Planning For Retirement

Since January 2003 Barbados began the reform of the National Insurance Pension Scheme with a long-term view of securing the pensions of insured persons.

Most countries around the world would have had to confront Pension Reform in some way in recent times. In Barbados, following a massive public awareness campaign and taking into account the findings of extensive national consultation, the government has implemented a reform programme to ensure that there is adequate funding for pensions for many years to come.

Pension Reform is a global concern because of ageing populations and low birth rates. Falling population numbers were once confined to older European nations. However that condition is now one that most countries will experience in the near future.

People in most parts of the world are having fewer children and living longer, in spite of evidence of heart disease and cancer occurring at younger ages than ever before. However, we easily forget the large numbers that previously died from diseases like tuberculosis, malaria and other pathogens that are now under control.

The first and most dramatic effects of an ageing population are those related to the state pension scheme. The reality is that there will be many more pensioners but at the same time fewer workers to support those pensions. Barbados has met this challenge in a timely fashion. Delay would have been catastrophic for the NIS Fund finances.

We in Barbados have completed the first steps towards that goal by planning and beginning a reform of the National Insurance pension scheme.

A phased increase in contributions began in January 2003. In addition, from January 1 2006 the pensionable age will move from 65 to 65 ½. Pension Reform also means that future pensioners have more options in terms of retirement. For example, the NIS has made it possible for pensions to be taken early with a reduced benefit. Pensions may also be deferred to a later retirement age in which case additional benefits will be applied to the amount calculated for normal retirement.

To make the right choice of retirement age each and every one of us must assess our own situation on reaching retirement. We should all plan for our retirement by considering our total financial picture including the NIS pension. It is not too difficult to work out approximately what our pension from the NIS and other possible sources will be. Then we might need to ask ourselves what our financial needs are likely to be once we have retired and then revise our plans if needed.