REGULATORY amendments aimed at strengthening the legislative framework to safeguard the assets of pension plans are expected to be in place by early next year.

This was disclosed by minister without portfolio in the Ministry of Economic Growth and Job Creation Senator Pearnel Charles Jr, who moved the Pensions (Superannuation Funds and Retirement Schemes) (Investment) (Amendment) Regulations, 2019 in the Upper House last Friday.

The regulations, which were approved by the Senate, were adopted by the House of Representatives in July.

“Target dates have been set. I know Minister (of Finance and the Public Service Dr Nigel) Clarke is pushing for them to be done by this year and I would say at latest the early quarter of 2020,” Senator Charles Jr said.

He noted that the amendments, which also aim to broaden the range of permissible assets in which pension plans can be invested, are “critical regulations underpinning this Government’s thrust towards macroeconomic stability”.

“As the macroeconomic environment in Jamaica has improved and as the Government’s appetite for debt has gone down, pension funds now have assets that they need to invest. The scope of their options and opportunities have, however, been constrained. These regulations are intended to release those constraints while contributing to economic growth,” he said.

Senator Charles Jr noted that the amendments proposed by the Financial Services Commission, which is the regulator for the private pension industry, as well as the means of execution “were well researched, and carefully considered.”

“These amendments …are perceived to be modest, and the increased risks should be manageable,” he said.

The regulations require each pension plan to develop an investment policy and mandates investment managers to invest pension fund assets in a manner consistent with the individual plan’s investment policy, the governing legislation, and the regulations.

Among other assets, pension plans will now be permitted to invest in bonds issued by companies that have an investment grade rating from a recognised rating agency; and bonds issued by companies listed on the Jamaica Stock Exchange.

Additionally, pension plans will be able to invest in equity or debt of private companies established under the laws of Jamaica provided that in aggregate these amounts do not exceed a maximum of five per cent of the assets of the pension fund. This will allow pension funds to invest in private equity and venture capital for the first time.

The amendments will provide higher return investment opportunities for pension funds, while improving access to finance, deepening capital markets, and providing options for financing outside of the banking sector.