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Results of Pension Fund Survey (2005)

Published: Monday October 15th, 2007

This article analyzes the results of the Central Bank's latest survey (2005) on private (sponsored) pension plans in The Bahamas. The available database on these activities now spans thirteen years, starting from 1992. According to the 2005 results, sponsored pension assets rose at a strengthened pace of 11.9% to approxi-mately $954 million, consolidating continuous average yearly gains from an estimated low of $300 million in 1992. Recent annual gains have been supported by the expansionary trends in the Bahamian economy, which have resulted in more employees contributing to these schemes and elevated average returns on invested assets. The largest concentration of assets and participants continues to be in plans sponsored by employers in the tourism, financial services and communications & utilities sectors. Based on investment patterns, the largest share of pension assets is still held in Govern-ment bonds and securities, although the proportion of both these investments as well as bank deposits have decreased due to diversification in equities, mutual funds and other private capital market instruments.

In most instances, private pensions supplement contributory retirement benefits to which Bahamians are entitled under the National Insurance Board (NIB) Act. Unlike the mandatory NIB scheme, which uses a formula to cap contributions and retirement benefits against an annual income of $20,800, total funding and potential benefits from sponsored schemes continue to increase along with participants' earnings. An estimated one-fourth of the Bahamian workforce participates in such schemes, and the Government operates a non-funded gratuity scheme for tenured civil service employees. The other significant sources of domestic financial savings are bank deposits held by individuals, and the assets of domestic credit unions and insurance companies.

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