Mr Othneil Blagrove, Senior Manager, Sales and Marketing, JN Life Insurance is urging more persons to plan for retirement because more Jamaicans were living longer. He added that if this was not done, there would be a heavy burden on the Government to provide for the elderly.
The life insurance executive pointed out that a working paper from the Pension Industry Association of Jamaica in 2022, revealed that the number of elderly persons were expected to grow by half in 2030 and represent 22 per cent of the population by 2050. He added that the document indicated that those over the age of 80 would be number over 100,000, individuals. It is for this reason that he wants the issue of retirement needed to be taken seriously.
“Investment experts say you need 40 years or more to plan for your retirement. Consequently, if you are above a certain age, no matter how much you save now, you will never be able to live the same lifestyle you lead now in retirement, because you would have lost some of the years needed to do that investment,” he explained.
“As more Jamaicans live longer, investment experts estimate that they will need to have enough money to live up to 15 years or more after retirement. Consequently, saving for retirement will ensure you are able to support yourself, as opposed to depending on others,” he stated.
He added that having a pension also had benefits for the wider economy.
“Investing in a pension will also take the burden off the state, to provide you with assistance. In addition, it would also help you to grow the economy, since it is money which is invested in mutual funds, stocks and other projects that are geared towards improving the quality of life for thousands of Jamaicans,” he added.
Mr Blagrove also urged Jamaicans, who contribute to a pension scheme, to increase their contributions to the maximum of 20 per cent of their earnings, where possible. He said Jamaicans who are a part of the labour force, should also become a member of a recognised pension fund.
The senior manage affirmed that the minimum five per cent, as is required by law, will not be enough for persons when they retire. At present, the law allows for a maximum of 20 per cent of earnings that can be contributed to a pension scheme.
“I also urge Jamaicans to increase their contributions to the maximum of 20 per cent, where possible. At the minimum of five per cent contribution, your pension will not be enough to support you upon retirement,” he informed.
“Additionally, the National Insurance Scheme (NIS) benefit, which some Jamaicans also contribute towards, will not be enough to give you a comfortable retirement. Therefore, saving what you can, in addition to the maximum 20 percent allowed, will help to increase the income you could receive during retirement.”
Mr Blagrove said that a contributor who began planning for retirement at age 44, who was earning $800,000 per year, and contributing the minimum five per cent, would have $1.5 million at retirement. He informed that a contributor earning that same $800,000 and contributing 20 per cent would have about $11.8 million in contributions.
Apart from more benefits at retirement, he emphasised that there were tax incentives to be earned.
“Also, by increasing your contributions to 20 per cent, you will receive valuable tax benefits on your contributions, which means that you will receive tax relief on that portion of your personal contributions,” he explained.
Mr Blagrove pointed out that persons could not opt out of retirement; and, therefore, preparation was necessary.
“Retirement is not a choice; it is something we all have to do one day. Therefore, you are responsible for your happiness and peace of mind, during your retirement years. I, therefore, encourage you to develop the habits that will support your peace of mind,” he affirmed.
