By NATARIO McKENZIE
Tribune Business Reporter
THE government's decision to make civil service pensions "contributory" for new hires was yesterday branded "a good step", although it will do little to address its unfunded multi-billion dollar liabilities.
Robert Myers, the Organisation for Responsible Governance's (ORG) principal, told Tribune Business: "It's a good step, but the 50,000 pound gorilla is the existing pension liabilities. That has to be addressed. The new hires aren't going to affect the big numbers. That contingent liability is somewhere around $2bn and that has to be addressed.
"The problem is not the new hires; it's the significant number of existing hires; civil servants with no cap on their pension liability and no contribution. That is just unsustainable. The reality of the matter is the when it comes time to pay the money won't be there anyway."
The prime minister, during his 2018/2019 budget address on Monday, said: "I wish to announce a necessary step in terms of public pension reform. In keeping with the practice of many countries, civil servants' pensions will be contributory for new hires. Commencement date to be announced soon. This reform is also necessary in order to begin to seriously address a large pension shortfall."
The Bahamas Public Services Union's (BPSU) president, Kingsley Ferguson, told Tribune Business: "If it's to affect the new employees that's fine if they contribute to their pensions. They would be the ones to determine what they receive at the end of the day. As long as it is not going to have an impact on existing employees it's not a major concern for us. Still, those new hires, depending on what their earnings are, will feel the impact."
The government's unfunded public sector pension liabilities are projected to hit $3.7bn by 2030 unless corrective action is taken to protect Bahamian taxpayers from this unsustainable fiscal burden. KP Turnquest, deputy prime minister, previously told Tribune Business that pension reform is among the government's medium-term fiscal goals.