Call to increase TAP contribution

THERE is a need for higher contribution rates from employer and employees to supplement the current pension scheme of the Employees Trust Fund (TAP), a dialogue on sustainable post-retirement income concluded yesterday.

The current contribution rates of 10 per cent from employees and employers were considered too low by regional standards, according to the latest research findings presented at the Centre of Strategic and Policy Studies' second social security roundtable discussion.

"Such a scheme should not allow for withdrawals, in order to provide an income stream in retirement," over 100 participants at the closed-door dialogue heard.

Permanent Secretary, Prime Minister's Office Pg Dato Paduka Hj Ismail Mohamed deliver his opening speech during the opening ceremony of CSPS Dialogues Session at the Empire Hotel & Country Club.

Stephen Ong, Board Member, Centre for Strategic & Policy Studies, also expressed his views on sustainable post-retirement schemes.

Research from international institutions have shown that a number of weaknesses have been found in Brunei's current pension schemes, including the lack of incentives for long term savings.

It was also noted that Brunei has a rapidly ageing population and a longer life expectancy of 74 years, with a current estimate of 20,000 people aged 55 and above, thus the urgency to make changes to the TAP scheme.

Given the "sluggish" state of Brunei's economy, the private sector's capacity to participate in raising the contribution rates may be limited. One suggestion brought up at the dialogue session was to extend the retirement age from 55 years to 60 years, as only retirees aged 60 and above are entitled to Brunei's Old Age Pension.

Participants were also told that further reforms in TAP's scheme are needed to improve old age income and savings protection.

"The proposed supplementary contributory plan should provide a continuous flow of post retirement income overtime because the lump sum withdrawal scheme potentially faces longevity and inflation risks," said a senior official from TAP.

He added that Brunei faces the issue of the availability of various types of pre-retirement withdrawal schemes that can reduce accumulated savings for retirement.

"Some people are just not financially prepared for retirement due to their lack of foresight of future economic needs and lack of financial planning and management, even at a much higher contribution rate of 34.5 per cent," he said. The senior official pointed out that some TAP members are also heavily indebted with personal loans, credit card and car loans.

Aubeck Kam, Singapore's deputy permanent secretary at the Ministry of Manpower, was also a panelist and shared Singapore's experience of retirement funds.The Brunei Times

llllllllllllllllllllllllllllllllllllllllllll See also Page 5