The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A world-renowned personal finance expert yesterday backed the Government’s drive to make pensions mandatory in the Bahamas, and added: “You can still save yourselves from a financial nightmare.”

Suze Orman, the two-time Emmy Award-winning television host who will headline a personal finance summit in the Bahamas on May 17, warned that failure to tackle this nation’s looming savings/retirement crisis would leave the country on a “highway to poverty with no sidewalk off it”.

Ms Orman, who is being brought to the Bahamas by local pension administrator, Colonial Pension Services on May 17, told Tribune Business in an interview that all societies had to be built from the bottom up.

Those at the bottom, who lacked any personal and retirement savings, would end up “pulling wealth down” through the need to support them with social security spending.

And, unless pensions became mandatory, many Bahamians would choose not to save for their retirement - a phase that was increasingly lasting longer than their working lives.

Emphasising that she had a personal interest in this nation, because she is currently building her own retirement home near Bimini, Ms Orman told Tribune Business: “For me, what is very sad in the Bahamas is that your pensions are not mandatory.”

Agreeing that National Insurance Board (NIB) payments would not be enough to maintain most Bahamians’ living standards in retirement, the best-selling author added: “People need to understand, and government needs to understand, that society and the economy are built from people that don’t have anything up.

“If people don’t have money, they will pull wealth down just to take care of them. If you really care about the Bahamas, you have to care about these people that feel they don’t have money to put away.

“You have to give them incentives, you have to make it mandatory. Because if you don’t, people are not going to choose to do it.”

With just an estimated 25 per cent of the Bahamian workforce covered by pension plans, financial advisers have long warned that this nation faces a ‘ticking timebomb’ created by a combination of demographics and lack of personal savings.

With persons generally living longer, the amount of retirement income they require is becoming greater, yet along with the minimal pension coverage, it has been repeatedly pointed out that 90 per cent of Bahamian bank accounts have less than $1,000 in them.

The relatively low savings rate and pension coverage levels appear to now be getting the Government’s attention, with the Christie administration now indicating it is prepared to further amend the Employee Pension Fund Protection Bill to make company-sponsored plans for their employees mandatory.

The Bill had initially focused on protection, and regulation, for existing pension plans, and some observers have questioned whether forcing all companies to set up employee pension plans will create another unsustainable burden for the private sector.

Others have argued that the responsibility should be placed on the worker, not the employer, to safeguard their retirement interests. But the counter argument is that the Government cannot ignore the negative social and economic implications of the current situation.

Either way, given her status as a personal finance ‘guru’, Ms Orman’s support for ‘mandatory’ pensions will likely give those backing such a move considerable heart and support.

Ms Orman said failure to act would see the Bahamas follow the US, developing into a class-divided society where the rich were becoming richer, and the poor, poorer.

She added that in this nation’s northern neighbour, some 50 per cent of the population had less than $1,000 in savings, while 50 million were living in poverty and another 100 million were on the “verge” of such a status.

“One out of two people in the US is on the verge of poverty,” Ms Orman told Tribune Business. “Bahamas, don’t think it can’t happen to you.”

If it did, she warned that tourism would be impacted, crime rates would increase and “everything will change”.

Yet Ms Orman said that even with just a 25 per cent workforce pension coverage rate, “believe it or not, you can save yourselves and become the beautiful country you are”.

“You have to take care of the people that don’t think they can take care of themselves,” Ms Orman added.

“It’s important that the Government gets on board here, the people tell the Government what they want, and that everybody starts looking within to see why they’re doing without.

“It’s not too late for the Bahamas; it’s just not too late. Your unemployment rate, there are definitely problems there, but there is no problem that cannot be solved. They need to make pensions mandatory.”

Ms Orman added that mandatory pensions needed to be accompanied by appropriate rules and regulations to prevent beneficiaries from being “ripped off” by unscrupulous financial managers and administrators.

“They [the Bahamas] really need to have a governing body that overseas all the financial instruments and companies that are going to tell people what to do,” she said.

Backing any national education efforts to sensitise Bahamians on the importance of savings and retirement planning, Ms Orman added: “Just because people are educated doesn’t mean they are going to save in a place where they are not ripped off.

“You have to make sure they are not ripped off, and that comes from the Government down. You have to take care of your people in every possible way.

“Don’t create your own financial nightmare people; you just don’t have to do it. You have to save yourself.”

M In March 2013, Forbes magazine awarded Ms Orman a spot in the top 10 on a list of the most influential celebrities of 2013 s Orman said the Bahamas looked like “a complete gold mine” compared to places in Africa and Asia where she had previously spoken at seminars, adding that she was holding the May 17 event at the Melia Nassau Beach for “personal reasons” given her existing affiliation with this nation.

“I’m building a home in the Bahamas on a little island near Bimini,” she told Tribune Business. “I see the Bahamas, go to Bimini, have been in Bimini, and had my Nathan’s Bread.

“There is a spirit that can be ignited in each of those people, shining like a sun that brightens the island. I’m not coming and leaving; I intend tend to spend my retirement years here.

“I want to live in a place where people are thriving; where you don’t have rich and poor, and have a thriving middle class. Without that you have nothing.

“I’d love to work with the Government to make it how it should be, and ensure the mistakes that happened in the States never happen again.”

In March 2013, Forbes magazine awarded Ms Orman a spot in the top 10 on a list of the most influential celebrities of 2013.

In January 2013, The Television Academy Foundation’s Archive of American Television honoured her broadcast career accomplishments with her inclusion in its historic Emmy TV Legends interview collection.

Ms Orman is also the contributing editor to ‘O’, The Oprah Magazine, and is in her 13th year as host of the award winning Suze Orman Show, which airs every Saturday night on CNBC.