The regulator of the non-banking financial services sector is reporting a sound pension industry in Barbados, which it says is playing a key role in the overall financial stability of the country’s economy.
Randy Graham, director of insurance and pensions at the Financial Services Commission (FSC), said pensions accounted for a significant portion of the financial system.
He said, however, one of the main challenges when it came to pensions remained the slow pace at which the registration process of the plans were completed.
Graham was making a presentation during the Royal Fidelity Pension Breakfast Seminar at the Barbados Hilton today. The theme was Challenges Facing the Pension Industry.
“It is evident that the pension sector is a material portion of the financial system in Barbados. Statistics provided thus far show that there are approximately 300 occupational pension plans which are active, and these plans cover about 28,000 employed persons in Barbados,” said Graham.
Of the 300 pension plans, said Graham, records showed that about 17 per cent of them were sponsored by companies in the financial industry, 22 per cent by companies in the service industry [and] 14 per cent by firms operating in the sales industry.
“Other industries that have material employer sponsored pension plans include the tourism sector, agriculture sector, the construction sector and telecommunications sector. These plans currently have an estimated $1.3 billion in assets under management and this amount continues to grow with continuous contributions and credit interests from investments,” reported Graham.
He said the size of the pensions industry was “therefore quite material to financial stability in Barbados, and it will play material part in the financial stability as our population ages”.
“This is why the FSC has been so meticulous in the application of the Occupational Pensions Benefit Act (OPBA) and particularly the registration process, because the registration process, as it is a new legislation, will provide the main follow up information for the review of the pension plans,” explained Graham.
Focusing his presentation on The Not-So-New Pension Act – Where Are You Falling Short?, Graham said while the process of registration was a cumbersome one it was progressing as the FSC continued to put pressure on companies.
He said a group of over 60 people was driving the regulatory process with a number of professionals in the pension department.
“The regulator received in excess of 300 applications for registration with registration packages that could be easily run a hundred pages each.”
The OPBA, which was enacted in 2011, is the piece of legislation which governs occupational pension plans. This Act, among other things, provides a registration framework to facilitate the submission of applications, the review and a registration of occupational pension plans.
In addition, the OPBA requires plan administrators to submit valuations, certified trustees, copies of service agreements as a part of the application package.
Graham said while the plan administrators have done well in submitting aspects of the application, he urged them to submit the service agreements and legal sign offs, which play a critical role in the registration process.
Graham also announced that of the 137 pension plans since the passing of the OPBA, 102 of them were defined contribution plans and the others were defined benefit pension plans.