With Guyana’s pensionable cohort projected to reach 20% of the total population size by 2050, a complete overhaul of its pension system is being recommended by a recent Inter-American Development Bank (IDB) Study.
“The financial sustainability of the pension scheme is at risk, and… without any major reform the increasing pension expenses…will erode the government’s ability to provide other relevant services to the population,” the study stressed, while warning that the window of opportunity for reform is closing rapidly as pension costs will continue to rise and the “demographic dividend” that could potentially alleviate the burden of the economically dependent population on the workforce erodes over the next 20 years.
The study, “Economic Institutions for a resilient Caribbean”, notes that Guyana like other Caribbean countries has maintained a defined-benefit pay-as-you-go pension system (PAYGO), such systems rely on contributions from the actively working population to support the dependent population.
