Pension reform critical to National Insurance Services survival – PM
PRIME MINISTER Dr Ralph Gonsalves
October 7, 2022
Pension reform critical to National Insurance Services survival – PM

PENSION REFORM is on the list of critical issues to be addressed by the Ralph Gonsalves administration if the National Insurance Services (NIS) is to be sustainable over the long-term.

These comments were expressed by the Prime Minister during an interview with SEARCHLIGHT yesterday, Thursday October 6 on the Parametric Reform which he admits presents challenges for some Vincentians heading into retirement.

He said it is unfortunate that some of the pension benefits of Winston Boyea, a former employee of the St Vincent Electricity Services Limited (VINLEC), would be lost as a result of the 2014 reform; however he noted that Boyea’s situation is not unique as employees in the private sector, central government and those under stateowned and statutory enterprises have been similarly affected.

Boyea told SEARCHLIGHT that he was “forced to retire” when he reached his 60th birthday in May last year which resulted in him losing a cumulative total of 18 per cent on his pension entitlement from the National Insurance Services.

Under the Parametric Reform the pensionable age was set to gradually increase based on the year of birth and Boyea is therefore getting a lesser pension than he would have had he retired at age 63.

Gonsalves however said that VINLEC, as a stateowned enterprise, has the authority to set policy with regard to the retirement age with no interference or objection from the government.

He noted that in cases like Boyea’s, where employees’ job responsibilities are high-risk, working past the age of 60 is not always feasible.

“We don’t have a law nationally to say that the private sector or any state enterprise must be retired at 60. Each enterprise determines that.”

He said for civil servants, when the retirement age is not in line with the pensionable age, extensions are sometimes given so employees can continue

to work and so avoid the six per cent per annum penalty. “Persons who are not on the central government pension, we currently on a case-by-case basis give them the extensions. In fact it would be very rare if somebody does not get the extension. Maybe if they are not well, or if they have a particularly bad record.”

He said the work being done on pension reform needs urgent attention if the NIS is to remain beneficial for future generations.

Highlighting the structure of the current pension benefits model for civil servants, Gonsalves said it is unsustainable as public sector employees get both a contributory and non-contributory pension.

“… So you have a situation where, by 2030, workers who retire who have all their full years would, for NIS and the state pension, end up with up to 127 per cent of their salary. Which means 27 percent more than when they left, they would be getting more money in retirement than what they get now.”

The Prime Minister said the government is considering different options to bolster the fund, some of which were tabled to the trade unions.