement planning means depending on their children to take care of their needs in old age. The practice seems largely the case with children who are expected to finance their parents and even grandparents.
Culturally, Jamaicans have never seemed keen on retirement planning, with only a small percentage of Jamaicans belonging to an approved pension scheme or having any form of investment geared at providing them with an income upon retirement.
Furthermore, women traditionally are more concerned with planning for retirement compared to men. But with Jamaica’s increasingly ageing population and given the current financial times in which many people are struggling to balance the many financial demands of life, experts are warning men to buck the tradition and actively prepare for their golden years.
Planning for the best stage of your life — when you are free from work and ideally free of bills such as a mortgage — should be seen as important as planning for any other major event in your life, according to Davian Jones, insurance pension sales officer at NCB Insurance Agency.
Speaking during an online forum convened by Healthy Men e-Magazine, Jones underscored the pervasiveness of Jamaicans regarding at their children as their pension.
“This is something that I hear a lot,” he said, stressing the need to change this type of thinking. “Your kids are not your pension, especially in these times when things are a bit harder for people to get a home or just start their lives. To put that pressure on a child is very tough,” the financial advisor said.
He suggested that persons “definitely need to consider taking out an individual retirement plan for themselves because your children will also have their children to take care of and will have to fend for themselves, so your child is not your pension”.
Jamaicans over 60 account for nearly 14 per cent of the population and are the fastest-growing segment of the country’s demographics, according to Planning Institute of Jamaica (PIOJ) data. What’s more, only a small number of Jamaicans are covered by pension schemes, setting the stage for a national dilemma given that more people are living longer and will therefore require medical and social services.
According to the Financial Services Commission, at the end of 2022 only 143,000 people, or just 11.2 per cent of the employed labour force, were counted among participants in pension schemes, with roughly 500,000 covered under the National Insurance Scheme (NIS).
As a benchmark Jones suggested individuals should have at least 75 per cent of their final salary to maintain their standard of living. Currently, the maximum benefit from the NIS stands at $13,000 per month.
“This will not be much so a pension plan is needed,” he stressed.
For 45-year-old police officer Lee Ashely, “children are a liability” and should not be depended on as pension. In his experience the practice is prevalent among people within the lower socio-economic bracket with inconsistent incomes, who hinge their family’s social and financial upliftment on the children in whom they have invested.
Communications professional Chad Bryan, 34, also does not agree that parents should depend on their children for financial support in their old age.
“I don’t believe in it at all because you tie up your children’s resources…it’s not something that should ever happen at all. It is so important to plan for your retirement,” Bryan said.
He cited the current financial conditions as well as the meagre pension some seniors now get as reasons he is now scouting a second pension plan.
“I don’t know how old people survive without a pension,” he said.
Research suggests that the average retirement period spans 15 to 20 years.
“We want to ensure that, as men, we are equipped for this period with a pension plan,” Jones said, pointing to NCB Insurance Agency’s SMART retirement plan which allows members to accumulate tax-free retirement contributions to provide an income in their retirement years. The plan is geared toward individuals ages 18 to 69 who are not already members of an approved superannuation plan or an approved retirement fund. People may also transfer their benefits from a group pension or individual retirement plan into a SMART plan, Jones said.
While some people may feel they are not earning enough to set aside anything for retirement, Jones reasoned it is far better to have something than nothing at all.