|
|
Green Paper on Pension Reform
EXECUTIVE SUMMARY |
The reform of the Pensions System is aimed at ensuring
that proper arrangements are made by and for Jamaicans during their working lives, so as
to enable them to receive an adequate pension at retirement. It has been designed to
improve the current system without defaulting on existing rights, to encourage the
extension of adequate pension facilities to self-employed persons, as well as to introduce
arrangements to facilitate the provision of pensions by children for their aged parents.
Two basic principles have been used to guide the planned
reforms. The National Insurance Scheme is to be enhanced so as to provide basic pension
benefits to a wide cross-section of Jamaicans and their dependents; and effectively
regulated Occupational Pension Schemes and Approved Retirement Schemes will be encouraged
as favorable means through which private and public sector workers and their employers can
save so as to supplement the basic NIS benefits.
The major goals of the reforms are expected to be achieved
through the enactment of comprehensive legislation governing the pension system in
Jamaica. However, a number of changes will also have to be made to certain sections of the
National Insurance and Income Tax Acts, so as to ensure that a consistent legal framework
will be maintained. As such, the reform of the Pensions System will to some extent, be a
collaborative effort between the Ministry of Finance and Planning and the Ministry of
Labor, Social Security and Sport.
The key features of the Reform of the Pension System are:
1. The Enhancement of the Basic Social Security System
(NIS)
The National Insurance Scheme will be enhanced. This will
involve developing improved funding arrangements and more efficient administrative
procedures so as to facilitate the provision of more meaningful basic benefits on a
national scale, with timely delivery of benefits to eligible contributors and their
beneficiaries.
2. Regulation of Occupational Pension Schemes and Approved
Retirement Schemes
This will be done so as to ensure that all pension and
superannuation schemes established in Jamaica will operate within an effective legal
framework. The reform will involve both the regulation of pension and superannuation
schemes and the creation of funded schemes for Public Servants, as is outlined below:
(a) Regulating Pension and Superannuation Schemes
Comprehensive legislation is to be enacted to provide for
the strict regulation of all Pension and Superannuation Schemes, Trustees, Administrators
and Investment Managers. This will include the enactment of:
- Licensing and Registration requirements;
- and Proper Person' requirements;
- Disclosure requirements; and
- Investment Criteria.
Other key issues such as the Indexation of Pensions and
the mandatory Preservation and Portability of Pension Rights are to be provided for in a
systematic manner.
An independent regulatory body, directed by a board known
as the Pensions Commission, will also be created to undertake the administration of the
pensions regulations, and to supervise the operation of the pension funds.
The Income Tax Department will therefore be relieved of
most of the regulatory tasks in respect of the pension funds, with the exception of
thetax-exemption role, which will continue in the new regime. After a suitable
transitional period has elapsed, all pension funds will be required to be registered with
the Pensions Commission, before they can get tax exemption.
(b) Creation of Funded Schemes for Public Servants
The implementation of this reform will involve improved
implicit and explicit benefits for public servants (inclusive of public officers - nurses
and civil servants, parochial officers, teachers, soldiers, police, special constables,
legislators and widows/widowers), expanded funding arrangements in which pension
contributions are made by both the Government and the public servants, and the creation of
funds dedicated solely to the provision of pensions for retired public servants.
In all the reforms to be implemented, an adequate
transitional period is to be allowed. During this period all the participants will be
expected to make the necessary adjustments. The reforms are not intended to create
widespread dislocation, and as such, will be implemented gradually, and with due concern
for the existing arrangements.
The reform of the pensions system is being developed in
consultation with the Pensions Reform Committee, which has representatives from a wide
cross-section of interest groups. The Ministry of Finance and Planning will continue
consulting with professional associations, other Ministries and the community, as it seeks
to design a dynamic Pensions System, which effectively meets the needs of our society.
|| Table of Contents | Next ||
|
