Pension plan jitters – Liability growing by $8M

in All News, Finance/Business / By: BVI News Online on March 23, 2017 at 9:21 AM /

Entrance to the Central Administration Complex where the main Government offices are located in the BVI

Financial Secretary Neil Smith said the civil service non-contributory pension and gratuities scheme has to be dealt with ‘sooner than later’, adding that the pension allocation in the budget each year is becoming increasingly challenging.

He said the liability has been increasing by approximately $7 million or $8 million annually.

Smith told the Standing Finance Committee that the government expects to pay out $17.5 million this year.

“The financial secretary further explained that, if everyone within the government were to retire all at once, and everyone had to be paid, the total paid out would be $200 million plus,” added the recently published Standing Finance Committee report.

Smith was responding to Minister of Health Ronnie Skelton who had enquired about how much longer the civil service non-contributory pension and gratuities scheme could continue to be viable before a contributory scheme is introduced.

Trade-offs

Meanwhile, member of the parliamentary opposition Julian Fraser added his voice to the discussion, suggesting what are being described as trade-offs.

He said one trade-off is that the scheme could be made contributory, whereby the spouse could benefit from it. The other trade-off is that it could remain non-contributory, whereby the spouse does not benefit from it.

Smith said those two ‘trade-offs’ are viable.

But he stated that he would prefer the pensions and gratuities scheme to be made contributory, adding that he would ‘grandfather in’ the contributory aspect of it. For example, Smith thinks any new employee coming into the government system should join a contributory pension scheme.