CFAL, better known as Colina Financial Advisors Ltd, an impressive local financial management and advisory company, with some high powered principals has laid the gauntlet down to the government over pension reform.
In a full page ad in the press on Tuesday, February 26, 2008 they wrote:
"CFAL has often written on this all too important topic. Our message, and those of others, has fallen on the deaf ears of successive governments. We can only surmise there is a clear and unacceptable lack of long range planning by our Governments, for if successive governments engaged in long-term planning, this simmering issue would not be on the table. Perhaps those drafting the legislation are clearly out of their depth or comfort zone with this crucial matter; or perhaps they have not received the necessary funding to engage the services of experts who can help; or perhaps, most concerning, the political will and foresight just does not exist with our elected officials."
Strong words indeed, but as they note, those involved in the Bahamian financial services industry have been making similar arguments over the years and in their view the government is not listening.
The ad goes into the reasons why they CFAL believes The Bahamas needs pension reform, but what always gets my attention with this discussion are the open ended recommendations.
Under the heading Pension Reform Action Steps, CFAL suggests "A properly structured plan should be developed and guided by international regulations and should include:"
• an independent regulatory body;
• private sector professional minimal conduct standards;
• investment guiding principals;
• restricted access to retirement funds until retirement;
• independent trustees;
• segregated investment accounts;
• access to foreign markets;
• independent accounting;
• liability insurance; and
• mechanisms for restitution
While these objectives seem reasonable on the surface, it harkens back to Bastiat's essay, Petition From the Manufacturers of Candles...
Albeit the pension providers are not making a case against free trade, but they do seem to be setting themselves up as the sole providers of pension programmes.
For example, no mention is made of trust deeds whereby employers provide a legal mechanism for in house pension/savings plans, an option that works very well and protects the employee money.
They also do not seem to account for self employed individuals and companies that might be pushed to the financial brink with one more mandatory charge.
I'm also not sure where the impression comes from that the Bahamian government is responsible for its citizens retirement. What ever happened to personal and family responsibility?
When will we ever get over the notion that government is the great provider? Don't we provide whatever government turns around and 'gives' us?
In the final, if government wishes to mandate that individuals must put a percentage of their personal money in a savings fund, this takes very little effort.
Is there really a need for a more complicated process?
