Growth & Jobs | Self-employed persons urged to secure pension
Published:Tuesday | November 1, 2022 | 12:06 AM
SELF-EMPLOYED PERSONS are being urged to think seriously about getting a pension plan, due to the risks associated with the lack of a safety net at retirement for persons who fall in this category.
Othneil Blagrove, senior manager of sales and marketing, JN Life Insurance, says the majority of the approximately 40 per cent of Jamaicans who are self-employed are not contributors to the National Insurance Scheme (NIS). He adds that many are not contributors to any private pension fund, either.
“In other cases, some persons employed in the cosmetology sector may find that as they mature in the profession, they sometimes find that younger clients are not keen to utilise their services. In all cases, it’s not because they will lack the skill; rather, there is the perception that a person at that age may not be in touch with the latest trends. Consequently, there is the possibility that persons may be forced to retire before 65,” he added.
Blagrove noted that for those who contribute to the NIS, the benefit will not be enough to give them a comfortable standard of living after retirement.
“NIS benefits are currently $13,600 monthly, which, based on cost of living, is not enough to cover basic expenses. This means that there are many persons who will experience financial difficulties upon retirement, or forced to work again, for those who can, for additional income,” he outlined.
He added that the number of Jamaicans being eligible for a pension upon retirement is low, especially with the country’s ageing population getting larger. He said more education is therefore needed, especially for those who are self-employed.
“Investment experts say you need 40 years or more to plan for your retirement. Consequently, if you are above a certain age, no matter how much you save now, you will never be able to live the same lifestyle in retirement that you lead now, because you would have lost some of the years needed to do that investment,” he explained.
“As more Jamaicans live longer, investment experts estimate that they will need to have enough money to live up to 15 years or more after retirement. Consequently, saving for retirement will ensure you are able to support yourself, as opposed to depending on others,” he stated.
He also underscored the need for persons to ensure that they have a ready source of funds to cover their daily expenses during retirement. “You may be saying that I have just paid down on a house and I am going to put a room to the back. Or you might say mommy or daddy has a piece of land and I’m going to build something on it, and that is my retirement. Nothing is wrong with that, but it is important that you have a source of liquid cash when you retire,” he added, pointing out that this would assist in times of emergencies.
Blagrove explained that outside of personal benefits, being a part of an approved pension fund is beneficial to the Jamaican economy. He said pensions provide a pool of long-term funds which can be used to invest in public infrastructure, rural and urban development and, ultimately, increase the wealth of the country.