Submitted by GoWEB Caribbean – Writer Caswell Franklyn
On Wednesday, February 9, 2011, the NUPW held a meeting of persons who were affected by the new tax on travelling and entertainment allowances. The following day the Daily Nation quoted the General Secretary as saying that government had attempted to appease the workers by saying that the deductions would be added to their pensionable emoluments.
Apparently, he was trying to explain that the amounts paid as travelling and entertainment allowances are not used to compute pension entitlements, however, they will now be taxed and added to the salary for pension purposes. As a result, those persons who are entitled to pensions would see an increase at the end of their working life, which would be any time between ages 60 and 67 depending on the person’s retirement age. This would require an amendment to the Pensions Act, Chapter 25, since the definition of “pensionable emoluments” excludes those allowances.
The promise to make the allowances pensionable is meaningless to officers who earn less than $4,090 per month, and who were employed in the Public Service after September 1, 1975. Officers in this category would only get a pension from the National Insurance Scheme.
A permanent secretary who receives a travelling allowance of $974.78 and entertainment of 1103.27 would see an increase in his monthly pension entitlement of $1,385. 37. This scenario assumes that: he would have been employed prior to September 1, 1975; he had been working for 33⅓ years; and that he received the allowances for 36 months immediately prior to retirement.
On the other hand, if the amendment were applied to the Retiring Allowances (Legislative Service) Act the picture would be quite different and alarming. That Act makes provisions for the pensions of Members of Parliament. Like public officers the allowances are not taken into consideration when computing the pensions of retired parliamentarians. The table below shows the effect on the monthly pension entitlement of the Cabinet and parliamentary secretaries at current salaries.
|Prime Minister||11,287.53||14,334.11|| 3,046.58
|Deputy PM||9,595.02||13,481. 61||3,889.59
It is interesting to note that the politicians qualify for their pensions at age 50 after serving a minimum of 8 years to qualify for half of their salary. They qualify for ⅔ of their salary after serving 12 years. A public officer qualifies for a pension of ⅔ of his salary after serving 33⅓ years.
Call me naive but I believe that these massive unconscionable increases in monthly pension entitlements would be unintended consequences of the Budget, despite the emerging pattern. In 1991, just prior to the 8% cut in salaries, parliamentarians gave themselves an increase of 10%. Also in 1991 Government reduced the severance payment entitlement for all workers except Constituency Assistants. I am left to wonder what next?