Opening Points

1.                 By 2025 – 15% of the World will be over 60 years.

2.                 Developing countries are aging faster than industrial countries.

3.                 By 2030, some 80% of the elderly will reside in Developing countries.

4.                 The contributory group is made up of all workers in the workers in the country (about $35,000). The Dependency group is made up of all pensioners about (6,000).

5.                 Between the two is something termed the Dependency ratios, the accepted level internationally is about 10 – 1.

6.                 Dependency ratios are likely to increase by over 50% between 2000 and 2025.

7.                 Adjustments can be made by targeting the Dependency ratio, or the replacement rate.  This can be affected by raising the retirement age, or increasing the contributory rate.

8.                 Social Security reserves at 2002 were $524M 52% of the assets supporting the reserves were accounts receivable – mainly from the government which did not pay in the deductions made, or its contributions and interests for years.  Many statutory bodies owed over $11M.

Additionally, 28% of the Fund’s investments are non performing.  Return on reserves is 3%, just above the cost of living.

9.                The A.B.S.S.F. will experience a serious decline, even if the government and other debtors pay their debts.  Due to the declining contributor-pension ratio, and a contribution rate that is below the cost of all benefits.  Contributions and benefits reform would seem to be inevitable.  To complete the circle serious consideration will have to be given to raising the retirement age of 60 to 65 in the future for both government workers and the private sector workers.

Now that we have gotten over that, let us proceed.  One of  the missing tool for development of the human person discovered, was the lack of early preparation for most things, including retirement.  At school, or in our early working years, no one ever prepared us for what life at retirement would be like.  No one ever asked us to consider what level of life style we would enjoy in our golden years, if we were fortunate or lucky to reach that threshold.

As was to be expected, with few exceptions, the retirement bar hit us with an unexpected force of a tsunami, we experienced a culture shock.

There we were, after decades of an acquired life-style, only to discover in one motion, life’s reality upon retirement, if one had not prepared.  The reality hit home hard; to simply survive, we were obliged to live a more ascetic and parsimonious life, something that we had not planned on, or imagined.  However, we may have been naive to expect that our retirement years would have been easy and comfortable in the face of the marching cost of living.

There are some who might say, everyone should expect changes in life, so it would be inevitable that life in our latter years would not be as those in the prime of life.  But I would venture to say that God has a universal plan for all his creations, and he would not set up a system for us to suffer in our latter years. Rather he wants us to live with nature, and he even took the time to give us a time clock, and that is the sun. By the way, it supports all life. If we use its position in the heavens as an analogy of our life, we could equate the rising sun as our birth and developing childhood. The hot noon day and afternoon sum would depict our working years of toil, and the sunset at dusk with its beautiful varied hues, would depict the comfort of life we should enjoy. Just as the sun is never so beautiful than at sunset, so it ought to be with early planning, our nadir should be no less beautiful, comforting, and especially dignified. Yes, I believe our golden years should be as warm and placated as the golden and ruddy hues of a setting sun. Our God does not plan suffering. Unfortunately, this does not follow the master plan in many instances. I have come across some real life instances that overwhelm me. At one of our early general meetings on the cost of the utilities, an ex—policeman stated that he turned the control of the water to the point that the water had very little pressure, and it ran like sweet—oil. He further said he did not have a phone, and he lived alone, he never switched on his lights. We inquired how he read in the evenings? How he got anything done at nights? His response was, he read by the television’s glare, and that was the source of light in the entire house. Well, if you ask me he was sure one tough cookie. He epitomized the saying “when the times get tough, the tough get going”. That, I assure you however is not the way God intended his creations to live (or is it exist?) in their golden years.

But let us address the topic; I intend to do so in three phases. We initiated our activities unofficially as far back as 1987 a group of us, some of them have since passed away; we visited the then minister of finance the Hon. John E. St. Luce, our issues were mainly on streamlining and increasing the government pensions. We were told, they did not have the time, but would give a 10% across the board. We pointed out that there were a number of lowly paid retirees, termed compassionate pensioners, who were receiving between $40.00 and $100.00 a month, we suggested to bring them up to at least $200.00 a month, government agreed, and the 10% across the board was effected for the others.

Though the raise was welcomed, it was disadvantageous to those in the lower pension bands. As e.g 10% of $100 is $10, while 10% of $250 is $25. Such a raise only served to widen the disparity, and took the pension bands out of symmetry.

Ten years passed before the same ministry gave us the excuse that they did not have time, and would give another 10% across the board in 1997. It was pointed out at the time that for 10 years the cost of living had moved every year at a minimum of 2.5% compounded, and requested that the compassionate pensioners at $200 be increased to $300. Again, they agreed, but that sort of ad hoc pension increments only served to make for disparity; the higher paid pensioners were getting the body and thighs of the hog, while the lower paid pensioners were receiving the tripe and tails. The better paid pensioners were getting a larger slice of the raise than those at the lower end of the pension bands.

We decided, there and then, was not the way cc go; we formed our organization and had a meeting with the Minister of to give our association a human face. He seemed impressed with our presentation, and requested that we put up a white paper setting out all of the issues, we raised. This was done on the 21st March 2001, the theme was ‘the right to a reasonable standard of living”. the preamble we quoted from the U.N. Declaration of Human Rights Article 25(l.)

We set out our definition of pensions. We set out the dimension of the classes of pensioners. We drew the average stipend per pensioner which was $671 per month, without parliamentary pensioners. We then drew a comparison of what the government, spent per month on one inmate of selected institutions as against the average pension the result was this:

Fiennes Institute                                $1,759.00

Boys Training School -                       $1,832.00

Mental Home —                                 $2,300.00

Prison —                                            $2,640.00

Average Pensioner—                          $   671.00

We also pointed to the stark reality that the base pension of $300 a month really translated to $10 a day to live by, which caused some of our members to actually end up in the Fiennes, the Mental Hospital or the 
Prison. We also drew up a minimum basket and services, where we pegged the national poverty line to be $950 per month for one person John’s. This was made up of:

Food & Drink -                                  $300.00
Toiletries/Laundry —                        $ 50.00
APUA(wat. Tele. & Ele.)                   $150.00
Med./Health —                                  $100.00
Transport —                                       $ 50.00
Housing/Rent/Shelter —                  $300.00
                                                           $950.00

Today the poverty line is $1,200 per month. The object of the exercise then was to impress upon the administration, that some 56% of all pensioners were in truth and in fact existing far below the poverty line. We requested that base pensions be moved from $300 to $800 among other requests.

Our white paper was tabled in cabinet within a fortnight they reported back to us claiming that they were not aware that the position with pensioners was so desperate. They did not offer the $800 we had requested, but they raised the $300 basic to $500 in 2001, no other adjustments were made, even though we had done so. The social security pensioners began complaining bitterly and rightfully so, for they had contributed towards their pensions, yet some 2900 were receiving
$150.15.

We were obliged to address their plight for they had contributed, and in the end, the government pensioners who were non-contributory, were getting the far larger base pension of $500.

At this point I would wish to fast-forward to what we are doing, and what we have accomplished to date.

In March 2004 the UPP took over the reigns of government. We addressed our interests formerly to the cabinet, to this end we received a copy of their cabinet decision agreeing to a number of our requests and promises for their implementation in 2005.

Some of these were:—

•         Reduction of 50% on the total utility bills for those at 65 years, and 100% for those at 70 years. Incidentally, the cabinet decision pointed out that this was in keeping with their manifesto promise to ease the utility, burden from seniors. However, the PVV Caribe Utility subsidy programme was put in its place, but we still pursuing our earlier request.

•        Cabinet also agreed to exempt senior
citizens to a certain level from residential property tax, in that the first $150,000 value of their homes would not attract property tax; the second $150,000 value would only attract 50% of the tax applicable.

•        We had requested that the following il1nesses be added the med. Ben. Scheme short list of ailments.   They are arthritis, alzhymers, acid reflux, eye, ear, teeth, nose and throat illnesses.  This has been agreed in principle, but not actuated.

•        We requested a widow/widower’s pension to be paid to the survivor of a deceased spouse. Cabinet has agreed to this proposal and promised to implement it in January 2009.

•        We also requested that pensions be index- linked to the movement of the cost-of-living, with those at the lower levels receiving a higher percentage than those at the upper levels, this too has been agreed to, but not implemented as yet.

•        We requested the setting up of a Pension Review Board, they agreed, and have moved to establish a Pensions Modernization Commission to bring about full pension reform.

•        We have requested some level of “social protection”, for as soon as we sit back to measure our benefits, the cost-of-living, and the upward trend of goods simply overwhelm our pension budgets.
 

•        On the Social Security side, we got an increase to the base pension of $150.15 to $350.  We also got the old age assistance increased from $136.50 to $250.

•        We have requested that the above base levels be brought up to the governments base level of $800, or at the very least to close the gap; there ought not to be vastly different levels of base pensions.

•        We have requested that the social security pensions also be index—linked on the same lines as was suggested for the government pensioners.

•        We suggested moving the ceiling on the wage contribution of $4,500 to between $7,000 or $9,000 to tap into a potential revenue stream. Out of the $6,000 pensioners, at least 11% of them work in excess of $4,500 monthly.

•        The funeral grant of $2,500 is far and away from the cost of a burial today. We have requested a meaningful increase.

•        There is a gender bias in the Social Security Act that is heavily skewed against a male survivor; we have asked that this be amended, also that spouses below 50 years should be paid a pension instead of the 1 year duration as presently exists.

•        We have suggested that the age of retirement be raised to 65 years, due to the stultified contributory group and the burgeoning dependency group.

The international ratio is some 10 to 1. Presently there are some 35,000 workers to 6,000 pensioners, that gives a ratio of 5.3 workers to 1 pensioner. Disturbingly, the actuary’s projection is that in 2062 the number of contributors per pensioner will fall from 5.3-1 down to 1.5-1.

The situation is aggravated by:

•        A low fertility rate, smaller size families today than 30 years ago.

•        A relatively early retirement age of 60.

•        The voluntary separation package that did not go to plan.

•        Some 10 persons each week turn 60 years at the Social Security Scheme.

•        Governments policy on selective employment or a temporary freeze on employment.

•        We have requested a seat on the Social Security Board to better serve all pensioners. The actuary has recommended that it should be implemented.

We are aware that in the past we have suggested at least two or three

very controversial issues for consideration.

(1)      That the retirement age of 60 be raised to 65 and

(2)      That the ceiling for social security tax of $4,500 be raised to between $7,000 and $9,000

(3)      Also, that the non—contributory government pensions be made contributory in much the same way as the social security contributions are made, with government workers making contributions and government making matching contributions.

We receive so many requests on pension compilation that I thought I

should spend some time on this.

Civil and established officers must serve some 33 1/3 years before

they can look to a pension. Presently, they can however ask for an

early retirement at 55 years, this is optional, at 60 years however,

that is mandatory, they must leave.

Should death occur during one’s service the spouse or he person responsible would be paid the year’s salary or the gratuity which ever is greater.

The non-established officers are treated differently. Their spouses receive one year’s full salary if they die in service. They retire at 55 years, and they only have to serve 10 years to be pensionable.

The pension formula for Civil or Established Officer

Full pension =  Annual Salary x num. of years (months) 600

                                No gratuity

Reduced pension =  ¾ of full pension

Gratuity =              l2 ½  x (full pension)

-         Reduced Pension

Pension formula for N.E..O’s

Full annual pension =  num.of years x weekly wages x 52 wks 50

Full monthly pension = Annual pension

         12 months

Reduced monthly =            ¾  full pension

Gratuity =             150 (full pension) - Reduced pension

Formula for Social Security Pension

Social Security pension is only paid at 60 years. The best 5 years is selected from the last 10 years. The average is found, 25% is worked. In addition 1% of each additional 50 contributions, this should not exceed 50% of the average worked.

Social Security pays 3 types of pensions:

(1)    Transitional pension - from 156 Contributions starting before 1975.

(2)     Reduced pension - requires 350 - 499 contribution

(3)     Full pension - requires minimum of 500 contributions

The Way Forward

Our main concern really, is that the integrity of the Government pension scheme, and the social security scheme be protected and preserved for the long term future payments to all category of pensioners. This very month, the government’s consolidated fund and the social security scheme will presently be experiencing some degree of strain to meet their monthly payments to their pensioners. I believe in the course of my talk, I did point out some of the reasons for the constipation of the free flow of these funds. From the government’s side, it is due to an over-bloated civil service, ministers of government salaries being transformed to Pensions, and the fact that civil servants get a non- contributory pension from the consolidated fund. In addition the ratio between the contributory group and the dependency group is shrinking, presently it is around 5.3 to 1 but by 2062 it will be 1.5 contributor to 1 pensioner. Some of the reasons why raising the retirement age is suggested:

On the social security side, the dependency group and the contributory group ratio also applies, but this is aggravated by a number of other things:-

•        Every week, at least 10 persons become 60 years at the Social Security.

•        The $4,500 ceiling for deduction is low, at least 11% of the contributory group receive in excess of the ceiling limit hence a loss of revenue.

There remains the need to collect the amounts due from government along with the interest obligations. In 2002 the reserves were EC$524M 52% of the assets supporting the reserves were accounts receivable from the Antigua and Barbuda government. In addition 28% of the fund’s investments are non- performing.

It is imperative for the investment portfolio to be revamped with an idea towards more balanced and effective investment. The majority of the reserves attract a meager 3% which is poor, as this is just above the rate of the cost of living.

In a nutshell, both the government’s consolidated fund, and the ABSSE are experiencing severe strictures in meeting pension payments presently, and this is giving every indication of getting worse. No responsible government should sit on their hands and allow equilibrium to set in, if for no other reason than many pensioners rely on their pension stipends to carry them through from month to month. To its credit, this administration has established a “national commission on Pension Modernization”; the members are drawn from eleven interest groups. The terms of reference is widely comprehensive; out of this exercise should come fiscal fortunes of the two pension institutions, and an easement in their monthly ability to meet pension payments.

It would be remiss of me to close out without admitting that this government has displayed much empathy in many a negotiation. But, what has happened on occasions is that as soon as we sit back to budget out our benefits won, the cost of living some how appear to be energized, and spiral out of our means, with our newly won benefits being fully consumed. We have requested a measure of social protection to help us through the gaunt-let of the cost of living.

But, as an aside, there are those who see the social security as a component of social protection which is a fundamental human right, and which plays a crucial role in fostering “social cohesion” and in preserving human dignity, which is a plank in our mission statement.

To put it sussinctly, our association believes without reservation in fundamental human rights especially in the dignity and worth of all walks of the human person, and in the enjoyment of such human dignity as befits a member of the human race.  This is clearly set out in the words of the United Nations Declaration of Human Rights which article

25(1) states unambiguously –

“Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing, and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control”.

Our Association stands ready to share alliance with the Senior Citizens, the disability group or any similar association who share in our fundamental beliefs.

PENSIONER’ S CREED

Inner love, that gives so freely

Inner truth, that never fails me

Inner power, that holds securely

Inner eye, that sees so clearly

Inner voice, that speaks supremely

Inner ear, that hears him only

Inner good, that binds me to thee,

Thou art my whole being

I am lost in the depths of thy inner calm

and peace.

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