Barbadians can no longer depend solely on National Insurance Scheme (NIS) pensions to meet their living expenses after retiring, the head of the General Insurance Association of Barbados (GIAB) has declared.
“The fact that people are living longer obviously is also a plus, but that lifespan extension means that we have to prepare for living longer after retirement. You will need income to live, pay your bills, and pay for upcoming medical conditions. It is not possible to live solely on a NIS pension post-retirement. You have to supplement your income,” Randy Graham told Barbados TODAY.
He said the government had little choice but to make its recently announced decision of increasing the pension age and the number of contributions for pension eligibility due to the format of the fund. He called it “a plus” that Barbados continues to offer the government-issued pension.
Graham highlighted that this pension should be the foundation of the income of retirees, but not their only source, and stressed that persons must now manage their funds in planning for life after leaving the workspace.
“Individuals have to take the responsibility to supplement their post-retirement income. The NIS will give a good base to many persons, and we have to be thankful that the government still offers this type of (pension) program as there are many places in the world where there is no option to get a government-issued NIS pension on retirement,” he said.
He advised people to look at the products offered by insurance companies and financial institutions for proper retirement planning.
“The options are there, but people in Barbados have to take it upon themselves to start early and do proper retirement planning so they have proper income to supplement their NIS pension because I do not think anyone can live and depend solely on the NIS pensions anymore going forward,” he said.
The insurance expert also sought to allay the fears of those reluctant to invest in such plans in light of the collapse of the regional insurance giant, CLICO, and other international financial agencies.
“Over the years, the regulator and regulations have made the financial services sector much better protected, and I actually think that persons no longer need to worry about things like CLICO repeating itself in a major way because agencies like the FSC (Financial Services Commission) and other regulatory bodies have improved the state of play for how financial institutions operate,” he said.
Graham said that to create an additional layer of comfort, insurance companies must embrace mechanisms to keep clients fully informed as to what was happening with their funds.
“We need to do better at telling the public where their funds are invested and what types of investments they are. We have to do better at giving the public periodic statements in a way that persons reading it can understand, including how much interest they are getting and what their payout would be,” he said.
(JB)
