Finance Ministry, NIB in talks to increase retirement age to 65

THE Ministry of Finance and the National Insurance Board (NIB) are discussing whether or not to increase the retirement age from 60 to 65.

On Wednesday, during a Parliament public accounts committee’s inquiry into the audited financial statements of the NIB, for the financial years 2014 to 2020, that ministry’s acting permanent secretary Jennifer Lutchman said the ministry is considering making the change.

“At this point, what is engaging our attention is moving the retirement age from 60 to 65,” she said.

“We are currently engaging in different scenarios, looking at the current economic situation (and) looking to determine what kind of solutions would be palatable.”

Lutchman said the ministry cannot yet say when the implementation would take place as minister Colm Imbert would have only recently reviewed some of the ideas being put forward by the NIB.

The increase in the retirement age is one of the solutions NIB has suggested to address the issue of the declining number of insurance contributors.

NIB executive director Naila Persad-Poliah said that in the ninth and tenth arterial review – done to determine the level of expenditure versus benefit payments – it was predicted that from 2013, the contribution benefit would no longer be sufficient to support the benefit expenditure.

“Over the last two years, as of 2020, the contribution and investment income combined were insufficient to support benefit expenditure and administrative expenditure,” she said. “We had to use not only investment income but cash and cash equivilants to support the deficit.”

She said reform is urgently required and suggested three major changes. The first, she said, is the gradual increase of the retirement age. The second, the gradual adjustment of the contribution rate, currently at 13.2 per cent, to 16 per cent. And third, that the minimum pension be frozen until it becomes relevant to change it.

She said the NIB has been meeting with the ministry and other key stakeholders to discuss proposed solutions.

NIB chief operations officer, Business Services, Feyaad Khan said the aging population is not only a reality for TT, but other countries around the world. He said the last actuary review indicated there are 3.2 contributors supporting each pensioner.

“That number is projected to decline to one to one over the next 50 years. That is in the absence of reform whish is urgently needed.”

He said by changing the retirement age, people will be contributing longer and the benefits are paid for a shorter period of time so the number over time will decline.

He said that in 2015, there was a rate increase from 12 per cent to 13.2 per cent and that change buffered liquidity restraints in the system.

“We are cognisant of the fact that the economy is facing other challenges and care must be taken and a gradual consultative approach must be done in making changes.”