by Linda Straker
- Over 2,500 retired public officers receive non-contributory Government pensions
- Government claims over 4,500 current public service workers not eligible to receive pensions under existing 1958 legislation
- Government aims to implement Public Sector Employees (Pension Fund) Act in January 2025
Legal Affairs Minister Claudette Joseph has expressed the view that the Public Sector Employees (Pension Fund) Bill 2024, which will establish a new pension system for government employees and public officers, is an improvement over the existing system because it will allow workers to have access to their funds before retirement age.
Currently, over 2,500 retired public officers receive a non-contributory pension from the Government, funded annually through the national budget. In 2024, the allocated amount for Pensions and Gratuities was EC$109,469,289.
The new bill mandates that employees or public officers who meet the criteria for the scheme will contribute 3% of their salaries or wages to the fund, with Government matching that contribution. An actuary review will take place every 2 years to assess whether the contribution rate needs to be adjusted.
Government claims that over 4,500 current public service workers are not eligible to receive pensions under the existing 1958 legislation recognised by the Constitution.
During the 27 December sitting of the Upper House of the Senate, Joseph acknowledged that some people believe the new scheme is less favourable, but she firmly disagreed.
“Workers are now required to contribute to this fund. Some believe that it is automatically less favourable, that is not correct Madam President. First of all, you have the voluntary contribution which you can take advantage of and save more, you have your fund vested so you have a return on your investment,” she said.
“The other thing is that against your contribution you can withdraw up to EC$2,000 twice per year…it is a savings. It’s going up as the 401K in the USA, you can actually withdraw, so instead of going by Fast Cash and paying 15% interest or wherever else you are paying [in] interest, you can a withdraw twice yearly,” she added.
Another benefit of the proposed system, Joseph pointed out, is that once the funds are vested, employees can access their pension benefits under more flexible conditions. Joseph, who is also the Attorney General, said that under this proposed scheme the funds become vested after 5 years and even before the funds become fully vested, an employee will be entitled to receive 100% of the contribution made to the fund.
She clarified, that after 5 years, if an individual exits the service, he/she is entitled to 100% of their contributions and Government contributions, meaning that an individual who leaves after 15 or 18 years of service, will still receive their pension contributions — a significant improvement over the existing system, where an individual must wait 26 and two-thirds years to receive any benefits. “Currently you either have to work until you [are] 60 or until you have done 26 and two-thirds years’ in the service or if you take early retirement, you have to have worked for 20 years and have attained the age of 50, that is the only how you can get your pension now,” said Joseph.
However, some lawyers from law firms involved in the legal argument against the Pension Disqualification Act believe that the new scheme is also unconstitutional, claiming it violates Section 92 of the Constitution.
The Public Sector Employees (Pension Fund) Bill 2024 was approved in both the Lower and Upper Houses of Parliament on 27 December, and Government aims to implement the act in January 2025.
