ST. GEORGE’S, Grenada, CMC—The Grenada government says the Public Sector Employees (Pension Fund) Bill, which will establish a new system of paying pensions to government employees and public officers, is better than the existing plan because it allows workers to access their funds before retirement age.
Currently, more than 2,500 established retired public officers receive a non-contributory pension from the government, which, in its national budget for 2024, allocated EC$109.4 million (One EC dollar = US$0.37 cent) for pensions and gratuities.
The new Bill mandates that each employee or public officer who meets the criteria to join the new scheme contribute three percent of the salaries/wages to the Fund, with a matching three percent to the government. An actuary review will be conducted for two years to determine if the contributing amount should be changed.
The government is claiming that more than 4,500 current public service workers are not qualified to receive a pension, as guided by the 1958 legislation, which the constitution recognizes.
Legal Affairs Minister Claudette Joseph, speaking in Parliament, said that some people believe the new scheme is less favorable, but that is not accurate.
“Workers are now required to contribute to this Fund. Some believe that it is automatically less favorable. That is not correct, Madam President. First of all, you have voluntarily contributed money, which you can take advantage of and save more. You have your Fund vested, so you have a return on your investment,” she said.
“The other thing is that against your contribution, you can withdraw up to EC$2,000 twice per year, so you could, it is savings, it’s going up as the 401K in the USA, you can actually withdraw, so instead of going by fast cash and paying 15 percent interest or wherever else you are paying interest, you can a withdraw twice yearly,” she added.
Joseph said another benefit is that when the funds become vested, workers can receive the money now.
“So currently, you either have to work until you are 60 or until you have done 26 and two-thirds years in the service or if you take early retirement, you have to have worked for 20 years and have attained the age of 50. That is the only way you can get your pension now,” said Joseph.
Joseph, also the Attorney General, said that under this proposed scheme, the funds become vested after five years, and even before the funds become fully vested, an employee will be entitled to receive 100 percent of the contribution made to the Fund.
“After five years, if you are exiting the service, you are entitled to get 100 percent of your contribution and the government’s contribution. So that you can walk away from the service after 15 years or 18 years and get your pension contribution because it has been vested since you made five years; that is a benefit over the existing scheme because you don’t have to wait for 26 and two-thirds years to get anything.
“Because now if you walk away before 26 and two-thirds years and you are fifty, you get nothing, you get zero. Under this scheme, all it takes for you to be vested is five years for you to get 100% of what is in your account,” she said.
However, lawyers from law firms who contributed to the legal argument that declared the Pension Disqualification Act unconstitutional believe that the new legislative scheme is also unconstitutional because it violates section 92 of the Constitution.
The government is hoping to enforce the Act in January 2025 following its approval in Parliament.