With just 12 per cent of the working population having a pension and/or retirement scheme, Minister of Industry, Investment and Commerce Senator Aubyn Hill has encouraged VM Pensions Management Limited to go after the remaining market share.

The minister was speaking at the launch of the Jamaica Manufacturers and Exporters Association Retirement Account (JMEARA) on Tuesday, during which the JMEA and VM Group entered into a partnership which will see the financial services provider offering a number of solutions as part of a ‘Bundled Benefits’ to members of the business lobby group.

As part of the agreement, VM Pensions Management Limited will provide discounts and early bird incentives on select products to JMEA members. In addition, the VM Building Society and VM Wealth Management will offer preferential rates and discounts on select products and services.

VM Group’s subsidiary and affiliated company VM Property Services and British Caribbean Insurance Company will also offer discounts on their services.

For its part, the JMEA will facilitate the VM Group accessing its members, collaborating with the financial group on onboarding activities, and share financial material provided by VM Group with its members.

During the launch, CEO of VM Pensions Management Limited Conroy Rose warned that experts predict a “pandemic of poverty” among the elderly by 2030. This, he said, could be exacerbated by the ageing Jamaican population and the fact that the “social safety network is not adequate” to handle the number of retirees without private pension.

“There is a lack of awareness and knowledge about retirement planning and about commitment and focus to retirement,” he lamented, adding: “If we don’t come together and solve this…we’re gonna have ton loads of Jamaicans becoming a burden to their loved ones and by extension, a burden to the State.”

As a result, Rose said the call to order is for those not enrolled in a pension plan or retirement to begin now.

In the same vein, Minister Hill, referring to World Health Organization projections, said that by 2030, one in six people in the world will be aged 60 and older.

“This means that more money will be needed for more people for life beyond retirement,” he pointed out.

Noting that only 12 per cent of the working population contributes to a post-retirement arrangement, Hill pointed out “your 88 per cent of the population is a market”.

Hill added that the partnership between VM Pension Management and JMEA was a strategic alliance that allows the financial institution to grow its business and provide retirement solutions to JMEA members and their employees.

According to the Pension Industry Association of Jamaica (PIAJ), while the private pension industry has been growing, coverage levels are still extremely low. As of June 2021, there were 815 private pension plans in Jamaica with a total membership of 141,606 and assets valuing approximately $695 billion. But only 373 active, 425 terminating and 17 inactive. Active membership in private pension plans was 11.56 per cent of the employed labour force.

In this regard, the PIAJ noted, “The inadequacy of both private and public schemes to reach our most vulnerable highlights the retirement security crisis facing Jamaica.”

It added: “Seventeen years after the implementation of a regulatory framework for private sector pension plans in Jamaica, the private market alone has not been able to solve the dire problem of low coverage which has hovered between approximately nine and 11 per cent, under the second pillar of privately managed pensions.”

As a result, the PIAJ has proposed an “automatic enrolment” of working Jamaicans into a privately managed pension scheme. However, employers would not be required to contribute but will be required to undertake the necessary steps to ensure employees are enrolled, and salary deductions paid to the applicable approved retirement scheme.

The PIAJ argues further that having “a national auto enrolment programme aligns with the Government’s National Financial Inclusion Strategy (NFIS) to create conditions in which Jamaicans, particularly those who are underserved by the domestic financial system, can save safely and build up resilience against financial shocks”.

President of the JMEA John Mahfood said that the idea to introduce the industry-wide JMEARA was inspired by Tourism Minister Ed Bartlett’s push to establish the Tourism Workers Pension Scheme.

However, he shared that in some cases people in the manufacturing industry may retire without a pension, and “that is not good enough for my JMEA members and not good enough for me.

“When a man reaches 65 and a woman at 60, they need to be able to retire with dignity and that’s not happening in Jamaica,” he continued.

Underscoring the importance of the agreement with the VM Group, Mahfood pointed out that the employers will not need to do much but provide a forum for the financial institution to speak with employees and have them sign up with salary deductions. Employers, he said, can contribute up to five per cent as their finances allow.