The Senate on Friday approved the Pensions (Superannuation Funds and Retirement Schemes) (Investment)(Amendment) Regulations, 2019, which broadens the range of permissible assets in which pension funds can be invested.

The amending regulations are expected to broaden the range of assets in which pension plans are involved, and strengthen the legislative framework to safeguard the assets of the pension funds by placing a limit of five per cent on the amount that can be invested, and limiting the investments to Jamaican companies.

Passage of these regulations is expected to introduce a huge pool of some $50 billion of credit available to the private sector, to expand and increase both production and staff complement.

Opening the debate, Minister without portfolio in the Ministry of Economic Growth and Job Creation, Senator Pearnel Charles Jr, noted how important the regulations are to sustainable economic growth.

Charles pointed out that the changes were being made on the basis of a review of the superannuation funds and retirement schemes investment regulations, which was undertaken as part of phase 2 of the pension reform measures being pursued by the Financial Services Commission (FSC), the regulator for the private pensions industry, and taking into account evolving international standards.

“The review and consultations with key industry stakeholders was done to strengthen the legislative framework with respect to the application of the prudent person rule, and to expand the range of permissible investments,” Senator Charles noted.

He said that the need to expand the range of permissible investments was seen as a priority action to unlock the ability to improve the returns to pensioners, as well as to provide potential increases in the sources of investment capital.

“As the macro investment environment in Jamaica has improved, and as the Government’s appetite for debt has gone down, pension funds now have assets which need a home for investment and increased returns. The scope for these options have, however, been constrained over time, and these regulations are intended to remove those constraints and strengthen the relevant framework,” Charles noted.

He said that the two things the regulations are primarily aimed at are: to strengthen the legislative framework to safeguard the assets of the superannuation funds and retirement schemes; and, to expand the range of permissible assets in which the pension funds’ assets can be invested.

Opposition senator and trade unionist Lambert Brown, however, criticised the Government for failing to consult with the unions.

He said that the new regulations are a departure from what was there before, and would affect significant sectors of the society, but that the workers and the pensioners who will contribute the most have not been included in the deliberations.

Senator Brown also raised the point that with less than 10 per cent of the Jamaican workforce benefiting from pension schemes, it was necessary for the negotiations to be more inclusive. He also urged the Government to encourage Jamaicans to save more, and to seek to resolve the issue of the age at which Jamaicans should retire, as well as address the issue of surplus.

Senator Kavan Gayle, a trade unionist like Senator Brown, agreed on the need to promote a culture of savings, and debunk the notion that “pickney a pension”.

He said that the regulations are a good move and proof that the minister (of finance and the public service) saw the need for change and took up the challenge. However, he said that the momentum could only be sustained through consultations and dialogue.

Gayle noted that the National Insurance Scheme was going through a period in which contributions have been flat and investments were increasingly desirable to keep it sustainable, and suggested that more attention be paid to the situation to keep it sustainable.

Opposition Senator Damion Crawford insisted that the $50- billion pool of funds, which is likely to emerge from the introduction of the new regulations, would be of more interest to companies who would benefit as creditors, while the workers would remain at a high risk.

Senator Aubyn Hill (Government) said he agreed with the trade unionists that a 9.8 per cent pension coverage of Jamaican workers meant that too few workers were benefiting from pensions.

“That is almost criminal. We must change that,” Senator Hill said.

However, Hill informed the Senate that the FSC had already started working on a micro pension plan which would target ordinary Jamaican workers.

He said that there was a need to bring a lot more ordinary Jamaican workers into the mix, including taxi drivers and farmers.

“We need to bring a lot more ordinary Jamaicans who can have a pension when they need it,” Hill insisted.

The regulations were passed in the House of Representatives on July 23 piloted by Minister of Finance and the Public Service Dr Nigel Clarke.