Kevin Greenidge: The role of pension plans in a growing Barbadian
economy
Remarks by Dr Kevin Greenidge, Governor of the Central Bank of Barbados, at the
Eckler Investment Policy Review for Pension Plans Conference, Bridgetown, 19
November 2024.
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Good morning.
It is my honor to address you at this year's pension investment conference. I extend my
gratitude to Ms. Wade and her colleagues for the invitation to share insights on "The
Role of Pension Plans in a Growing Barbadian Economy."
Barbados has demonstrated resilience and strength, transitioning from a challenging
period to one of sustained economic growth since the second quarter of 2022. This
progress is a testament to the dedication and collaboration of our people and
institutions, and it has created a solid foundation for us to discuss the critical role of
pension plans-not just as instruments of financial security, but as active contributors to
national development.
The Barbadian economy is on firm footing. Over the first nine months of 2024, real GDP
expanded by 3.9 percent, led by key sectors such as tourism, business services, and
construction.
This growth has delivered measurable outcomes:
A strengthened fiscal position, evidenced by a primary surplus of $581.9 million (4
percent of GDP).
Declining unemployment, which fell to 7.7 percent in mid-2024.
Debt-to-GDP ratio down to 105.6 percent
Robust international reserves, currently standing at $3.2 billion - providing over
31 weeks of import cover.
Our progress is underpinned by strategic investments in education, digital
transformation, and infrastructure-all of which contribute to the economy's foundation
and, indirectly, to the pension landscape by creating jobs and boosting long-term
growth potential.
In this environment of sustained growth, the pension sector plays a vital role in ensuring
financial security for our ageing population while fueling national development.
Barbados has a proud history of leadership in pensions, from being the first British
colony to introduce non-contributory old-age pensions in 1938 to the establishment of
the National Insurance Scheme in 1967.
However, modern challenges demand renewed focus:
Funding Deficits : As highlighted in the 2023 Financial Stability Report, over 28
percent of defined benefit plans remain underfunded, with an average funding
ratio of 84.1 percent.
Shifting Demographics long: An ageing population and declining birth rates pose
term sustainability challenges.
The imperative is clear: our pension plans must be not only resilient, but also
innovative, adapting to changing demographics and economic conditions.
Despite these challenges, opportunities abound. A growing economy creates fertile
ground for strategic investments by pension funds, particularly in:
Climate-Resilient and Sustainable Infrastructure: Investments that align with
Barbados' national priorities, including net-zero carbon goals by 2035, while
offering stable, long-term returns.
Affordable Housing and Green Technology: Addressing critical social and
environmental needs while supporting economic growth.
Digitisation and AI: Capturing growth in emerging industries that will shape future
economic landscapes.
The Government's recent fiscal reforms, such as the Barbados Optional Savings
Scheme ( BOSS+ ), offering a secure investment with a 4.5 percent annual interest rate,
present an avenue for pension funds to grow their assets while contributing to national
development. Initiatives like the reverse auction for Series D bonds further enhance
liquidity for pension funds, enabling more efficient asset management.
We must continue to strengthen resilience through governance and education. The
sustainability of pensions also hinges on governance and financial literacy. Trustees
must remain vigilant, regularly reviewing investment policies to adapt to inflation, market
volatility, and evolving beneficiary needs.
At the Central Bank of Barbados, we are committed to fostering economic and financial
literacy through initiatives like MoneySmart and the Explainer Series (What It Means;
Why It Matters). By equipping Barbadians with the tools to make informed investment
decisions, we enhance the resilience of pension funds and, by extension, the economy.
Ladies and gentlemen,
pensions are far more than financial instruments, they are a
promise of security and dignity for our retirees. As we look ahead, let us embrace
this moment of consistent economic growth to strengthen our pension systems,
ensuring they remain robust, inclusive, and aligned with the needs of future generations.
This is a collective responsibility - one that requires vigilance, innovation, and
collaboration. Together, we can build a future where every Barbadian can retire with
confidence, supported by a sustainable and well-managed pension system.
Thank you.