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Letter of the Day | More needs to be done for pensioners

Published:Wednesday | June 19, 2024 | 12:08 AM


Jamaica is facing a demographic shift characterised by an ageing population and declining birth rates. This poses significant economic and social challenges, particularly for pensioners who have not seen a real increase in their pensions for years. It is imperative that the Government of Jamaica rethinks the way it treats pensioners, to ensure they can afford a basic standard of living.

According to the World Bank, Jamaica’s fertility rate has been steadily declining, from 4.2 births per woman in the 1960s to 2.0 births per woman in 2021. This decline, coupled with increased life expectancy, means that a larger proportion of our population is moving into the retirement-age bracket. The Planning Institute of Jamaica projects that by 2030, approximately 16 per cent of the population will be age 60 and over, up from 11.1 per cent in 2011. This demographic shift underscores the urgent need to address the economic vulnerabilities of our ageing population.

The current pension system in Jamaica does not adequately meet the needs of our retirees. Many pensioners struggle to afford basic necessities such as food, healthcare, and housing. The inadequacy of pension benefits has been exacerbated by inflation and the rising cost of living. According to a 2019 report by the Inter-American Development Bank, the average pension replacement rate in Jamaica is only about 34 per cent of pre-retirement income, significantly lower than the recommended rate of 60-70 per cent for maintaining a decent standard of living.

The following measures could be implemented to address this situation:

• The Government should implement a phased increase in pension benefits to align with the cost of living. This can be achieved through periodic adjustments based on inflation rates and economic growth indicators.

• Efforts should be made to expand pension coverage to include informal sector workers, who constitute a significant portion of the workforce. This can be done through flexible and contributory schemes tailored to the needs of informal workers.

• Strengthening healthcare services for the elderly, including improved healthcare and more prescription drugs added to existing programmes, will alleviate some of the financial burdens on pensioners.

• Implementing programmes to enhance financial literacy among workers will help them plan better for retirement, ensuring they can maximise their savings and investment opportunities.

• Encouraging partnerships between the Government and private sector can lead to innovative pension schemes and retirement plans that offer better returns and security for retirees.

Jamaica should adopt a forward-thinking approach to pension reform. The Government should prioritise this issue and take immediate steps for better treatment of pensioners.