Bigger labour force dents pension coverage as assets near $900b

Jamaica’s private pension coverage fell in the June quarter even as industry assets climbed to a record just short of $900 billion, because the employed labour force grew faster than the number of workers joining plans.

Active coverage slipped to 12.67 per cent of the employed labour force from 12.76 per cent in March, and total coverage to 12.75 per cent from 12.85 per cent.

“These declines in pension coverage are primarily due to an employed labour force growing faster than pension membership over the June 2026 quarter,” according to the Private Pensions Industry Statistics June 2026 report, released by the Financial Services Commission (FSC) on November 2.

The employed labour force stood at 1,473,900 in the period, and the unemployment rate fell to 3.4 per cent in July from 3.7 per cent in April. Pension membership also grew, rising 1.28 per cent to 180,845 across 820 plans, of which 354 were active, one fewer than in March, but not fast enough to keep pace.

The coverage dip comes as job losses loom in the outsourcing and creative sectors, driven in part by the spread of chatbot and agentic artificial intelligence.

Assets reached $897.40 billion, up 1.98 per cent from $879.94 billion in March and 8.22 per cent from $829.21 billion a year earlier.

Beneath the totals, the industry’s centre of gravity has moved. Life insurance companies now administer $453.57 billion, or 50.54 per cent of assets, as against $372.36 billion, or 41.49 per cent, for securities dealers, which had held the larger share.

Defined-benefit arrangements still hold the bulk of the money. Some 104 active plans with 38,764 members control about 60 per cent of active assets, while 250 defined contribution plans covering 141,041 members hold $343.71 billion, or 39.19 per cent.

Of 345 active plans assessed for solvency, 315, or 91.30 per cent, were solvent. Six defined contribution plans were insolvent, an outcome the commission reminded trustees that should not arise in a true defined contribution plan.

Growth to slow

The commission expects the pace of asset growth to ease.

“Consequently, growth in private pension fund asset values is expected to be modest over the next quarter, as elevated inflation, higher interest rates, and limited investment opportunities continue to constrain market performance,” the FSC said.

That marks a tougher environment than the one that carried pension assets higher over the past several years, and the commission put the onus on the people running the funds.

“Pension plan trustees and investment managers are encouraged to continue to conduct their due diligence in market monitoring and rebalancing of portfolios where necessary,” the FSC said. “This proactive approach is essential for securing the preservation of the value of members’ retirement income, thus safeguarding their financial well-being upon retirement.”

The report cited the Planning Institute of Jamaica’s estimate that real gross domestic product contracted 2.9 per cent in the April-to-June quarter against the corresponding period of 2025, with a further decline of 0.5 per cent to 1.5 per cent projected for the September quarter. Weather shocks, worsening geopolitical tensions, and delays to major infrastructure projects rank as the key downside risks to growth.

Point-to-point inflation stood at 6.65 per cent in June, above the Bank of Jamaica’s 4 to 6 per cent target range. The report warned that pressures could intensify on higher global commodity prices, stronger domestic demand tied to post-Hurricane Melissa reconstruction, and agricultural prices lifted by drought and heat. Inflation has since climbed to 8.6 per cent.

The central bank raised its policy rate to 6.0 per cent in September from 5.5 per cent, and the commission expects rates to stay elevated in the near term.

Pension funds still added assets through the quarter, led by stocks and shares, government securities and repurchase agreements. Stocks and shares rose 5.62 per cent to $179.2 billion, while holdings of government securities increased to $194.8 billion.

business@gleanerjm.com