Yet another Cabinet minister has added his voice to a growing chorus calling for mandatory pension legislation in The Bahamas, but it is unclear as yet whether this Cabinet-level support will result in the desired legislation.
Pinewood MP Khaalis Rolle, who has Cabinet responsibility for investment, told Guardian Business that mandatory pension legislation must be seriously considered. In so doing, he joins Minister of State for Finance Michael Halkitis and Labour Minister Shane Gibson in expressing public support for mandatory pension laws.
"Too many of our aged population are living in substandard conditions because, over a period of time, they didn't think about what would happen when they retire," Rolle said.
"For far too long I see individuals at retirement age, and they have nothing. They can't retire, because they have nothing. The only thing they have is National Insurance to rely on, and that can't fund a comfortable lifestyle for the average person."
He said, however, that he was unaware of whether the Ministry of Finance was preparing mandatory pension legislation at present.
Guardian Business spoke with CEOs of two of the nation's leading pension fund managers about the situation.

Regulation
Providence Advisors CEO Kenwood Kerr said the absence of mandatory pension legislation means no rules govern the administrative and investment behavior or qualifications of the current service providers in the marketplace.
CFAL CEO Anthony Ferguson also told Guardian Business that regulation is key.
"With legislation, the industry would be better regulated and companies would not be able to do some of the things they would like from an

investment
perspective," Ferguson said.

NIB assumptions
Ferguson said while many Bahamians are relying on National Insurance for retirement, the scheme is not a pension plan.
"[National Insurance] is a supplementary plan, and since its initial formation has taken on other responsibilities, such as unemployment insurance, accidental insurance and the prescription plan. In the first instance, NIB itself needs to review its asset allocation and contribution rate, but I suspect - actually I am certain - it won't be able to even meet its current obligations should nothing change," the CFAL chief said.
Kerr pointed to an inherent lack of savings and generally poor preparation for retirement.
He cited a recent KPMG pension report indicating that less than 25 percent of the working population is covered by a pension plan. He said given this, plus a lingering belief that the young should care for the old, there is "a general over-reliance" on National Insurance.
"Combined with a lack of savings generally and no savings or planning for retirement, and little or no pension plans to provide for retirement, the only pillar left is the National Insurance Fund. An over-reliance on the National Insurance Fund leads to a financial strain, particularly if contribution levels are low and investment returns are not being maximized," Kerr said.
"Therefore pensions play a significant role as the second pillar to bring retirement relief and to lessen the retirement financial burden on the state... Two other important points are the current high level of employment and, in particular, youth unemployment that puts a future strain on the NIB's ability to collect higher revenues, and also the rising level of baby boomers who will be going into retirement who have not saved sufficient enough and will be claiming NIB benefits.
"When you add these to the mix there needs to be serious consideration to this matter."

Pushback
Ferguson said that, with low NIB contributions and a low savings rate, mandatory pension legislation is "regrettably" necessary.
"Just about every civilized country has it," he said. "We like to benchmark when it meets our goals and we ignore (the world) when it contradicts."
Kerr envisioned a "push back from a business perspective".
"They would view the provision of mandatory pension as a tax or additional cost to businesses and they may resist this. We need a renewed focus on financial literacy and education on the need for savings, financial and retirement planning."
The National Insurance program was established in 1972; the National Insurance Board (NIB), the organization charged with administering the social security program, is charged with providing income-replacement in respect of sickness, invalidity, maternity, retirement, death, industrial injury/disease and involuntary loss of income. NIB's added mission in the administration of the country's social security program, is to provide assistance for needy citizens and to assist with the social and infrastructural development of the country.
Currently sitting at close to $2 billion, the fund is considered on solid ground, although there have been questions in the past about its sustainability.

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