Financial Sec wants civil servants to contribute to pension
Each civil servant, once they retire, is given 2/3 of their retired salary or less dependent on the years of service. But this non-contributory system is costing government millions.
According to Financial Secretary Mr Neil M. Smith, each year pension and gratuities liability is around 7 to 8 million dollars, monies government must find to cover the scheme, as civil servants do not contribute.
In addition, the Chief Government Financial Advisor noted that some $17.5M is paid out each year in pension and gratuities. However, it is not clear if this figure includes politicians who after two terms in office earn a pension.
System cannot be sustained
Mr Smith was at the time speaking before the 2017 House of Assembly’s Standing Finance Committee on Pensions and Gratuities as they deliberated the Budget.
Minister for Health and Social Development Hon Ronnie W. Skelton (AL) had asked how much longer the civil service non-contributory Pension and Gratuities Scheme could continue to be viable before a contributory scheme is introduced.
To this the Financial Secretary (FS) told the Legislators “every year the pension allocation in the budget is becoming a little bit more challenging and noted that this situation has to be dealt with sooner rather than later.”
At the time, the Third District Representative Hon Julian Fraser RA, also interjected and told the committee that new thinking was needed towards the scheme in terms of making it contributory versus non-contributory. Hon Fraser suggested that “one of the trade-offs could be that it be made contributory where the spouse can benefit from it or leave it as non-contributory were the spouse does not benefit from it”.
The FS stated that both options were viable and noted that he would recommend that Pensions and Gratuities Scheme be made contributory where they would “grandfather in” the contributory side of it. He gave an example where any new employee coming on to the government system, in his opinion, should be joining on to a contributory system.
The FS also noted that if all civil servants were to retire today government would have to pay out $200M plus.
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40 Responses to “Financial Sec wants civil servants to contribute to pension”
It's just plain stupid! Institute it now for ALL Government workers, including ALL politicians. Give the rest of us a break for a change!
Everyone is laughing and chiding the Government for saying the BVI economy is 'robust' and it's 'good', but read the above and tell me which other Country this happens, while taxation is relatively low at that. In the real world everyone has to chip in to the pension scheme to make it sustainable.
Tuition at the Community College should also be instituted.
Land and house tax should be raised.
Folks in the BVI have a system that is overly generous and with little appreciation. Throw garbage everywhere, dump cars anywhere and keep singing how poor they are in the BVI,
Get real Government and make things realistic. Thiis is not Dubai or some other oil rich little place.
Government should establish a pension "Sinking Fund" whereby employees are required to contribute a % (5%, 6%, 7%) of salary monthly with government matching each dollar of employee contribution either $1.5, $1..... etc to $1. Some employees say with 5 years or more of service will be grandfathered under the old system. Employees with 5 years of service or less, along with new employees, will be under the new system. Current employees with 5 years or less may need to buy the non-contributory time; government may have to share in time purchase.
Furthermore, the entire pension scheme needs to be revamped. If not, the current scheme pay collapse under its own weight. The revamped should include elected members, statutory bodies employees, and government employees. The FS is point in that the pension scheme needs to be fix sooner than later.
It's not rocket science, SSB been doing it for decades. No reason why this problem could not have been tacklers sooner, politians just scared of loosing votes if they implement a contribution scheme.
Government has not done a salary evaluation since 2005 which is rediculous. On top of that their increments are being withheld. You have college students coming back to the BVI with a BA degree and being paid 28k tell me where else in the world this happens.
On another note, civil servants have to labour for 25 years or more to get 2/3 of their current salary at retirement . But elected officials only need to serve two consecutive terms (8 years) to snap up a pension. What is fair and equitable about this? Nothing. Elected officials do not have to work any harder than regular civil servants. But do not wait for poiiticians to rectify this inequity, for you quicker see green donkeys flying. If a change will occur, the electorate will have to demand it.
Civil servant contribute, even when they are not confirmed pensionable ???????