Double tax blow hurting pension savings

Barbadians who are paying taxes on their income and are then required to pay taxes again on the money they have put aside to support them during retirement should be entitled to some relief from the double burden.

The case has been made by Roger Cave, Investment Director of Fortress Fund Manager as he addressed members of the media Tuesday at the company’s virtual media briefing. Asked what Government could do to make the investing environment more appealing, he said the matter of taxation on pensions was a longstanding sore point.

Noting that since Government removed registered retirement savings plans from the list of investments Barbadian could claim against the tax liabilities, they are now facing two tax hits; one at the source in the form of PAYE and another at the pension payment stage for sums over a minimum amount.

“The one area from a policy point of view that we do need to relook is the taxation on pensions and it is a point that we raise repeatedly. We have a situation where contributions to pension schemes are no longer deductible but they are still taxed on retirement.

“This COVID-19 situation has demonstrated even more so the importance of saving for long-term needs and that has increased rather than decreased. And further, to have a situation where there is a tax penalty, we need to reverse this where there is an incentive to put away those savings,” Cave urged.

“We have a strong regulatory scheme with pensions with a number of local providers, so the environment is there but the policy needs to be revisited.”

On the matter of Barbados’ blacklisting by the European Union over claims the country was not been meeting the standard for Anti-money Laundering and the Countering Financing of Terrorism, Cave said the development was “most unfortunate”.

The Fortress top executive added: “We think there has been a number of initiatives and ongoing things to strengthen our AML processes and procedures. As a player in the financial system, we are very aware of them and think that that was a very unfortunate case. I know that representation has been made to have [blacklisting] revisited and we hope that we will be off that list sooner rather than later.

“It is never helpful, especially in the environment that we are in,” Cave added.