Growth & Jobs | ‘Retirement planning is not optional’ - JN director

Hugh Reid, managing director, JN Life Insurance, is calling for the estimated 500,000 self employed workers in Jamaica to urgently prioritise retirement planning, warning that the country’s shifting demographics and low pension scheme enrolment place many at severe financial risk later in life.

Reid, who is also a director on the board of directors of the Insurance Association of Jamaica, said data from the Planning Institute of Jamaica Economic and Social Survey of 2024 show that Jamaica’s population is ageing. He said the data shows that the country’s median age has climbed to just over 31.1 years, up from 28.9 a decade earlier, reflecting decades of declining fertility rates and rising life expectancy.

Similarly, the Statistical Institute of Jamaica (STATIN) projects that by 2050, Jamaicans over 65 will outnumber children for the first time in history.

“This situation in terms of retirement planning is dire because when you look at the numbers, by 2050, children under 15 are expected to account for about 16.9 per cent of the population, while persons 65 and older will make up roughly 18.5 per cent,” he said. “The health data also shows that women now live into their mid 70s on average, while men approach the low 70s, further accelerating the number of years Jamaicans must finance after retirement.

“When you look at these numbers you realise that the country’s approximately 40 per cent self employed labour force remains dangerously underserved by formal retirement mechanisms. Many are not contributing consistently or at all, to individual retirement schemes or the National Insurance Scheme (NIS), so they have to continue working well beyond retirement or leaving them reliant on minimal PATH or poor relief benefits or vulnerable to slipping into poverty due to age, illness, or income disruptions,” he added.

The insurance executive pointed out that it was important for those who are self-employed to think about retirement in a meaningful way.

“Self employed persons must think seriously about having a solid pension plan because of the risks associated with retirement,” Reid stated. “Many Jamaicans who work independently, whether professionals or blue collar, simply do not have the safeguards that traditional employees with superannuation funds enjoy.”

Reid noted that although the NIS provides foundational protection, its current monthly pension payout, approximately $13,600, is nowhere near adequate to cover basic living expenses in today’s economy.

“The reality is that someone depending solely on the NIS will struggle,” Reid said. “Many pensioners will either have to reduce their standard of living drastically or seek additional income, and not everyone at that age will be able to work.”

He said this reality was especially pronounced among self employed professionals, such as hairdressers, barbers, makeup artists, manicurists, marketers, photographers and other professionals whose income often fluctuate month to month. Many operate outside structured payroll systems, with irregular contributions.

“Even higher-earning self employed professionals including doctors operating private practices, attorneys, accountants, engineers, architects, IT providers, and creative industry practitioners are not immune. While they may enjoy higher incomes, surveys within the pension industry reveal that only a small percentage contribute consistently to private retirement schemes. Industry data suggest that only about 10 to 12 per cent of Jamaican adults are enrolled in any formal private pension arrangement, leaving even educated and high skilled workers exposed,” he revealed.

Reid explained that financial advisers have long recommended at least 40 years of consistent saving to ensure a comfortable retirement. He said that given Jamaica’s increasing life expectancy, many people will need enough resources to finance 15 to 20 years of post retirement living.

He added that while many Jamaicans invest in real estate as their retirement plan, property alone is not enough. “It’s important to have liquid cash in retirement, money you can access quickly in an emergency or for health expenses,” he said. “Emergencies will happen. You don’t want to depend on tenants or be forced to sell assets at a discount.”

He noted that pension participation is not only about personal financial security, because keen pension planning helps to strengthen the wider Jamaican economy. He said pension funds provided large pools of long term capital that governments and private entities use for national priorities in areas such infrastructure, development projects, mortgage financing, and national investment initiatives.

He explained that more public education, simplified pension products, and partnerships between government and the private sector are essential to increase pension participation rates.

“People must understand that retirement planning is not optional,” Reid said. “It is a necessity, one that determines whether you live comfortably in your later years or face unnecessary hardship.”