More and more people are choosing to receive their pensions early according to Dominica Social Security.
Deputy Director, Augustus Etienne was speaking on Vibes Radio recently when he explained that the pension fund of the social security system wasn’t designed for early checkouts; that means a loss for the fund.
“This is not allowing the system to see the impact of the savings that that provision was meant for,” he said.
“If people apply for the pension early, it means they’re not making additional contributions; the system has to pay them out earlier and longer and that is a challenge.”
Etienne says, “It would be better for everybody concerned if people stayed in the workforce longer and make additional contributions because every year that you contribute, you get 1% added to your pension. If somebody works for an additional 6 years from age 60 to 65, that’s 5% added to their pension.”
He revealed that contributors are also opting to accept a major loss with the decision to cash out early.
“When they claim it earlier than it is due to them, they will receive it for longer than they should have rightfully received it.”
The rate for that, he says, is 6% per annum.
“If you take it a year early, you’re giving up 6% of your pension for the rest of your life.”
The only increase applied would be inflationary every 3 years.