Government will be hiring a contractor to give advice on how to change the current non-contributory pensions and gratuities scheme, which has become an increasing financial burden on the state.
Financial Secretary Glenroy Forbes told BVI News that talks have already begun to change the scheme from non-contributory to contributory so civil servants will be made to pay pension.
He said the soon-to-be-revised pensions scheme will allow civil servants to pay a percentage of their pension while government pays the remaining percentage.
Neither the exact percentage each party will pay nor an implementation date for the new pension scheme has been decided.
Forbes, however, noted that certain terms of the revised scheme must be a mutual agreement between the government and its employees. He further said the revised scheme must be sustainable.
“It has to be viable that will endure into the future because right now it is not the best way to be administering a pension scheme,” said Forbes, adding that the current scheme has always been a concerning liability for government.
He explained: “Currently, government makes an appropriation to pay those persons who are pensioners as well as those persons who are projected to be retiring for a particular year. To put it to the extreme, if everyone in the system who can claim a pension would decide to retire and take that pension, it would be millions of dollars that would be funded by the government.”
He said current legislation such as the Public Finance Management Act of 2004 makes provisions for the pensions fund.
Millions paid out in the last five years
According to statistics from the Ministry of Finance, government has spent almost $80 million for pensions and gratuities to its employees in the last five years.
Government appropriated $18,092,342 for pensions and gratuities in the annual budget last year but only $16,884,838 was spent.
In 2016, government allocated $16,631,200 and $16,631,181 paid out.
Some $18,693,650 was set aside in 2015 but only $16,491,044 of that sum was paid.
Government budgetted $14,822,200 in 2014 and $14,946,766 was expended.
Some $14,733,800 was budgeted in 2013 and $14,347,326 was spent.
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