THIS column has previously addressed the recommendation for all employers to automatically enrol employees into a pension scheme.

Speaking at the Pension Industry Association of Jamaica’s (PIAJ) annual luncheon recently, President Sanya Goffe announced that Finance Minister Nigel Clarke has given approval for the automatic enrolment proposal to be passed into law. This is great news not just for employees, but for the nation.

Automatic enrolment is an important tool for employees to accumulate significant savings for retirement. It can positively impact Jamaica’s economic growth. Pension funds can finance long-term productive investments. When employees retire, the impact of pension funds on the economy does not end because the spending and investing of pension income by retirees further enhances the country’s economic growth. Retirees, therefore, play a crucial role in growing the economy.

Today I will examine the power of retirees’ spending and investments in an economy. Economic growth is measured by the total value of the goods and services produced in an economy over a period of time. It is directed by the amount of spending and investment that occurs within the economy. For example, when there is a demand for housing, the real estate market or construction industry will register economic growth.

Many retirees continue to play an active role in retirement. Some have become owners of businesses, and others who have re-entered the workplace and are earning streams of income. For example, a retiree may earn income from the National Insurance Scheme (NIS); a registered pension; Airbnb for short-term rental; home rental; and financial investments such as stocks, bonds, and certificates of deposits. As a business owner, a retiree also contributes to the economy through the employment of labour. There are also baby boomers who have accumulated wealth or financial freedom and are now better able to assist grandchildren or pass on inheritance through financial assets and property.

Many people, aged 65 and over, are working longer and some are in a position to influence consumer spending. Having saved for many years for retirement, they can afford to spend at their leisure for travel, purchasing a new car or buying a new house, thereby making significant contributions to employment and economic growth. And many will be in business for years as due to advances in medicine and health care; many retirees are expected to live longer than previous generations did.

If retirees accumulate huge nest eggs for retirement they will be able to play a greater role in growing the economy in their twilight years. This is the reason automatic enrolment in pension schemes can increase the gross domestic product and increase spending in retirement.

Based on statistics provided by the American Association of Retired Persons (AARP), regarding elderly Americans, “Adults aged 60 and above accounted for 37 per cent of travellers in 2023.” This information shows that the travelling industry stands to benefit from consumer spending by retirees as they remain an appealing target market for the global travel industry.

These are just a few examples of how retirees play an important role in boosting economic growth by investing in tangible and intangible assets. The habit of long-term saving and investing can spur household wealth and benefit the wider society. Developing a culture of long-term savings within families or households will result in fewer retirees relying on government assistance and more resources being made available to support social and economic programmes in the nation. When the retirement years dawn, let’s choose to be an asset to our society rather than a liability.

Grace G McLean is a financial advisor and retirement specialist at BPM Financial Limited. Contact her at gmclean@bpmfinancial or visit the website: www.bpmfinancial.com. She is also a podcaster for Living Above Self. E-mail her at: livingaboveself@gmail.com