Photo: PM John Briceño
The phasing in of a new contributory pension scheme for the public service will begin on July 1, 2023
by Marco Lopez
BELIZE CITY, Mon. Mar. 13, 2023
The 2023 IMF Staff Concluding Statement for Belize recommended reform of the Pension Plan for Public Officers scheme in Belize yet again. Those recommendations may be realized this year after a meeting between the Ministerial Consulting Team and Joint Union Negotiating Team (JUNT) last Thursday at which the JUNT supported the move toward a contributory pension scheme. Prime Minister John Briceño, during his budget speech, shared that the first phase of the contributory pension scheme will commence with persons entering the public service on July 1, 2023.
In the upcoming fiscal year, the Government is forecasted to spend approximately $100 million on the pension plan for public officers. In the fiscal year 2022/2023, a total of $95 million was paid to public officers via the scheme. As it stands, according to the IMF, pension liability in Belize is 77% of GDP, outweighing the entire public debt of the country.
Belize’s policies as it relates to retirement age, replacement rate, and contribution rate are called an “outlier” by PM Briceño, since our counterparts in the region practice contributory pension schemes with more stringent criteria for qualification.
“I have said publicly, and I say again: this budget line spending is neither sustainable nor fair,” the PM said in his remarks.
While the average replacement rate in Latin America and the Caribbean stands at around 61.9%, in Belize that rate for public officers is 95.4% when combined with Social Security pension at 27.9% and the noncontributory pension at 67.5%, a total of 33.5 % over the regional average.
The IMF has recommended that the retirement age of 55 be increased to 65 under the new contributory scheme. This is in line with regional standards in countries like Jamaica, Barbados, and Antigua and Barbuda, the PM shared. A contribution rate of 10% of wages was present in its formula for public pension reform – half of which, 5%, was contributed by public officers. Steps such as reducing the replacement rate from 67% to 50 % along with the other measures will be gradually phased in over time.
In February, the president of the Public Service Union, Dean Flowers, at a joint union press conference, announced the government’s intention to carry out the pension reform. Since then, meetings with the union and a government ministerial team have led to the reinstatement of public officer increments and the support from the JUNT of the government’s plan for what a March 9 Cabinet Brief refers to as a “phased approach to the Public Sector Pension Reform.”
“In phase one, the goal is to institute, effective 1st July 2023, a new contributory pension scheme applicable only to new entrants into the Belize Public Service. Phase two will include a comprehensive review of the existing Public Service Pension Scheme to determine how to make it more effective, efficient, and sustainable,” the Cabinet brief outlines.
A working group inclusive of the government, JUNT, the National Trade Union Congress of Belize, GAMAS, and the private sector will be established to execute this task.
The PM during his presentation referred to the advancement as “significant progress” and applauded the work of the ministerial team and the Joint Unions for what he considers to be a “historic” moment of “unprecedented collaboration and achievement.”
We will continue to follow.