The nation’s main advocate for pensioners has begun lobbying Government for an exemption from key terms of the debt restructuring, Barbados Assocation of Retired Persons (BARP) president Ed Bushell has told Barbados TODAY.
Among provisions of the Government’s offer to domestic creditors are protracted debt repayments and a haircut on interest payments to bondholders, many of whom were relying on bonds for retirement income.
BARP has written the Minister of Finance – Prime Minister Mia Mottley – to begin discussing a financial ease for pensioners, following the announcement that the interest rate of Government debt securities and instruments will plummet from seven per cent to one per cent.
And the pensioners’ advocate has called for the 15-year maturity time span to be shorted for the island’s retirees, BARP’s president, Ed Bushell, has told Barbados TODAY.
Pensioners holding Government securities are anticipating a blow to their standard of living following the revelation that the island was virtually bankrupt.
As of September 11, approximately 1,725 pensioners in Barbados held government paper totalling $373,473,000. Some 73 pensioners held bonds each with a value of over one million each while the majority of pensioners – 1,120 – each held bonds of less than $100 000. The value of the government paper for the rest is between $101,000 and one million dollars, according to BARP figures.
Some of the 22-year-old organization’s members were “deeply concerned” their incomes would be severely reduced over the next 15 years under the debt restructuring programme which begins next month, Bushell said.
Central Bank Governor Cleviston Haynes announced Thursday that Barbadian citizens, including pensioners, and institutions holding Barbados dollar-denominated debt securities or instruments used by Government, or loans and bonds contracted by state-owned enterprises that received transfers from Government will be affected by the island’s debt restructuring programme.
Treasury Bills, treasury notes, debentures, loans and bonds owned by state entities will be exchanged for new debt instruments under the programme which seeks to tackle the island’s $6 billion debt.
Bushell predicted that pensions will be affected as well, as a number of pension schemes provided by commercial banks, credit unions or insurance corporations will be struck by this “impending storm”.
“I believe a lot of pension schemes are invested as government paper and if they are going to be impacted in a similar fashion or harsher fashion than pensioners then their ability to pay pensions at the same rate they were paying I believe would come into question,” the BARP president explained.
A number of pensioners who thought their investments would be safe were concerned about what the future held and how their livelihood would change in the upcoming years, Bushell told Barbados TODAY.
“The concern is that some of these people will have difficulty maintaining their lifestyle,” he said.
“A lot of these people depended on the income that they were getting from the treasury notes to pay their big ticket items like land tax and . . . now they are not going to be able to do that with [as] much ease so it is going to be a major problem.”
He disclosed that the pensioners’ advocate was itself caught in the debt crossfire as BARP had invested in Government paper as well.
“We recognize that the government is in a very difficult place and we have to make some very difficult decisions, we just feel that the impositions on the pensions could be adjusted somewhat because we think they are really difficult for pensions who have no other recourse; there is no coming back from this,” Bushell stressed.