Ageing population sees pension payments rise

Friday April 27, 2018 Written by Published in Economy

The government is anticipating an increase in old-age pension payments as 15 per cent of the Cook Islands workforce is heading for retirement age in the next nine years.

 

According to the Cook Islands National Superannuation Fund (CINSF) administration manager report dated December 31, 2017, there are 1606 fund members who fall between the age of 51 and 60 years. The retirement age in the Cook Islands is 60 years.

In the 2016/17 financial year, which ended on June 30 last year, Internal Affairs paid out about $12.1million in old-age pensions.

CINSF chief executive officer Damien Beddoes said that while the larger portion of the workforce remains 40 years of age or younger, over the next nine years just over 1600 members will be reaching retirement age.

“The demographic showing 1600 moving into retirement over the next nine years feeds into government to assist in planning for budget expenditure on the government pension,” Beddoes said.

“Depending on mortality rates in the Cook Islands, we can expect to see increases in claims for the Cook Islands government pension in the coming years.”

According to the statistics provided by Internal Affairs, the rate of old-age pensions has increased by about $3.5million from 2012/13 to the 2016/17 financial year.

In the 2012/13 financial year, about $8.6m was paid in old-age pensions, which increased to about $9.0m in 2013/14.

In the 2014/15 financial year, about $11.8m was paid out, which increased to about $12.5m in the 2015/16 financial year.

“During the Internal Affairs Welfare Stocktake Workshop in November 2017, it was announced that due to the ageing population in the Cook Islands it is predicted that there will be an increase in the pension recipients and thus payments issued,” Internal Affairs said in a statement. In its projection, Internal Affairs anticipated an old-age pension payment of $12.3m in 2017/18, $12.5m in 2018/19, and $12.8m in 2019/2020.  

Meanwhile, the report published last month also shows that the members currently between the ages of 51 and 60 years contribute $35.4m towards the fund per year, or just over a quarter of the total annual contribution, which is about $133million.

There are a total of 10,378 employees who are members of the CINSF, of which 483 are under the age of 20 and contribute $0.53m, with 2884 members between 21 and 30 years contributing $14.19m, 2666 members between 31 and 40 contributing $33.21m and 2277 members between 41 and 50 contributing $40.15m annually.

There are also 462 members over the age of 61 years who contribute about $9.5m annually to the fund. “Whilst we have 460 members aged over 60, we only have 191 receiving a pension, and this can be for any of the following reasons – choice not to claim, choice to continue to work and contribute past 60 years, or some may be dormant accounts that members have not contributed to and therefore have not claimed on,” Beddoes said. He said the report was a true reflection of the numbers of all employees, past and present, that have a CINSF account.

“The employee registration remains strong, and this reflects the employer compliance.

“There does however remain just a couple employers that have not complied, and if they continue to remain uncompliant then we will move to legal action.”

Leave a comment