In the last five years, Government has paid a staggering $18.6 billion in senior citizens pensions. This year alone, the Ministry of Social Development and Family Services spent $4 billion in pension as part of its social safety net and due to a substantial increase in beneficiaries due to the country’s ageing population.
This was revealed by Minister of Social Development and Family Services Donna Cox in response to questions about her ministry’s annual pension payouts.
She admitted: “there has been a substantial increase in the number of persons receiving Senior Citizens Pension over the last five years because of the Government’s decision to increase in the statutory limit to qualify for a pension.”
Cox said in the last five years, the ministry has recorded 41,745 new pensioners in their system. At age 65, a citizen can receive a monthly pension of $3,500 from the State.
In 2015, the ministry recorded 86,280 senior citizens in receipt of pensions. Fast forward to September 2020 and the pension population has increased to 104,007.
The ministry was allocated $5.3 billion in last year’s budget and pensions account for the majority of its annual expenditure.
In 2016, the ministry spent $3.6 billion in pension. For 2017 and 2018, the figure dropped to $3.5 billion and last year pensioners received $3.8 billion. This year, the ministry paid the highest sum to date—$4 billion—bringing the total in the last five years to $18.6 billion.
Cox, who dismissed reports that recently circulated on social media that Government planned to slash pensions by half in the October 5 budget, insisted: “There is no intention to reduce the allocation for the senior citizens’ pension. The person putting up such posts may be in a better position to say why they are making these statements.”
Former director of the Division of Ageing Dr Jennifer Rouse said the $18 billion spent over time has put a severe burden on the Treasury. Rouse, a gerontologist, said in 1997 the International Monetary Fund (IMF) had advised the Government to look at the unsustainability of a non-contributory pension plan.
“At that time, we were not an ageing population. Life expectancy was low and communicable diseases were the order of the day. And there was a trend to cut and contrive,” she said.
Rouse said between 1946 and 1964 the country saw a marked increase in the birth rate. This was the era of the baby boomers most of whom joined the public service to work. The last cohort of baby boomers will retire by 2024.
“The demographic transitioned from high fertility and mortality to the opposite. With that came less people in the workforce which means you have less Pay As You Earn (PAYE) that will go towards this pension. None of them who worked never put a cent towards pension,” she said.
Rouse said they will become beneficiaries of this grant which would further encumber the State’s coffers.
When ten per cent of the population is 65 years and over it is considered ageing. A national census undertaken in 2010 showed that 13.4 per cent of the population is over the age of 60, which represented 177,676 people. The United Nations has projected that by 2030 T&T’s ageing population will balloon to 17.5 per cent.
“So basically, every five years we will go up by one per cent. This year we should be at 15.4 per cent,” she said.
She believes instituting property tax and establishing the T&T Revenue Authority can bail the country out of the financial crisis we are facing.
“Diversifying the economy must be done with a thrust towards revenue generation,” Rouse said.