Jamaica's ageing population is creating an increasing burden on the young and could potentially develop into another type of economic problem - health-care inflation - according to pensions regulator Rohan Barnett.

The executive director of the Financial Services Commission (FSC) says ageing, combined with the cost of preventable diseases and the desire and tendency for retirees to want to maintain their lifestyles, will create an inflationary impact as the population grows increasingly 'grey'.

fastest-growing segment

"The elderly dependent group is currently the fastest-growing segment of the population. Consequently, the age dependency ratio is increasing," said the FSC head.

"The average dependency ratio for 65 years and over has increased from 10.8 per cent in 1970 to 15.3 per cent in 2007. This ratio indicates that the cost or economic burden on the working-age population to maintain the upbringing and pensions of the economically dependent is growing."

The demographic transition to an ageing population is clearly demonstrated in population data, Barnett said, showing that the working-age population (15-64) and the elderly dependent (65+ years) are on the increase, while those in the age group 0-14 years are declining.

Barnett said that given the potential ballooning of costs that each retiree could face, working people are obligated to prepare for and save towards their pension.

"We owe it to ourselves to do our best so that our subsistence does not depend on relatives or the charitable acts of individuals and organisations. That's why we must act now to save for our retirement."

Jamaica offers four options: the 'public option' or government-run National Insurance Scheme (NIS); approved private pension plan, whether a superannuation fund or retirement scheme; specialised pension plans; as well as personal savings and investments.

Barnett says that of the 1.12 million employed Jamaicans, about five per cent, or 67, 000 individuals, are invested in approved private pension plans, while another 117,000 employed in the public service may have some form of coverage by the Consolidated Fund as well as specified pension plans.

But, the savings from that small pool might not be enough.

pension expo

A pension expo hosted Tuesday by the FSC was, said Barnett, meant to "assist Jamaicans to stop the procrastinating and to begin to see pensions planning as a matter of urgency".

The diversity of options for such savings was displayed by a number of financial houses.

"We must now begin to take a more active role in managing our retirement investments in order to attain an amount that will meet our desired lifestyle during retirement despite the challenges of life, such as illness and economic slowdown," Barnett said.

The FSC director noted that in the United States, individuals over age 65 spend roughly 30 per cent of their income on health care and, due to economic slowdown, more individuals in both the US and the UK are postponing their retirement and returning to work.

avia.collinder@gleanerjm.com