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Jamaica Senate Debates Pension Reform Bills

Reform aimed at making pension system more affordable and sustainable.

Having passed The Pensions (Public Service) Act 2017 earlier this year, Jamaica’s Senate has now begun to debate public-sector pension reform bills.

“The current public-sector pension arrangement is unsustainable, as only a small portion of public-sector workers make contributions,” said Ruel Reid, Jamaica’s minister of education, youth, and information, according to the government-run Jamaica Information Service (JIS). “These contributions are not related to their pension benefit. Consequently, this has serious implications for our public debt.”

The current pension expenditure is estimated at more than $30 billion, and is projected to increase, said Reid, who added that the bills will ease the pension burden on the government, but wouldn’t eliminate it.

“The intention of the reform is not a panacea,” said Reid, “but the intention is to review the reformed system after a specified period, with the aim to determine if and what other reforms are required.”

The Pensions (Public Service) Act 2017 establishes a defined benefit contribution plan, which will require all pensionable officers to contribute 5% of their annual salary. It also provides for the creation of a segregated fund for contributions; a gradual increase in the retirement age to 65; and harmonization of legislation regarding public-sector pensions in a single statute. It also repeals several enactments previously dealing with pensions.

According to a government white paper outlining pension reform, the driving force for pension reform is a need to reduce the pension expenditure in the face of a high debt-to-GDP ratio. But it also cited other key criteria from the World Bank that will help ensure that the pension plan is fiscally sustainable:

  • An adequate pension system that will offer benefits that are sufficient to aid in the prevention of old age poverty.


  • An affordable pension system that is within the financing capacity of individuals and the society, and does not unduly displace other social or economic imperatives of the country, or have untenable fiscal consequences.


  • A sustainable system that is financially sound and can be maintained over the long run, when certain assumptions are kept in mind.


  • A robust pension system that is capable of withstanding any major shocks.


  • A predictable pension system that provides the formula used to calculate the pension benefits.

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