ST. GEORGE’S, Grenada (CMC) – The Grenada government says the Public Sector Employees (Pension Fund) Bill, which will establish a new system of paying pension to government employees and public officers, is better than the existing plan because it allows workers to have access to their funds before retirement age.

Currently more than 2,500 established retired public officers receive a non-contributory pension from the government which in its national budget for 2024, allocated $109.4 million EC (One dollar EC = $0.37 cent US) for pensions and gratuities.

The new Bill mandates that each employee or public officer who meets the criteria to join the new scheme contributes three per cent of the salaries/wages to the Fund with a matching three per cent from the government. There will be an actuary review every two years to determine if the contributing amount should be changed.

Government is claiming that more than 4,500 current workers in the public service are not qualified to receive a pension as guided by the 1958 legislation which the constitution recognises.

Legal Affairs Minister, Claudette Joseph, speaking in Parliament, said that some people are of the belief that the new scheme is less favourable but that is not accurate.

“Workers are now required to contribute to this fund, some believe that it is automatically less favourable, that is not correct Madam President, first of all you have the voluntarily contribution which you can take advantage of and save more, you have your fund vested so you have a return on your investment,” she said.

“The other things is that against your contribution you can withdraw up to $2,000 EC twice per year, so you could actually, it is a savings, it’s going up as the 401K in the USA, you can actually withdraw, so instead of going by fast cash and paying 15 per cent interest or wherever else you are paying interest, you can a withdraw twice yearly,” she added.

Joseph said another benefit is that when the funds become vested workers are able to receive the money now.

“So currently you either have to work until you 60  or until you have done 26 and two thirds years in the service or if you take early retirement you have to have worked for 20 years and have attained the age of 50, that is the only how you can get your pension now,” said Joseph.

Joseph, who is also the Attorney General, said that under this proposed scheme the funds become vested after five years and even before the funds become fully vested an employee will be entitled to receive 100 percent of the contribution made to the fund.

“After five years if you are exiting the service you are entitled to get 100 per cent of your contribution and the government’s contribution after five years. So that you can walk away from the service after 15 years, 18 years and get your pension contribution because it is vested since you make five years, that is a benefit over the existing scheme because you don’t have to wait for 26 and two thirds years to get anything

“Because now if you are walking away before 26 and two third years and you are fifty, you get nothing, you get zero, under this scheme all it takes for you to be vested is five years for you to get 100% of what is there in your account,” she said.

However, lawyers from law firms which contribute to the legal argument which declared the Pension Disqualification Act as unconstitutional are of the opinion that the new legislative scheme is also unconstitutional because it violates section 92 of the Constitution.

Government is hoping to enforce the Act in January 2025 following its approval in Parliament.