Wednesday, April 17, 2024

Govt and pensions

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Let me start by saying congratulations to the winners in the general elections, and I would like to commiserate with those who did not find favour with the electorate.
However, the elections are water under the bridge and at this time I prefer to leave the post-mortems to the political scientists, who always tend to over-analyze everything. Instead, I will deal with a matter that has been occupying a considerable amount of my waking hours, mainly because it has now intruded into my sleep. I actually had a dream about pensions.
Since the latter part of 2012, I have been receiving almost daily queries from people who are considering early retirement from the public service because of frustration. Invariably, the calls come from workers who complain of being overlooked for promotion because of political interference.
Rather than fight, many of them opt for the path of least resistance and consider early retirement. As a result, the public service is suffering the loss of some very experienced and highly trained professionals, leaving back a lot of political flotsam and jetsam that is causing havoc in the service.
Unfortunately, many seeking retirement are confronted with little-known and poorly interpreted provisions of the Pensions Act that are holding them captive in the public service. That act was amended no fewer than 25 times since its passage in 1947, and those amendments are causing massive confusion. Imagine their shock when some civil servants come to what they believe to be the end of their careers, only to discover they have to work for five more years because of one of those unexplained amendments!  
Worse yet, many are surprised to learn that also as a result of those amendments, their pension entitlements have been diminished. They are then faced with the stark realization that they would be reduced to a state of gentile poverty shortly after retirement because there is no time left to put away a little nest egg.
In the good old days when things were much simpler, civil servants and those with “good private sector jobs” worked for 33 1/3 years and received a pension on retirement. The ones who did not fit into those categories lined up at post offices to receive a meagre state-welfare pension if it was determined that they were poor enough.  
Others, hopefully, had the good fortune to have children who cared enough for their parents to provide for them in their declining years. Failing those options, retirees would have ended up in the large network of almshouses that were strategically located around the country. Now that Government has closed a majority of those almshouses, the elderly retired end up as abandoned at the Queen Elizabeth Hospital, but I digress.
The pensions that were paid to retired civil servants and those with the private sector “good jobs” were provided by the employer as part of doing business at no cost to the workers, and were considered as deferred earnings.  
Nowadays, when it appears that all that matters is the bottom line, employers, including Government, are moving away from rewarding retired employees, requiring them to make their own private pension arrangements.  
In some cases employers might assist their employees by paying part of the contributions but, generally, they favour this type of arrangement because it gets them off the hook for providing pensions for a lot of old people who do not matter to their businesses anymore.  
It is sad to admit that employers are only following the lead of Government in their attempts to cut costs without realising that this type of penny-pinching has the effect of reducing employee loyalty and commitment to their jobs.
Fortunately for private sector employees, Government has put in place the Occupational Pensions Benefits Act where the pension fund must give to each participant an annual statement of the benefits that they have accumulated. On the other hand, civil servants have to wait until their actual retirement to find out their entitlements. It is particularly disconcerting when some civil servants hand in their retirement papers only to receive a reply that they must wait for another five years before they can receive their pensions. At this point they have little or no option than to rescind their retirement.
This confusion comes because the Personnel Administration Division continues to misinterpret and misapply the provisions of the Pensions Act. Public officers who were employed prior to July15, 1985, are entitled to retire early at age 55, compulsory at 60 and as a result of a recent amendment, they can choose to retire as late as age 67. However, officers who were appointed after that date can only opt for early retirement at age 60. A number of officers who were employed continuously on the basis of a temporary appointment prior to 1985 but only received permanent appointments after July 15, 1985, are being disadvantaged.  
Apparently, the Personnel Administration Division has determined that these officers, who were employed prior to the relevant date, have pensionable service but it does not qualify them for early retirement at age 55 because of the date of their permanent appointments.
That reasoning is so completely farcical when you consider that the officers would have been entitled to retire early at age 55 if all of their service was on a temporary basis, in accordance with section 2A of the Pensions Act.
My advice to public servants, who want to enjoy a financially secure retirement and who still have time on their side, is to invest in a registered retirement savings plan. The earlier you start the better: your contributions could be a negligible portion of your salary. On the other hand, if you are approaching 50 and have not started to provide for your pension, you are not too late but fast approaching that point. No one is there to take care of you if you in your old age don’t have money. Be warned.
• Caswell Franklyn is a trade unionist and social commentator. Email caswellf@hotmail.com

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