Improving Retirement Planning and Financial Literacy in Barbados: Wealth Managers Urge Citizen Engagement

Concerns have been raised about the need to improve retirement planning and financial literacy in Barbados, wealth managers have warned.

Peter Arender, Chief Executive and Chief Investment Officer of Fortress Fund Managers Ltd, told journalists at a virtual press briefing on Wednesday, that more needs to be done to wean citizens off relying solely on state pensions from the National Insurance and Social Security Service (NISSS).

“The government does not need to be super paternalistic in helping people save and invest for their future, but it’s good to encourage persons to invest for the future,” Arender said. “One thing the government can do is address issues that can be a deterrent, and in some cases, the double taxation on pensions at the moment in Barbados is an outlier by international standards.”

“Everyone is finding a way to work around it, but it’s a baby elephant in the room when looking at pensions as a whole, and we all have a vested interest not only as individuals but as a whole country to make sure that everybody is financially secure in their retirement,” he added.

Arender stressed that greater financial literacy is needed to address apprehensions about retirement planning among Barbadians.

“When we are dealing with things so far down the road like retirement, it’s very hard for the average person to make that connection between today’s behaviour and tomorrow’s financial security,” he said.

“One part of the problem, it’s not unique to Barbados, and it has to do with financial literacy and understanding what these concepts are, and what behaviours to avoid are. Then we get into the strategy of implementing this, and that’s why pensions are so wonderful because they are automatic, they typically involve the company matching, and the money is locked away for a long time.”

Fortress’ Pension Administrator, Shomari Simpson-Sealy, said most Barbadians could save a substantial sum for retirement by investing just $100 in mutual funds each month.

While pension plan uptake has not increased significantly, he said existing members are showing more interest in boosting their savings.

“We don’t have a very good relationship with our dollars today, and we are not very kind to our future selves. $100 goes a long way and we definitely need to do more as a society in trying to get people to understand that particular equation,” Simpson-Sealy said.

“What I have noticed is that members who are already part of a pension plan are taking a bit more interest in how their plan works, what they are likely to get at retirement if they keep their level of contributions the same, and just exploring to see what else they can do to help sure up any shortfalls there.” (SB)