The Tribune

BAHAMIAN employers who do not offer staff company-sponsored pension plans are ultimately “hurting their own bottom-line”, a world-renowned personal finance expert has warned.

Suze Orman, the two-time Emmy Award-winning television host, who headlined a personal finance summit spearheaded organised by local administrator, Colonial Pension Services (Bahamas), again urged Bahamians who currently do not have a company-sponsored plan to “save themselves”.

Speaking at the Melia Nassau Beach hotel this weekend, she said: “It is very important that we take care of ourselves today as well as tomorrow. In the Bahamas, that is very difficult to do. If you aren’t being provided with the retirement vehicles that you need to secure yourself in your own retirement, you have got to save yourself. You cannot depend on the Government, the economy or anybody.”

Ms Orman added: “Even if all you did was invest in pensions for yourself currently, with how you can invest here you will see that the return will be far beyond what you are getting in your savings account.”

The best-selling author also noted that National Insurance Board (NIB) payments would not be enough to maintain most Bahamians’ living standards in retirement. “Social insurance is not going to do it for you,” said Ms Orman.

The Christie administration has indicated 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.

“The good thing about not having any pension legislation is that any money you voluntarily put into an individual pension,you can take out at any time you want without any penalty whatsoever,” said Ms Orman.

She added that employers were “kidding themselves” if they believed they were saving money by not offering employee pension plans. “For the employers not offering a pension, what are you doing to your employees and why? “ Ms Orman asked.

“When people don’t have to be thinking about their own retirement, when people feel like they are being taken care of and don’t have money problems, they feel more secure and ultimately make better and more productive employees. You are hurting your own bottom line by not giving them a pension.”

She added that employee turnover, training and worker productivity were among the major cost factors for employers.

Ms Orman who has often voiced her dislike for annuities, told a room packed with attendees: “ Annuities are simply a contract with an insurance company. They give you a specific interest rate for a specific period of time. In the US, if you put the money in an annuity they give you an interest rate, but you do not have to pay taxes on it while the money is there.

“ If it were in a bank you would have income taxes on it. That doesn’t exist in the Bahamas. Because you are the annuitant, there are fees and expenses within that annuity that, when it is all said and done, you are not going to get as much as possibly you would be getting at a bank. They tell you put all this money in an annuity and they can give you a fixed cheque every month for the rest of your life.

“Can you image that if you would be retiring today you would be locking in the lowest rate in the history of the Bahamas forever. Why would you want to do that to yourself? They make absolutely no sense in my opinion, especially if you have no taxes.”

Ms Orman, who was ranked in the top 10 by Forbes magazines as one of the most influential celebrities of 2013, also warned Bahamians struggling to get out of debt to “live below your means but within your needs”. “Just because you are bringing home $2,000 a month or whatever, it does not mean that you have to spend $2,000 a month,” said Ms Orman.