Pension plan ease

back

Pension plan ease

The Barbados Advocate
October 15, 2003

In a move to widen the net of Barbadians covered by pension plans, Government yesterday introduced sweeping new legislation to govern the administration of private pension plans while making them more accessible.

The new measures will shorten the time employees must wait before becoming eligible to join pension plans to 1 000 working hours; give members in such plans vested rights to their employers’ contributions after only three years and make provisions for employees to take their accrued pension rights from employer to employer.

In introducing the Occupational Pension Benefits Bill, 2003 to Parliament yesterday, Prime Minister Owen Arthur said only one-third of the working population enjoyed coverage by occupational pension plans but coverage must be expanded in the face of the continuing trend of an ageing society.

He said the legislation represented part of Government’s attempts to meet the financial needs and security of the ageing population and ensure that elderly persons were not left to live out their senior days in poverty.

One of the key provisions of the Bill was the placement of the 1 000 hours cap, a stipulation which the Prime Minister said would remove the need for persons to work for long periods before becoming eligible to join plans offered at their work places.

Additionally, Arthur said that for the first time, part-time workers who accumulate 1 000 hours will also be able to join the same or equivalent pension plans as the ones enjoyed by full-time workers at their work places.

In relation to the portability of accrued pension rights, Arthur said if a member terminated his employment before the normal retirement age and accrued pension was fully vested in that member, he could carry his accrued pension to his next place of employment if a pension plan existed there.

“This is important because young people in today’s world will not be able, as their foreparents, to contemplate a situation where they started life in one occupation and end their careers in that same occupation.

“Most Barbadians will have to face the prospect of having to change jobs a number of times during the course of their working life and therefore you could not have relevant pension legislation unless portability rights are vested in it” Arthur told the chamber.

He said the clause governing vesting would allow an employee to benefit from his employer’s contributions after three years, as opposed to the present situation where an employee must wait anywhere between five or ten years in some cases before having an absolute right to their employer’s contribution.

The Barbados Labour Party leader, in noting that the legislation was 15 years in the making, said it would allow members to have much more information about plans, know when there are surpluses and would also protect their contributions from employers as well as secure them in cases where companies wind down operations or change hands.

Further consideration of the bill was postponed after nearly four hours of debate.