GRENADA has no choice but to increase the pension age and contribution minimums for islanders to receive retirement benefits from the National Insurance Scheme (NIS).

This was the message conveyed on Friday by Minister of Social and Community Development, Philip Telesford, and NIS Director, Dorset Cromwell, as they justified the government’s plans to make amendments to the National Insurance Act next week to raise the pensionable age to 65.

“If the government fails to make the legislative changes, the NIS will come crumbling down in a few years,” Telesford stated.

Telesford revealed that the pension fund contained approximately EC$953 million.

Cromwell said: “To save our social security system, we must increase the pensionable age as a matter of national urgency.”

“If you are in your 20s and your 30s and if we as a country and as a people continue to do nothing, you would not get a pension. And if you do get a pension, there will be days when you have to wait for it.

The government is seeking to increase the pension age to 65 by 2029 and the contribution rate to 16 per cent by 2031.

The minimum contribution rate will move from 500 to 750 by 2028.

The reforms proposed by the government will also see the pension scheme move away from being an age entitlement.

If approved by the parliament, the first change will take effect in 2024 when the minimum contribution to qualify for a pension will increase to 550.

Persons, who do not make the required payments, will not be left to suffer in their old age, as Telesford said they would receive a government grant.

Cromwell noted that recommendations to increase the pensionable age were made to the government since 2002, but successive administrations chose to “cherry pick” the reforms they wanted to make while leaving the tough choices for another administration.

“Over our history of 40-something years, the changes that we have made have fundamentally hurt the NIS and not helped the NIS,” he remarked.

He said the country is already seeing the effects of failing to make changes to the social security scheme as current contributions are less than pay-outs.

“The reality of the situation is that we are already in that position. Because in 2021, in order to pay pensions and other benefits, we had to break term deposits. In 2021, we broke 8 term deposits totalling 14.3 million. In 2022, we broke 6 term deposits totalling 14.45 million to do the same. In 2023, we have already broken eight term deposits totalling 22.8 million and the year is not quite finished yet,” he said.

Cromwell said Grenada is not the only country making changes seeking to increase the pension age and contribution as neighbouring countries have already begun the process.

St Lucia and Dominica recently increased their retirement age to 65.

St Vincent and the Grenadines is also moving to increase the retirement age to 65 by 2028 as well as increase minimum contributions to over 750.

Barbados, which has one of the highest retirement rates in the Caribbean at 67, is also moving to reform its pension programme. (Loop News)