By Victor Poyotte
In Part 2, I examine concerns that the current government should have addressed in the proposed amendments of Section 6, Sub-section 6.2 (7), (8) and (9) of the Pensions Act of 1967, Cap. 15.26 of the revised laws of Saint Lucia; and amendments that must be addressed.
The pension rights of public officers
As an employer, the government of Saint Lucia employs one category of public officers in the Saint Lucia public service who are covered by the Pensions Act. Government maintains a pension fund on behalf of each public officer holding a pensionable position. On retirement, government makes a direct lump-sum payment as a gratuity and regular monthly payments as pension to the public officer from the amount accumulated by the officer during the period of his/her pensionable service.
The government also employs a second category of public officers who hold non-pensionable positions and are covered by the National Insurance Corporation (NIC) Act. Government makes the five percent employer’s contribution to the NIC on behalf of each public officer and on reaching the age of retirement, the NIC makes the pension payment to each qualifying public officer in accordance with the provisions of the NIC Act.
If the government is serious about addressing the real concerns of public officers, then the administration must be comprehensive in its focus to ensure that the rights of all eligible public officers are protected throughout their working life and that they qualify to receive some form of pension payment on retirement. At the end of the day, whether the pensions payment is made by either the government or the NIC, it is the best interest of the public officer that must be of paramount concern to the policymaker.
In the sections that follow, I will examine some of the concerns that the current government should have addressed in the proposed amendments.
Concerns that the amendments must address
It must be remembered that pension represents a deferred payment to the public officer and as such any decision to pay the money directly to the public officer must take several issues into account. Therefore, the amendments need to address other concerns that a public officer would face during retirement.
A common concern is that a public officer who receives the accumulated amount due to him/her from the government at the time of resignation may squander the money or otherwise manage the funds badly thus leaving very little resources to sustain himself/herself during retirement. In such a situation, the state is still left with responsibility for taking care of the individual in his/her twilight years and will have to increase the annual allocation for welfare payments.
A second concern is that it is also in the best interest of the public officer for the government to ensure that the amount due each year is transferred to the NIC for payment when the officer retires. Therefore, to address this concern, a new Saint Lucia Labour Party (SLP) government should, in keeping with the provisions of the Act, ensure that the minister of finance make the necessary annual budgetary allocation to facilitate the transfer of the amounts due to NIC to cover pension payments.
A third and related issue is that the operating rules of the NIC does not make provision for the corporation to receive funds from government for the purpose of making pension payments to public officers. The prudent move for the government at this time is to remove the current legislative impediment to enable NIC to accept the pensions funds from the treasury and then make the pensions payments to public officers as required.
A fourth issue of concern is helping some our outgoing public officers to satisfy their entrepreneurial drive and at the same time mitigate against the squandering of pension funds. One option is to consider the establishment of a retirement business incubation option which will allow for the funds or a percentage therefrom, to be invested in a sustainable business venture that the individual would decide upon, guided by incubator professionals. The key advantage of this option is the application of capacity (skills and experiences) developed over many years in the public service, towards greater contribution to socio-economic development of our country and better standard of leaving of retirees.
A fifth issue of concern has to do with a much broader initiative whereby government facilitates public officers who are desirous of investing in securities and other interest-bearing programs by depositing the pension funds due as an investment of the public officer with approved financial establishments (banking and financial intermediaries) in the country. The public officer would receive a “Certificate of Deposit” for the lump sum deposited on his behalf, he/she would earn interest at an agreed rate on the deposited amount and would receive payment either as a lump sum or agreed monthly amounts at the appropriate time.
A sixth issue of concern is the rationale for the payment of a pension which has to do with the availability of funds for the retired public officer to meet monthly recurrent expenses. More importantly, it is well-known that the average retiree will most likely face some form of medical complications as he/she grows older and consequently, receiving a monthly pension payment also serves as a lifeline to help him/her meet the high cost of health care.
Without that much needed financial support to access quality health care, the public officer will experience serious psychological and mental stress. It might also be worthwhile to encourage the public officers affected to take some form of health insurance to cover their needs.
Related: Part 1
