I write this letter in response to some misconceptions I hear from the public about the proposed changes to the National Pension Law, with three in particular included in the (Amendments) Bill 2016 and about the National Pension Law (2012 revision) as it stands now.
It is important to understand that Section 2 of the pension law states “This Law applies to pension plans established and maintained for the benefit of employees in the Islands.”
As it stands, the pension law says the age of retirement is 60 and early retirement is 50. If you retire early, you receive less benefits from your pension fund than if you wait until you’re 60, but you don’t have to retire at 60. You could retire at 65 or 70 if you wish. 60 is just the earliest age that you can retire to collect full benefits.
Once a person retires and begins collecting full benefits, they can continue working, not have to contribute 5 percent toward the pension anymore and their employer doesn’t have to match their 5 percent anymore either.
An employer can make you retire at whatever age their policies dictate. Nothing in the pension Law can prevent an employer from letting you go at 55 if, where professional or industry standards or requirements mandate an early age. So the Pension Law saying the age of retirement is 60 is basically saying that is the age you are allowed to collect your benefits and nothing more.
The proposed (Amendment) Bill 2016, is trying to change the age of retirement by giving it a new name (“Normal age of pension entitlement”) and calling it 65 years of age. What this means is that even if you wanted to start collecting your pension benefits at 60, you won’t be allowed. Even if your employer retires you at 60 (because they can), you will not be allowed to collect your benefits until you are 65. This is in no way for the benefit of employees in the islands, this is for the benefit of the pension plan providers/administrators so that they can hold on to your money for five more years and make money.
Five years’ worth of additional pension contributions at 10 percent is not going to increase your pension benefits significantly, but multiply that 10 percent by the number of members a pension provider has in their pension scheme over a five-year period and you can easily see who benefits from the increased age of retirement.
It would be more beneficial to an employee if they could retire at 60 and start collecting their pension benefits, continue working, instantly receive a 5 percent increase in their salary (because the 5 percent is not required to be deducted) and the employer saves an additional 5 percent (because they don’t have to match the contribution).
Don’t allow the government to pass the amendment bill to increase the age of retirement to 65.
Depending on your employer’s policies, you may be retired earlier and not allowed to collect your benefits, effectively being without an income for five years. Sign the online petition to stop these changes.