Longer living retired Barbadians are threatening the survival of country’s pension fund and there are fewer workers to replenish it, warned retired permanent secretary in the Ministry of Finance Erskine Griffith.
He told an Opposition-sponsored panel discussion last night that Government currently has a $226 million pensions bill, but the figure is rising every year.
“Those pensions are paid out of Government’s revenue. [They are] not paid out of any pension fund, so the sustainability of the pensions depends on the sustainability of the fiscal position in the country,” he said at the Barbados Labour Party-organized People’s Assembly.
He also warned that any further deterioration in the Government’s fiscal position could affect its payment of pensions and “we are likely to find ourselves in the situation which we now have with health care and education at the tertiary level”.
Griffith, who is also a former director of finance, further cautioned that the state’s pension bill was getting bigger every year.
“In 2012, it was $226 million, it’s now $266 million. And it came from much lower than $226 million,” he said.
“If per chance the fiscal situation deteriorates at some point in time and Government is not able to meet those expenditures, you could imagine what will happen to those people who are dependent on those pensions.”
While pointing out that fewer young people were entering the job market, President of the Barbados Association of Retired Persons Ed Bushell noted that decades ago the Barbadian family comprised “one grandparent, two parents and about ten children”.
“Think of it now. We got four grandparents, sometimes one parent and one child,” he said.
The situation raises concern over whether there is adequate labour supply to contribute to pension funds and to keep Government viable.
William Layne, another retired permanent secretary in the Ministry of Finance, suggested there was a need to bring workers into the island, while chairman of Goddard’s Enterprises Charles Herbert argued for an extension of the current age of retirement of 65 to keep more Barbadians on the job.
“We cannot expect that people are living healthier and longer lives but are not working. The truth [is] the world has a new paradigm; people are not stopping work when they retire. People are finding alternative work. People need to find alternative work; people need to work longer,” Herbert said.
“We cannot afford to continue a situation where people have both pensions and earnings for a significant portion of their lives after retirement. It’s the age that needs to move. We don’t need more workers. The last thing we need is more workers in an overcrowded island,” he stressed.
The Goddards top official specifically called for “policies that are automatically self-correcting that keep the ratio between pensioners and workers at a sensible level, that is sustainable and affordable”.
However, describing Herbert’s view as a “simplistic response to a complex economic phenomenon”, Layne said: “All dynamic societies require immigrant labour because the immigrants will do jobs that the locals will not do, and will produce them at a lower cost. That’s an economic fact.”
He further countered Herbert’s contention that imported labour would compete with unemployed Barbadians, saying “there is unemployment in Barbados about 20 per cent, but you also have a lot of vacancies in other areas”.
“We need a larger society because we need a larger economy. Two hundred and fifty thousand people will not drive this economy, cannot and will never,” Layne stressed.