Editorial | Why pension hiccups?

This week’s report by The Gleaner on two former district constables who are yet to be fully on the pension roll several years after retirement highlights an old problem that successive governments have pledged to fix, but with seemingly limited success.

While the immediate focus is on two district constables, the issue is not solely with that institution. It is across the public sector, affecting, based on anecdotal evidence, significant numbers of retirees.

The failure of timely payments, therefore, demands a comprehensive explanation from Finance and the Public Service Minister, Fayval Williams, of why the problem is so intractable, nearly a decade after the government bragged that a new public-sector employee management system would cure the weaknesses in record-keeping and data tracking that were the main reasons for the delays.

At the same time, given the island’s demographic dynamics, with an increasingly greying population, Minister Williams should engage Jamaicans in a serious, ongoing conversation about pensions, so as to help citizens plan for their future.

The finer details of 74-year-old Derrick Foster’s case are not known, except that he served for 36 years as a district constable (DC) and that, two years after retiring, he received an interim lump-sum payment of J$800,000.

Several years later, according to Mr Foster, he still doesn’t receive his expected monthly pension from his former job. So, he and his wife survive off the J$17,000 monthly state pension he receives from the National Insurance Scheme.

‘RUNAROUND’

Mr Foster said he submitted all required documentation to the Jamaica Constabulary Force a decade ago, and has been following up ever since. He believes he is getting “a runaround”.

In the same report, The Gleaner also highlighted another former DC, 72, who, six years into his retirement, complained of not receiving his monthly entitlements. Fortunately, his personal financial circumstances are better than Mr Foster’s.

There may be several factors accounting for these delays, including incomplete records and contestation of a retiree’s entitlements. But six years is an extremely long time to resolve any such issue and to bring clarity to a former employee’s situation. Ten years is worse.

These delays have greater significance in the context of pensions. It happens at a time when people are older, less likely to move to new employment, and therefore more vulnerable. Moreover, there is the opportunity cost to the delayed payments. An outstanding payment, if made a decade later without interest, doesn’t have the same value as if the pensioner were receiving the money when due.

These are old complaints in the public sector, with its estimated 40,000 active pensioners which, in 2018, the former Finance Minister, Dr Nigel Clarke pledged, in short order, would be a thing of the past.

Dr Clarke said, with new human resources and pension payment software being installed across government ministries, departments and agencies, the system would become fully automated and pension disbursements timely.

“We are changing the processes and, as far as the technology is concerned, the Government is implementing software packages MyHR+ and the Public Employees Pension Administration System (PEPAS),” he said.

ENHANCE ABILITY

PEPAS, Dr Clarke said, would, apart from reducing manual operations, enhance the government’s ability to more accurately do pension budget forecasting and controls, while allowing public servants to view their records.

“The idea behind this is to allow for seamless transition from being employed in the public service and into retirement,” he said. “All that is going to be required in the near future is that the information that is pulled down from the software system is verified, and your pension payment begins the very next month.”

He added: “What we are seeking to establish for those who work in the public service and are moving towards retirement is that your pension cheque becomes your next cheque after your (final) salary cheque; that is the goal and that is the commitment of the Government of Jamaica to those who work in the public service.

“The implementation is going to start in the next financial year and this reality of which I speak will happen thereafter.”

This is eight years later and many of the problems of decades ago persist. The seamless transition from employee to public sector pensioner, with a pension cheque assured the month after retirement, hasn’t been accomplished.

This is not the only pension matter to be tackled in Jamaica, where people over 65 represent the island’s fastest-growing demographic group, which is expected to double to over 20 per cent of the population by 2050.

However, only about 12 per cent of the workforce is covered by private pensions. The number is still less than a quarter when contributors to the State’s National Insurance Fund (NIS) are added. That is a conversation to be had.