NASSAU, Bahamas — The Government’s unfunded multi-billion dollar pension liabilities, projected to hit $3.7bn by 2030, were yesterday branded “a big time bomb waiting to go off”, Business Editor Neil Hartnell reported in an articleI in The Tribune on May 15.
Robert Myers, the Organisation for Responsible Governance’s (ORG) principal, told Tribune Business that unfunded civil service pensions were threatening to send The Bahamas “bankrupt” unless swift corrective action was taken.
He spoke out after the International Monetary Fund (IMF), in its full Article IV report on The Bahamas, again warned that the current system – where civil servants contribute nothing to funding their retirement – is “unsustainable”.
The Washington DC-based Fund again listed civil service pensions, together with the public sector’s wage bill and loss-making state-owned enterprises (SOEs), as three key reforms that the Government must target if it is to reverse The Bahamas’ fiscal decline.
“The civil servants’ pension system is unsustainable,” the IMF warned. “Government employees draw pensions at retirement without contributing to the system while employed.
“Staff analysis in the 2016 Article IV Staff report noted that accrued government pension liabilities totaled B$1.5bn in 2012, and would rise to B$3.7bn by 2030 as the population ages.”
The IMF called for reforms that involve “moving to a contributory regime in the near term, and to a defined-contribution scheme in the medium-term”. This would require civil servants to contribute a portion of their salary to funding their retirement, rather than having this financed 100 per cent by the taxpayer through the Budget – as is done currently.
Mr Myers yesterday described these unfunded pension liabilities as the Bahamas’ “single biggest problem” alongside energy costs, the near-$8 billion national debt and $300 million-plus annual deficits, and accused successive administrations of “ignoring” the looming problem.
