Slow motion pensions sector
VM says reform key to growth of pensions industry
AT least one local pension fund manager states that the accelerated growth of the sector and the deepening of interest among Jamaicans in retirement savings could increase if promised reforms are enacted.
Conroy Rose, CEO VM Pensions Management, noting that the sector has grown less than three per cent annually in recent times, while less than 12 per cent of the labour force have a pension plan in place, told the Jamaica
Observer that reform was critical.
Rose told the Business
Observer, “Based on the Financial Services
Commission’s private pension industry statistics, there has not been any significant growth in pension plans in
Jamaica.
“As at June 2021, only
11.56 per cent of the
Jamaican labour force are enrolled in a pension plan. The industry experienced an average growth of 2.77 per cent per quarter over the past five years.”
The pensions professional is proposing that more people might be attracted if there are some reforms to the pension industry, such as special draw down allowances for major life events such as home purchases and medical expenses related to critical illnesses.
This is one of the proposals documented by the Pension Funds Association of Jamaica to make retirement savings more appealing to workers.
Other reforms suggested include mandatory pension arrangements in the informal labour market which would automatically widen the numbers of those covered.
Also suggested are more flexible investment options for pension funds and an increase in contribution limits.
Rose, commenting on the phenomenon of the ‘The Great Resignation’, a trend in which more individuals are leaving the employ of others, noted that it has not been accompanied by a concurrent increase in retirement planning, from his perspective.
He pointed out, however, “As more persons become self-employed, there is an opportunity for engagement to ensure that they receive the right financial education and are empowered to achieve financial wellbeing.”
Education, he says, is VM’S 2022 strategy for portfolio growth. He told the Business Observer, “There needs to be a shift in perception and mindset about retirement solutions. Debunking myths surrounding pensions is critical. This is why the VM Group invests so heavily in providing financial education. We use every avenue available via digital and traditional media to help demystify pensions and explain the importance of retirement planning.”
He explained, “We understand that as the cost of living increases, day-to-day survival may relegate thoughts of retirement and pensions to the back burner of many people’s minds. Providing them with proper guidance and education is therefore more important than ever.”
The aim, he said, is to empower individuals to make “the right financial decisions for themselves and their families.”