The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A SENIOR accountant believes closer regulation and supervision of pension funds in the Bahamas is critically important, telling Tribune Business that just over $1 billion in pension assets were for the most part “not heavily regulated”.

Kendrick Christie, a fraud examiner and partner with Grant Thornton (Bahamas), told Tribune Business that closer regulation of the pensions sector was critical, given its importance to retirement incomes.

Mr Christie, who was part of a Taskforce appointed by the previous Ingraham administration to look at the Bahamas’ pension sector and provided recommendations for regulating it, said: “I have always been a proponent of regulating pensions in this country. Regulation and close supervision is critically important because a lot of money is tied up in pensions. We have over $1 billion in assets in this country which, for the most part, are not heavily regulated.”

The new Christie administration has pledged to bring employee pension funds under “closer regulation and supervision”. This is “to ensure that pension funds are duly protected; and that trustees and managers of pension funds are held to higher standards of transparency and accountability; and that employees are afforded access to their pension savings for emergency purposes, including mortgage relief”.

Mr Christie said he was pleased the new governmment appeared committed to bringing closer regulation to the sector, noting that the Taskforce had already drafted recommendations to that effect.

Mr Christie said: “The committee had adopted the 12-point guidelines for pension fund governance, which were designed to help protect a person’s retirement benefits from mismanagement and fraud.

“We recommended the establishment of an authority that would be set up specifically to regulate pension plans. This would also guide the carrying out of mandatory pension plans for all companies above a certain employee level.

“It would ensure savings, and that employees have a pension amount when they retire or resign and have vested. The committee had spent a lot of time researching, looking at countries in the region and Latin America. We got to the point where we had a draft bill that could be used to bring the legislation into effect. We expect that the Organisation for Economic Cooperation & Development (OECD) will look for us to move toward the regulation of our pension assets.”

Mr Christie added: “The second part of the committee was to establish a National Pension Plan to supplement NIB.

“We focused really on the regulation and, secondly, the establishment of a National Pension Plan. One of the concerns with a National Pension Plan is you have persons who are contributing NIB or out of work, for instance, and this would have been an additional deduction out of their salary.

“That’s one of the things we have to iron out. I saw that as something that could be overcome if it’s done fairly. When persons retire, all they get is what is entitled to them under the Employment Act. You have persons who spend 40 and 50 years with a company and get basically nothing.

“One of the objectives of the OECD is they say that good governance would encourage savings and financial planning by a country’s citizens, and I think the establishment of a pension plan regime would go a long way to do that. I think maybe they would have to look at the regulation of the current pension plan before they go about establishing a National Pension Plan. Pension plans should be transferable; that’s something I support.”