Editorial

IDB's Retirement Savings Laboratory a good initiative

Friday, April 20, 2018

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The Retirement Savings Laboratory launched by the Inter-American Development Bank (IDB) is a worthy initiative that should be embraced by all governments in the jurisdictions to which it applies.

According to the IDB, this project is designed to increase the number of people saving for retirement in Latin America and the Caribbean.

The bank estimates that about 130 million people in the region are not saving for retirement. This, it said, “will make it difficult for them to have a good life when they reach old age, especially for low-income and independent workers”.

According to the IDB, the main causes of under-saving for retirement are problems in the way labour markets function, the design of pension systems, and the psychological barriers inherent in human nature.

This, the Economic Commission for Latin America and the Caribbean (ECLAC) tells us, explains why few workers in the region save for retirement, despite surveys showing that they want to do so.

Interestingly, this IDB project comes a month after former Jamaican Prime Minister Bruce Golding, in an address to the Rotary Club of Kingston, pointed to the challenges that an ageing population will pose to Jamaica.

In that address, Mr Golding noted that the 2012 Survey of Living Conditions shows that 63 per cent of Jamaica's elderly do not now benefit from a pension plan; only 23 per cent of the elderly were receiving assistance under the Programme for Advancement Through Health and Education; 77 per cent had neither private health insurance nor NI Gold coverage; 72 per cent were suffering from one or more chronic illnesses — hypertension, diabetes, and arthritis being the most prevalent; 15 per cent were disabled, mainly from blindness and strokes; and 75 per cent were dependent on some form of medication.

Based on that data and other information in the survey, he called on the authorities to prepare for the fiscal implications of these developments as the increasing number of elderly Jamaicans will put pressure on pension schemes, health services, and welfare programmes.

We share that concern and support his encouragement for the menu of public health services to be reconfigured to deal with the changing profile and needs of the patient population.

The IDB has said that its project will carry out more than 15 interventions with financing from its Multilateral Investment Fund, Network for Pensions in Latin America and the Caribbean, and the MetLife Foundation.

It will use innovative ways to encourage savings through interventions based on behavioural economics and the use of new technologies. The goal, the IDB explained, is for 400,000 low-income workers to start saving for their old age.

It is, we reiterate, a good initiative, and one that will hopefully be successful, thus easing the financial and social burdens on families and the economies of countries in the region.

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