n September 2017 the Jamaican Senate passed the Pensions (Public Service) Act of 2017 and the Constitution (Amendment) (Establishment Fund) (Payment of Pensions) Act of 2017 under which pensionable officers were required to contribute five per cent of salary towards a pension. Today deductions still flow freely into and out of the Consolidated Fund.

THE Government is yet to set up a segregated fund to manage public sector pensions, years after passing legislation to make the change. Officials from the Pension Industry Associaion of Jamaica confirmed that the inflows remain without a fund manager.

Tanisha Weir-Grant, director of communications and customer service at the Accountant General’s Department (AGD), indicates that the planned segregated fund for public sector worker deductions will not be put in place until fiscal objectives stated in the enabling Acts are satisfied — these include reducing the debt to gross domestic product (GDP) ratio to no more than 60 per cent.

Legislative changes were made to facilitate the change after the Government deemed that the payment of pensions was unaffordable and unsutainable from the Consolidated Fund, and that the new plan would contribute to sustainability and reducing budgetary stress. Since the implementation of the legislative changes, at least five per cent of he salaries of public sector workers are being deducted at source.

However, the monies collected are flowing into the Consolidated Fund instead of a separate fund and form part of total pensions paid out each month by the Government. It is not clear how much money is collected from public sector workers each year, but Government data show a total of $36 billion was paid out in pensions during the 2020/21 fiscal year to retired public sector workers.

BY AVIA USTANNY-COLLINDER Senior business reporter collindera@jamaicaobserver.com

 

Jan 06, 2023 12:12 am