Pensions continue to be major challenge for government
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November 23, 2012

Pensions continue to be major challenge for government

Pensions have been identified as “the major challenge” for the Dr Ralph Gonsalves administration, as it prepares the estimates of income and expenditure for next year.{{more}}

“The major challenge always is pensions. Now the pensions are growing at about five per cent annual. It is the fastest single growing item: retiring benefits, pensions and NIS contributions,” Gonsalves said Monday night during a radio consultation ahead of the Budget next month.

The government has been considering, since last year, its option for reforming a system that qualifies public servants to receive separate pensions from both the National Insurance Services and the central government.

Gonsalves, who is also Minister of Finance, said in his Budget Address last year that pension reform would be discussed during this year’s budget debate, since the Government was awaiting an actuarial report on the NIS.

That review has been completed and the proposals for pension reform are expected to be announced when Gonsalves delivers the Budget Address next month.

And during the interactive programme Monday night, a pensioner asked if the Government was considering increasing pensions to compensate for inflation.

Gonsalves suggested that this would not be done, but, noting that the actuarial review was recently completed, said he would make announcements during the Budget.

He said the Government might have to consider “gradually extending the period of retirement”, a suggestion to which the male caller responded favourably.

The caller said that he was still strong and could work, but had to retire.

During the budget debate last year, it was suggested that the government might have to increase the rate of NIS contribution and/or extend retirement age to ensure the future viability of the NIS.

Gonsalves told the caller that while persons at retirement age might still be strong enough to work, the economy must be structured so that young people can also get jobs.

He said that France, the United Kingdom, and the United States were dealing with a similar issue.

He called for open and honest discussion of the issue in St Vincent and the Grenadines.

In his introductory comments, Gonsalves said the Estimates would deal with “housekeeping matters” — recurrent expenses needed to run the country — and developmental issues.

He listed the $652 million airport at Argyle — scheduled to be completed next year — among the strategic issues his government is considering while designing the budget.

The Government must find resources for the project inside and outside the budget, the prime minister said.

He spoke of the “coalition of the willing” nations that are contributing to the project.

He, however, noted that land sales, the major source of SVG’s contribution, have slowed with the global financial crisis.

With the slowing of land sales, Gonsalves said, the central government has had to seek other resources, for instance more money from PetroCaribe.

The budget, he also said, will have to address the nation’s energy needs, including exploration for geothermal energy.

It will also speak to the proposed new city at Arnos Vale, and the relocation of Port Kingstown to the western end of the capital.

There is no money in the budget for the port, but he will present the framework, the prime minister said.

He further said that health and the environment are focal sectors in this year’s budget address.

“Climate change, global warming, they affect us intimately and touch and concern our very existence as a country,” he further said, adding that natural disasters, are a permanent feature of the nation’s make-up.

Parliament was prorogued Tuesday and the Appropriation Bill is scheduled to be debated in the House of Assembly next Wednesday.

The Standing Committee on Finance is expected to meet to consider the 2013 Estimates and the Appropriation Bill on Tuesday and on Wednesday, the Third Session of the Ninth Parliament will be convened, when the 2013 Estimates will be presented.

Gonsalves will deliver the 2013 Budget Address on December 3. (