Workers allowed to suspend pension payments

  • Curtis Dickinson, the Minister of Finance (Photograph by Blaire Simmons)

    Curtis Dickinson, the Minister of Finance (Photograph by Blaire Simmons)

Amendments to allow suspension of contributions to pension funds for a year were approved by MPs last night.

Curtis Dickinson, the finance minister, said the move was intended to help struggling businesses and workers.

He added: “We are where we are. What we are trying to do now is to find ways to find relief without busting the budget any further than it has been.”

The House of Assembly approved amendments to the Contributory Pensions Act and the National Pensions Scheme Act to allow employers and employees to stop payments to pension funds from July 1 to June 30 next year.

Mr Dickinson said employees and employers would have to agree to voluntary suspensions.

He added: “If the employee says they want to continue contributions, employers are obliged by law to make their contributions.”

Mr Dickinson said that the amendments would also allow employees to “make up” the shortfall once the suspension period was over through voluntary contributions.

He said the Contributory Pension Fund received $113 million in contributions a year that could be used to help those with financial problems caused by the pandemic. Mr Dickinson also told the House that the pension pot already held about $1.8 billion and, although it was underfunded, it was in a good position compared with similar funds in other countries.

He added that the Government planned to carry out a review of the CPF to find ways to strengthen it. One option is to change contributions from a flat figure to one based on a percentage of salaries.

Mr Dickinson said that almost $11 million had been withdrawn from pensions through a new scheme that allowed people with private pensions to withdraw up to $12,000 to help cover virus-related financial difficulties.

Patrica Gordon-Pamplin, the shadow finance minister, said she could not oppose legislation that could help struggling businesses stay afloat and help workers pay their bills.

But she warned that the pandemic would not always be an excuse for the country’s economic problems and that growth was needed.

Ms Gordon-Pamplin said many businesses and people had faced financial difficulty before the pandemic.

She added: “We have to be mindful of our responsibility and our obligation to grow the economy so our people are not struggling.”

Ms Gordon-Pamplin said during the debate on the National Pension Scheme (Occupational Pensions) Temporary Amendment Act, that she feared black people would be most affected by reduced contributions to retirement plans.

She added: “We have been consistent in criticising the tampering with pensions because of the impact that it will have down the road.”

She added: “The failure to be able to do anything with our economy has been the rallying cry here inasmuch as people have not been able to have the money, they haven’t had anything extra to tuck away so that once this Covid hit, then there was nothing that people had to fall back on.”

Ms Gordon-Pamplin said it meant that the only “recourse” was to allow residents to use up money that they might otherwise have had invested for their retirement.

She told the House: “What causes me to lament is the idea that people will get to the end of their working life and into their retirement environment and they will not have — and who is going to most suffer? It’s going to be our black people.”

Scott Pearman, the Shadow Minister of Legal Affairs, backed the amendments, but said the public had to be aware of the long-term effects of suspension of pension contributions.

He added: “There are those who are very much hurting and they need that money today. We recognise that.

“But there are also those who should stop, pause and think before spending pension income now because it ultimately means less will be there when they reach pensionable age.”

Renée Ming, a Progressive Labour Party backbencher, said education about the suspension was important.

She also appealed to the public to help find fresh ways to grow the economy.

Leah Scott, the deputy Opposition leader, supported the legislation. But she added: “It’s not just the amount that they are putting in their pension that they are taking out. They are losing out on any returns from gains in the market.”

Mr Dickinson added: “My job is to try to find ways of providing relief to people in this time that we are dealing with the pandemic.

“I certainly don’t want people taking money out of their pension funds if they don’t have to, but I certainly also don’t want them going hungry.”

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Published Jun 20, 2020 at 8:00 am (Updated Jun 20, 2020 at 7:28 am)

Workers allowed to suspend pension payments

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