Barbados: Dr. Williams calls for restructuring of private pension plans

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Barbados: Dr. Williams calls for restructuring of private pension plans

Barbados Advocate

June 5, 2003

Barbados – Dr. Marion Williams, the Governor of the Central Bank of Barbados, has called for a restructuring of private pension plans.

Delivering the feature address at the opening of a three-day symposium at the Wildey Conference Centre yesterday, Dr. Williams said while such reforms had already started, “many of the considerations discussed in the context of public funds need to be applied to private pension funds as well”.

According to Dr. Williams, “this gets us into issues of contractual obligations and raises the question as to whether new contracts should give flexibility to employers to change plan terms and whether such flexibility is possible, (or whether) it should differ when plans are contributory from when they are non-contributory.”

Close to 100 delegates are attending the international symposium on pension reforms in the English speaking Caribbean.

The event, which ends tomorrow, is jointly sponsored by the Caribbean Development Bank (CDB) and the Inter-American Development Bank.

Dr. Williams said the issue of pension schemes and pension needs to be discussed more in the region, since it is extremely critical to “our continued economic and social development”.

“Notwithstanding the fact that the case for pension reform throughout the world has already been strongly made in many quarters, they are worth repeating since pension reform is something which has to be sold, particularly where benefits are being modified or expectations changed,” she said.

Dr. Williams maintained that since the funding costs of pension schemes are likely to continue to increase, understanding both current and future costs is necessary to allow enough time to properly plan for expected increases and to make the necessary modifications to existing plans.

“In our constantly changing environments, plan actuaries will need more than before to continually review and modify assumptions to ensure that they are still good enough predictors of future expectations,” Dr. Williams said.

“Since the early to mid 1990s, actuaries and international institutions were speaking of averting the Old Age Crisis. The implication for pension funds of aging population which were expected to be healthier and to live longer was seen to be creating a crisis for pension funds,” said the Governor.

She went on: “Studies which started first in the Organisation for Economic Cooperation and Developed Countries (OECD) showed declining rates of labour force participation among able-bodied men of working age.”