Finance Minister Camilo Gonsalves said in 2022, the amount provided to pay pensions to retired civil servants and the Government’s counterpart contribution to the NIS for civil servants currently employed is $ 74.8 million.
This amount is comprised of:
Pensions $60.3 m
NIS Contribution $14.5 m
$74.8 m
Pension continues to be one of the more significant items of the recurrent expenditure in 2022. Budgetary provisions for pensions have grown significantly in recent times.
With the increase in average life expectancy, added medical expenditure by the government and rising inflation nominal pension is bound to increase in the future. The allocation towards pension is fiscally unsustainable as our system is non-contributory and is being financed by current revenue. We need to ensure that adequate funds are being set aside to meet future liabilities as they accrue.
With constricting fiscal space consequent upon COVID-19 and the volcanic eruption, government has to look at reforming the defined benefit pension program, as high pension will continue to reduce fiscal space available for health, education and other welfare-related priorities.
This can have serious knock-on effects on the vulnerable among us. Consequently, I wish to reiterate what I’d said during my budget consultation with stakeholders in the Business Community that is, in the 2022 budget pension reform would be foremost on the government’s agenda and we would at least commence discussions on the issue with the various stakeholders in the upcoming fiscal year.