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TIME TO ADJUST PENSION SCHEMES

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TIME TO ADJUST PENSION SCHEMES

Search form Search Main menu Home News Business Sports Columns Contact Us E-Paper Moises Schwartz, Manager, Institutions for Development Sector, Inter-American Development Bank.

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TIME TO ADJUST PENSION SCHEMES Mon, 04/05/2021 – 5:39am By:  Cara L. Jean-Baptiste Because of the ageing population, pension schemes will come under increased pressure in the coming years.

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Speaking during the Central Bank of Barbados’ webinar series “Resilient Institutions and What They Mean to Me”, Moises Schwartz, Manager, Institutions for Development Sector, Inter- American Development Bank, outlined that in the Caribbean there are “pay as you go” pension systems, where pensions are paid out of the current contributions of active employees. However, he noted that these systems are financially stable in countries that have a high proportion of working people in the total population.

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“Countries all over the world have adjusted their pension schemes in order to anticipate these demographic changes, and be prepared for the future, and offer adequate pension to their citizens,” he said.

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“These difficult issues are not resolved by themselves and those issues are difficult and might not be of immediate urgency, but in the coming years Government will need to address this problem and prepare themselves.

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“We have already seen some countries all over the world anticipate these events by increasing workers’ and employers’ contributions. Some have increased the age of retirement; others have adjusted pension benefits for civil servants; and others have complemented their pension schemes with additional modalities to cover a larger share of the population.”

Schwartz stated that reforms need to be implemented in basically every single Caribbean country in order for the Governments to face these pension problems down the road.

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He believes that in the medium-term – 10 to 15 years from now – there is going to be a lot of pressure on the fiscal accounts in order to face these pension payments. Therefore, he is advising that policymakers start making some provisions and start anticipating these political events

Additionally, Brian Wynter, former Governor of the Bank of Jamaica, believes that there needs to be a big push towards persuading people from lower incomes that saving for a pension makes sense

“This would require micro pensions and other forms of saving,” he said

“I think this is an area where technology can play a part as we go forward, but I think it requires more than technology to engage people in the importance of long-term savings.”