THE Ministry of Tourism (MOT) indicates that, as at December 31, 2021, the value of assets managed by Sagicor Life Jamaica on behalf of the Tourism Workers Pension Scheme was approximately $506 million.
At the launch of the scheme, Minister of Tourism Edmund Bartlett said he expected the fund to grow to $100 billion by 2023 and to reach $1 trillion in 10 years.
The management of the assets of the scheme falls under Sagicor's managed pension portfolios which as at November 30, 2021 was valued at $218 billion.
Guardian Life Limited administers the scheme and also solicits participation through its marketing efforts.
In early February 2022, Sagicor, in remarks channeled through the MOT, said that funds currently held are predominantly invested in inflation indexed fixed income securities.
Sagicor stated, “Growth over the next five years will be determined by the value of contributions made by and on behalf of each enrolled member, in addition to the performance of the assets.”
Meanwhile, pensions expert Sanya Goffe said the likelihood of rapid growth for the tourism employees fund is greater than traditional pension funds, as the new fund is not limited in the same way as others under Jamaican law.
Goffe, who is president of the Pensions Industry Association of Jamaica, in an assessment shared with the Jamaica Observer, stated: “There are significant opportunities for growth of the Tourism Workers Pension Plan, largely because the statutory framework does not currently have the investment fetters that approved retirement schemes and approved superannuation funds have.”
She noted that while the Tourism Workers Pensions Act speaks to investments of the fund being subject to investment guidelines which may be established by the Financial Services Commission of Jamaica (FSC), “the establishment of regulations for the investment of the fund and broadly to the policies and principles that should be a framework for investments, for example, risk tolerances, return objectives, diversification and liquidity needs, there are currently no guidelines or regulations setting out prescriptive quantitative or qualitative limits or prohibitions on investments other than the BOJ Guidelines on FX investments.”
What this means, she stated, is that the Tourism Workers Pension Fund is currently not constrained by the “one-size-fits-all” regulatory approach to pension investing that other private sector pension plans currently have to deal with under the investment regulations.
Goffe explained, “This can have a positive impact on pension fund portfolio construction, allowing for greater diversification and ultimately potentially higher pension fund returns. Applying a risk-based approach will allow the trustees to effectively improve the hunt for returns at the most acceptable risk for the scheme, at all times ensuring that the best interests of the ultimate beneficiaries are preserved.”
Pension funds, she noted, are natural long-term investors, due to the long maturities of their liabilities. Under the right conditions, pension funds' capital can contribute to the development of the real economy and drive growth. But this can only occur when the regulatory environment is flexible and adaptable to foster this growth, the Tourism Workers Act currently has that flexibility. She expressed the hope that the flexibility afforded to the new fund will remain that way.
The MOT, meanwhile, indicates that an independent body to manage the fund was not created, but that even while the Ministry of Tourism has appointed Sagicor as investment manager for its tourism pension fund, Guardian Life has been appointed administrator of the scheme.
Tourism workers between the ages of 18 and 60 years are eligible to register for the fund through the scheme administrators, Guardian Life, and can make their contributions via several payment methods that have been set up by Sagicor. These include online payments as well as in-person at all Bill Express, Paymaster and Sagicor Bank locations.
The Tourism Workers Pension Scheme is designed to cover all workers ages 18-59 years in the tourism sector, whether permanent, contract or self-employed. The vesting period for contributors is five years.
Industry participants being targeted for increased participation are red cap porters, raftsmen, craft merchants and artisans, taxi operators, bartenders, waitresses, room attendants, and self-employed suppliers to the tourism industry.