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Chamber Director ‘Tasked’ With National Pension Fund Set-Up

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Chamber of Commerce director yesterday revealed he has been “tasked” with developing a National Workers Pension Fund in a bid to tackle The Bahamas’ looming retirement crisis.

Peter Goudie, who sits as one of the private sector representatives on the National Tripartite Council, told Tribune Business the initiative was designed to get Bahamians “thinking about saving for retirement for themselves” rather than relying on the government and/or their employers to take care of them.

Confirming that the Council has given him this “mandate”, Mr Goudie said the Fund was primarily targeted at Bahamians whose employers did not provide them with company-sponsored pension plans because this was cost prohibitive or due to other factors.

He added, though, that workers needed to use the proposed fund as a vehicle to start taking responsibility themselves for their post-retirement financial needs, given that less than 30 percent of the workforce is thought to be covered by employer-sponsored plans.

With Taylor Industries the latest example of a company to cease operating without paying its 43 employees the collective $682,096 in termination pay they are entitled to in law, Mr Goudie said greater focus needs to be placed on retirement savings to ensure workers have some kind of financial protection in such situations.

Recalling how pensions legislation drafted under the last Ingraham administration stalled once it was voted out of office in 2012, he added: “It really begs that we need a retirement plan policy in this country.

“I was on the Pensions Task Force under the previous FNM government. The legislation was brought to the floor of Parliament by the PLP in the first year after they won from the FNM, and nothing happened to it. Unfortunately, there were changes made which we would have objected to.”

The effort ultimately stalled, with the legislation produced by the Pensions Task Force moving no further forward. However, Robert Farquharson, the former union head and labour director who now chairs the National Tripartite Committee, revealed earlier this year that interest had revived with the creation of portable worker pensions included in its three-year strategic plan.

“We’re also looking at the possibility of a National Pension Plan,” Mr Farquharson said at the time. “We feel more people would be willing to change jobs, and be more productive, if they could take their pension with them.” He added that the design of such pensions would be based on the US 401(k) model.

Mr Goudie yesterday confirmed this task has been assigned to himself, telling Tribune Business: “Through the National Tripartite Council I have been tasked with instituting a National Workers Pension Fund so that people, separate from NIB, have some type of savings for their retirement.

“If companies cannot afford it, people will be able to pay into it. People have to learn to save for themselves. They expect government, the company to look after them for life. People need to think about their own retirement instead of expecting someone else to take care of them.

“It’s a very difficult discussion about who should look after who. People will say the Government will do this, the company will do this, but what are you doing about it yourself. I never expected someone else to take care of me later in life.”

Mr Goudie said the proposed National Workers Pension Fund would be professionally-structured and set up in accordance with international best practice, with its finances overseen by the likes of trustees, pension administrators and fund managers.

“A lot of small companies can’t afford pension plans,” he added, “but if we get people thinking about saving for themselves when they’re young..... That’s my mandate and what I’m working on.”

Taylor Industries’ route into insolvency, and lack of funding to pay staff their due termination pay under the Employment Act, has also highlighted another initiative included in the National Tripartite Council’s three-year plan - the creation of a National Redundancy Fund.

Mr Farquharson said in January: “We’re looking at the possibility of establishing a National Redundancy Fund to ease the pressure on employers to pay employees what they are owed when the company fails.”

A National Redundancy Fund has been proposed before, especially by trade union leaders such as Trades Union Congress (TUC) president Obie Ferguson, who have argued that it will provide appropriate protection for employees in terms of paying them severance and other benefits should their employer - especially a foreign one - either close down or skip the country.

While that would have aided the likes of former Royal Oasis employees and ex-Taylor Industries staff, the prime concern with such an initiative is how it would be financed, by whom, and how much they would pay.

Further expanding The Bahamas’ social safety net frequently fills employers with dread, especially the many who are struggling, because it seems to promise an increased tax on both businesses and employees to finance it.

Mr Goudie yesterday told Tribune Business that he personally objected to the concept of a National Redundancy Fund because it would force well-run, successful companies to pay for those that are poorly managed and unsuccessful.

“There’s been a lot of talk about setting up a Redundancy Fund, which I don’t agree with, because it means well-run companies are funding poorly-run companies,” he said.

The issue was brought into sharp relief by the sums owed to former Taylor Industries employees. Several observers have privately suggested to Tribune Business that the company’s predicament highlights how the Employment Act’s termination provisions are overly-generous and too great a burden for employers - especially those that are struggling.

Andrew Davies, the Crowe Bahamas accountant who is acting as Taylor Industries’ court-supervised liquidator, wrote that the termination sums due were cost prohibitive for a business losing such significant sums of money, creating an obstacle to downsizing and saving the business that proved impossible to overcome.

“Taylor Industries staff demographic contained many long-standing employees who, under Bahamian labour law, would have been entitled to significant termination pay for which the company did not have the cash reserves to meet as part of a restructuring exercise,” Mr Davies wrote.

Documents attached to the liquidators report show some former Taylor Industries managers are owed more than $71,000 in termination pay but, with the business possessing realisable net assets of just over $288,000, they are only likely to recover “cents on the dollar”.

Comments

tetelestai 5 months, 1 week ago

Jeez, someone really needs to teach Neil how to write an article. He just seems to throw everything against the wall, in this case, the newspaper, and hopes it sticks. And, he is only getting worse.

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bcitizen 5 months, 1 week ago

Will this be another mandatory salary deduction for a government managed fund? If so l cry for us all.

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screwedbahamian 5 months, 1 week ago

With the Mass amount of Bahamian living at or below the poverty line ( reality) to think about reducing one's income to save and invest funds for retirement is to say to go without living for several days per week Scammers feed on situations that exist in our country and line their pockets for themselves, their families and their lovers by milking their companies into insolvency and POOF like smoke, your money gone! .Foreigners use our God given beautiful land and water to profit and live in retirement in foreign lands AIDED BY OUR PEOPLES Governments. Our Government managed National Insurance Pension Fund, Mandated at the time of our INDEPENDENCE in 1973, were not government funds but funds from employers and individual employees that were in trusted to the management of our government and DUE TO CORRUPTION and MISMANAGERNMENT by the Hubert "PAPA DOC" Ingraham government many Bahamians have to survive today in their old age without any retirement or dignity despite trying to TAKE CARE OF THEMSELVES through the government mandated retirement scheme. SHAME! SHAME!

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Chucky 5 months, 1 week ago

“Confirming that the Council has given him this “mandate”, Mr Goudie said the Fund was primarily targeted at Bahamians whose employers did not provide them with company-sponsored pension plans because this was cost prohibitive or due to other factors”

If the companies can’t afford to give the employees a pension, how does it make sense that employees fund it?

I.e. it’s ultimately salary salary that must fund retirement , in one form (paychecks) or (paycheck and pension) . If employers can’t afford it, then clearly salary alone won’t allow the individual to fund it.

It’s a fool who appoints a corporate member to design the retirement system for the employees. Corporations want to pay as little as they can, their obvious goal is to offload any costs, they only care about the production of any given current employee and want to pay as little for that as possible. What thinking person would want to trust someone of corporate mindset to set up their retirement future when you are clearly no longer producing for the corporation. Again, when you’re working for the corporation they barely want to pay you, why would they do anything to ensure you have money once put out to pasture.

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