by Linda Straker
- Established government workers get monthly government pension and NIS pension payment upon retirement
- Unestablished workers receive only NIS payment
- Government proposes for unestablished government workers to receive pensions
To ensure that unestablished government workers also receive a pension payment other than what is expected from the National Insurance Scheme (NIS), the Government of Grenada has proposed a pension plan that will mandate the payment of 3% to their monthly salaries.
This will be done by seeking approval of a pension reform bill by members of both the Upper and Lower Houses of Parliament.
In Grenada, established workers or those appointed by the Public Service Commission (PSC) are granted a monthly government pension and pension payment from the NIS upon retirement once they reach or surpass the number of qualifying contributions. However, unestablished workers are qualified to receive only the NIS payment.
An established worker is an employee appointed by the Public Service Commission to an established position within the public service, while an unestablished worker is an employee who has not received a letter of appointment to the post but instead is working on a contract for service or contract of service.
Prime Minister Dickon Mitchell believes that the NIS payment is insufficient for them to continue with their existing lifestyle before retirement, and thus many government workers retire into poverty.
Referring to the proposed pension reform plan as the solution that will maintain lifestyles after retirement, the Prime Minister said, “What the Government is seeking to do is to give them a pension plan. The Government is contributing 3%, and we are askng them to contribute 3%. So, that 3% is their money, and we are simply saying, instead of spending all of it now, we are incentivising you to save 3% of it, and we are matching an additional 3%.”
Speaking at a news conference on Wednesday, 16 October, the Prime Minister said that the reform pension plan will not apply to all public officers.
“This pension is going to be applicable to the 3,000+ persons who do not have a pension, so if they leave the service now, whether they reach retirement age or whether they worked for 10 or 15 years, they get nothing,” he explained, pointing out that it will not apply to the 4,000+ established workers.
Pension for established workers is mandated in the constitution, and the workers do not contribute to the pension plan. The People’s Revolutionary Government established the National Insurance Act and also approved the Pensions (Disqualification) Act in 1983. When that legislation came into effect in 1985, all workers — established and unestablished — who went into the public service after 1985, were disqualified from receiving Government pension. In March 2022, however, a judge ruled that the Pensions (Disqualification) Act violated the constitutional rights of established public officers.
Prime Minister Mitchell believes that in the future, that constitutional right may be one on paper if the necessary reform measures are not embraced by Government and the relevant trade unions. “The constitution guarantees public servants the right to a pension, but if the State does not have the money to pay the pension, then there is a constitutional right that exists on paper and not in reality,” he told the parliament in December 2022 during the 2023 budget debate.
He said then that his administration will adopt measures to ensure that pension payment is guaranteed in the future for all worker employees.
Lyndonna Hillaire-Marshall, Permanent Secretary, Department of Public Administration, said the key feature of the new pension is defined contribution. “By that, I mean that employees are required to contribute a percentage while the government is going to match the percentage.” She said, “The plan is a multi-employer plan. The plan is long-term and forward-thinking; it caters to employers outside of the government, while the government will be the main employer it can also support, for example, the statutory bodies who do not have a plan and are interested in securing pension benefits for its employees.”
Trade unions representing government employees are cautious about the plan because of the approach adopted during the consultation process. Brian Grimes, President of the Public Workers Union (PWU), is of the opinion that the plan was not discussed so that the union will in turn educate their members about the new system proposed. “Pension reform as proposed by this administration will not better the lives of our workers. We call on the NDC administration to review their approach,” Grimes said in a Facebook post.
Regulation and supervision of pension plans are covered under the Insurance Act, which commenced in Grenada in 2011. Under the Insurance Act, all pension plans must be registered with the Grenada Authority for the Regulation of Financial Institutions (GARFIN). As of 30 June 2024, the aggregate fund of benefits stood at $281.1 million for pension plans in Grenada. 50 plans are registered, of which 46 are active, and 4 plans are being wound up or are inactive.
Government is expected to seek Parliament approval for the proposed pension plan before it goes into effect. That legislation will instruct which entity will be tasked to supervise the new plan.
