The other issue is – what is the purpose of the FSC if it is happy to rely on ‘suasion’ to address protracted non compliant issues? It is another entity happy to be labelled a paper tiger?
Today’s Nation News headline Pension Plan Gaps (see reprint below) piqued a lowly blogmaster’s interest for the obvious reason. The concern from the regulator makes for interesting unpacking for two main reasons.
Concern by the Financial Services Commission (FSC) that 144 out of 250 private pension plans are non compliant is disturbing. With a distressed National Insurance Fund citizens private pension plans are critical to supplement retirement income. for many, especially a decimated middle class.
The other issue is – what is the purpose of the FSC if it is happy to rely on ‘suasion’ to address protracted non compliant issues? It is another entity happy to be labelled a paper tiger? We have a lack of good governance with the National Insurance Fund – unable to produce up to date audited financial statements – and now non compliant private pension plans? The blogmaster is happy to be enlightened if the concern expressed is misplaced.
All non compliant pension plans should be published? What are the punitive actions the FSC should take against the Trustees and Administrators of the private pension plans? Time for action Messrs Ward and Jordan!
Pension plan gaps
THE MAJORITY OF PRIVATE pension plans in Barbados are not fulfilling all of their statutory requirements, including paying fees and filing actuarial reports on time.
Their regulator the Financial Services Commission (FSC) is imploring the administrators of the 250 schemes to fix these compliance failures.
FSC chief executive officer (CEO) Warrick Ward said yesterday that the regulator did not “want to rely on punitive measures” against pension plans and had generally used moral suasion over the last 11 years to get them to comply.
However, he said “we have to stop at some point”, while noting that he anticipated that by next year, the number of pension plans would decline in the absence of tax incentives for individuals to invest in them.
Ward was speaking via Zoom during Eckler Limited’s annual Pension Investment Conference.
He said the FSC “would like to see more effort” by pension plans in relation to making statutory filings, reporting that “we still have a lot of problems with those”.
The CEO told the online forum that of the 250 pension plans operating up to the end of October, 144 were non-compliant with their requirements under the law.
The FSC wants pension plan administrators to ensure that statutory filings are up to date; that pension plans are being funded; that special payments are made where pension plans are in deficit; and that the relevant fees are being paid and paid on time.
Noting that 58 per cent of pension plans are noncompliant for one . . . reason or the other, he said: “The bulk of those are [defined contribution] plans. That’s a little strange because you would like to think that those plans are newer and so you would really want to have . . . that measure of compliance and that’s something that the team is working on.
“And so, I am once again imploring you, those of you who know that you have outstanding things for us, things like the actuarial reports, there is a set time you know you’re supposed to send those to us, every three years, and sometimes we haven’t seen any for quite a long time,” he told pension plan sponsors and trustees at the conference.
Decline
Ward anticipates that the number of pension plans will decline by next year.
“We had a strong growth in the private pension sector say from the early 2000s until mid-2000s, and a lot of that stemmed from the tax-free benefits that were provided to . . . individuals to invest in the pension sector, and we saw a strong growth in that market,” he explained.
“There was a tax-free benefit there. However, that was removed, and so we are seeing some shrinking in terms of the number of pension plans.”
Ward said this was an issue the FSC was discussing with Government and other partners because of the need to encourage people “to save in private pension plans as much as possible, given where we are with the [National Insurance and Social Security Service] to reduce the strain on Government in terms of long-term social policy”.
The CEO acknowledged the pension sector’s importance from the point of view that Barbados’ economy was about $10 billion and pension plan assets were about $2.3 billion. (SC)
Source: Nation news
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