Breaking the cycle of old-age poverty
Minimum-wage earners urged to save for retirement
Jamaican minimum wage earners are especially being encouraged to save for retirement so as not to fall into old-age poverty.
Financial advisor Oran Hall asserts that people who earn a minimum wage are more prone to be living in deprivation when they retire.
But with the current minimum wage of $9,000 per 40-hour workweek, and industrial security guards earning $10,500, Hall acknowledges that saving might be difficult.
“The reality is that when you are earning so low, it is going to be an absolute challenge,” he said, while lauding the “amazing capacity” of Jamaicans to save.
Effective June 1, the minimum wage will be increased by 44 per cent to $13,000 per 40-hour workweek, with security guards getting $14,000.
Still, he believes that this is for mere subsistence, and suggests that minimum-wage earners supplement this income with other jobs or by upskilling themselves to get out of this bracket altogether.
And in the event that the contractual arrangement with an employer does not include National Insurance Scheme (NIS) payments, or where there is no contractual agreement, then the financial advisor is urging minimum-wage earners to make arrangement to pay NIS contributions themselves.
The NIS is a compulsory contributory-funded social-security measure that covers employed people in Jamaica. It offers some financial protection to the worker during retirement or a period of income loss, arising from injury on the job, sickness, or death of a breadwinner.
According to Hall, children are not a viable pension plan. And he cautions parents with that mindset that there is no guarantee that their adult children will be in a position to help them significantly financially. Additionally, he said that these children will now have responsibilities of their own, and might even die before the parent.
With just four more years before reaching the official retirement age of 65, Kenneth Marriott, a horse groomer at Caymanas Park in St Catherine, is banking on younger relatives whom he took care of to pitch in financially when he needs assistance.
“Mi send my own dem to school ... Right now, they say mi need fi stop work, they will financial me, but I not gonna sit down and I can move,” he said.
Marriott, who told The Gleaner that he has been grooming horses since he was a child, said he is paid a weekly wage of $4,200 per horse. This money, he disclosed, is given to him cash in hand, but he is uncertain if pension contributions are made on his behalf.
Marriott said he has seen how the lack of preparation for retirement has affected some of his former colleagues.
“From mi a bwoy, a inside here mi deh, and whole heap a big man who I come inside here come see, if dem come inside here [dem] seh, ‘Beg yuh a $500, beg yuh a $1,000 mek mi go cook food’ and so. I don’t know how dem make it out,” he said.
His 78-year-old former colleague, Winston Lloyd Thompson, had no retirement plans and is not currently benefiting from a pension.
He told The Gleaner that life has been hard.
“I pray to God every night and every day, just asking Him to just open a way fi mi, ‘cause mi can’t find mi way out. Mi can’t find mi way out … Without money, you is nothing,” he said.
The St Thomas resident said he had four children and would have spent the minimum wage he earned over the years taking care of them. Eleven years ago, two of his children died – one in an arson attack – and the burden of funeral arrangements fell on him, too.
Professor Denise Eldemire-Shearer said it will take a mindset change to break the cycle of old-age poverty.
“I do not believe as a country that we are taking pension seriously enough – how many young people are contributing to pension – because this issue is not going to go away until we as a country get serious about pension,” the ageing expert said.
Eldemire-Shearer told The Gleaner that the opportune time to start saving for retirement is now. She believes a public education campaign is needed to educate people in the formal and informal economy about retirement.
But she also disclosed that oftentimes, retirees are not aware of the help available to them.
Two weeks ago, Labour Minister Karl Samuda announced a $200-million welfare programme to assist the poor and elderly, through the 63 members of parliament.
He disclosed that at least 12,000 people age 75 years and over have benefited from the government’s social pension programme since its introduction in July 2021. To benefit under the new programme, elderly people must not be receiving pension support.
The 2019 Jamaica Survey of Living Conditions revealed that 11.0 per cent of the population was living below the poverty line. Although statistically similar to the previous year’s estimate of 12.6 per cent, there was an 8.3 percentage point decline when compared with 2017, the first year of the current revised poverty series. Rural areas recorded the highest regional poverty prevalence figures, at 14.2 per cent. Other urban centres recorded a poverty rate of 13.4 per cent.