Home' Trinidad and Tobago Guardian : May 25th 2017 Contents MAY 25 • 2017 guardian.co.tt BUSINESS GUARDIAN
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Economist Dr Ronald Ramkissoon---who spoke on the topic of the
economic rationale for pension reform at the seminar---said pensions
are important part of the social infrastructure of any modern economy.
"If we were to distinguish between a developing economy and a
developed ones, then we would see how pensions in the developed
He said pensions help what economists call "consumption smooth-
"In effect, what this model seeks to do is to transfer consumption
from the working age to your retirement years. Secondly, pension
surplus insurance covers when people get ill, accidents, pregnan-
cies and so on. So insurance manages uncertainties. Once there are
uncertainties then pensions help mitigate some of the risks," he said.
Ramkissoon added that pensions also help with income distribution
as pensions can help to provide a supplementary income. Pensions
also help with poverty alleviation as it provides social assistance and
it can also encourage savings which spurs growth and development.
"So if pensions are important then it is important to ensure that
the existing system is fit for its purpose. A pension system must be
able to meet the objectives. We live in a dynamic world and must
examine the existing pension system ever so often to ensure that the
funds are appropriate."
He also said that the national pension system should be outside
of the reach of politicians so that ad hoc, economically ill advised
decisions will not be made.
"We need to pay attention to reforms of automatic adjustments to
ensure that we have a sustainable pension system."
He referred to the conclusion of the 2013 actuarial review of the
pension system which showed that the financial situation of the NIS
"The general average premium of the scheme has increased from
17.6 to 23.8. On that account, major actions must be taken in order
to restore the financial health of the system. The report also sees a
marginal increase in the population decline in the future. This has
an adverse impact on the labour force and the number of persons of
pensionable age will grow."
Ramkissoon described the findings of the 2013 actuarial review
"The fact that income from the mainstay of the economy, oil and
gas have declined considerably means that our system needs to be
reformed as quickly as possible. I agree that an adjustment should
be made from age 60 to 65 for the retirement age. The truth is the
situation at the present time is bad as the state of the NIS has come
under increasing pressure. If nothing is done then the level of taxation
is likely to be much higher as future adjustments are made, or people
might get lower benefits when they are older," he said.
He said pension reform must be considered as part of a cultural shift.
"There are too many that are unaware as to the importance of pen-
sions and education should be made a priority by all relevant agencies.
Can reforms of the system stimulate economic growth as in the case
of some countries? Chile is one country that is very popular," he said.
Ageing population costs
Mariano Browne, a former Finance Minister who also spoke at the
seminar, said although T&T has an ageing population, no one has
asked the question: what is the government's capacity to maintain
He said government expenditure on healthcare is 5.9 per cent and
if there is an aging population, it can be expected this figure spent on
health to double in the next 20 years.
"If this is taking place and the level of healthcare is expected to
increase then look at a hospital that is still to be opened. The country
does not have staff and the income to fund it. The reality is in terms
of recurrent expenditure we must talk of priorities and how we will
allocate it. What are we not going to spend money on, to move money
He said the problem is the government and their policy of budgeting
for only one year is "putting the country in problems."
He argues that budgeting should take a longer-term approach.
Browne like Ramkissoon believes that decisions to reform the pen-
sion system must be taken out of the hands of politicians.
"We should thank the founding fathers for putting into the legis-
lation an actuarial review into the NIB. Because we are kicking the
can down the road with the NIB and we are not making the necessary
adjustments," he said.
Former politician Selby Wilson says T&T is
in a better economic place today than when
he served as finance minister between 1989
and 1991 in the National Alliance for Recon-
Economist Gregory McGuire, in a Busi-
ness Guardian article last week, described T&T's present
economic climate as the same as the 1980s recession but
Wilson did not agree.
Giving his take on T&T today, he said, "I think the Gov-
ernment today, while they have some challenges, is in a
better place than we were in 1986. We had no foreign re-
serves, no Heritage & Stabilisation Fund (HSF). We were
in a very bad place and were unable to service our loans.
"That's one reason why we had to have the IMF pro-
gramme. We couldn't go to the creditors until we had the
Wilson said T&T is not in that place right now.
"We still have nine to ten months' foreign reserves and
we do have access to the HSF."
As finance minister from 1989 to 1991, Wilson imple-
mented IMF austerity measures and was one of several NAR
government ministers held hostage in the Red House for
six days by Jamaat al Muslimeen insurrectionists during
the July 1990 attempted coup.
The NAR became unpopular with the masses after it
introduced severe austerity measures when it came into
power in 1986 to deal with the dramatic economic downturn
caused by a drastic fall in oil and gas prices.
The Summit of the People's Organisation, an amalga-
mation of trade unions, non-governmental organisations,
public servants and prominent individuals, like Jamaat al
Muslimeen leader Yasin Abu Bakr and Canon Knolly Clarke,
and deceased PNM MP Morris Marshall, staged several
demonstrations in the months preceding the coup d'etat.
Wilson testified at the Commission of Enquiry into the
attempted coup in 2012. He told the T&T Guardian he was
psychologically traumatised after the uprising and would
jump out of his sleep at nights as if he was fighting some-
body. He said he thinks he has healed now and no longer
He said "a series of political parties" were behind the
protests leading up to July 1990 which promoted the idea
the NAR did not need to do what it did.
"A kind of empathy was generated by politicians that
(then prime minister Arthur NR) Robinson was a wicked
man, that he was a Tobagonian and didn't like Trinidadians.
"But you are not seeing that kind of thing now."
Summing up his experience as a finance minister during
those difficult years, Wilson said, "It was a great learning
experience for me."
Given his background as a finance minister in a period
of economic decline, Wilson gave his take on the property
tax and other taxation measures the Government is using
to deal with the current economic downturn.
He said the property tax is a valid measure.
However, Wilson, now 77 and employed with a Caricom
organisation in the area of telecommunications, believes
the Government faltered with regard to the property tax
rate. And he foresees difficulties with implementation
because of the sheer volume of documents citizens are
being asked to submit.
Government's appeal of the interim stay of the measure
granted by Justice Frank Seepersad in the High Court last
Friday evening will be heard on June 6.
Former People's Partnership government minister,
Devant Maharaj, through his attorneys led by Anand
Ramlogan SC, another former PP minister, is claiming
the approach to enforcing the tax is unconstitutiuonal,
illegal and ultra vires.
Asked for his response to government's plan to use tax-
ation as its main source of revenue, Wilson said: "Tax-
ation has always been the government's primary source
of revenue, a significant part coming from the oil sector.
"Okay, so they raised some taxes," he said, referring to
those outside of the oil sector, like the so-called million-
aire's tax and the broadening of the VAT base.
But he countered the Government also raised personal
allowances at the same time. "They increased personal
allowances, which means more people are excluded from
the tax net. If you earn $6,000 and less, you don't pay tax."
While he has no problem with the current adminis-
tration's taxation policies, Wilson said the problem was
that government seemed unable to engender confidence
among citizens in how it was addressing various problems
in the country
"They are talking the language (of fixing) but not getting
the desired results."
He said too many negatives continue to face the local
business sector, "like crime and foreign exchange prob-
lems every week.
"There's too much of a blame game. The other side did
this and the other side did that. They (the Government)
are in charge now."
minister Selby Wilson
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