Government has tabled a bill in Parliament requiring all companies to begin private sector pension plans for their employees in 18 months.

When enacted and implemented The National Pension Scheme (Occupational Pensions) Act 1998 will also set up a national commission to oversee operations of those schemes.

With the introduction of mandated pension plans Government is attempting to ensure employees will reach a target of 60 to 70 percent of their final salary in benefits when they retire. Employees won't be entitled to receive the pension money until they retire.

Employers will be mandated to provide a pension plan for all employees 23 years-of-age and older and who are employed for a minimum of 720 hours a year.

Employers and employees will be required to contribute to the private pension plans at equal rates adding to a minimum ten percent of earnings. However the actual rate of contribution will be phased in over a period of five years beginning at one percent of earnings each from employer and employee in 2000 and reaching five percent each by 2004, according to a schedule of the proposed Act.

Employers can also chose to contribute some or all of the employees pension portion.

In brief the key elements of the proposed legislation provides for a vesting period of two years, and portability of contributions between pension plans when an employee changes employers.

Date set for pension plans Vesting refers to the period after which the employee is entitled to the employer's portion put into a pension plan. An employee's contributions will be transferred between plans even if he quits employment before the vesting period.

The proposed Act also requires pension plan funds to be held separate and apart from an employer's assets.

The Government-appointed Pensions Commission will be made up of between seven to nine members, including a chairman and a deputy chairman. The body will have wide ranging powers to ensure companies comply with the proposed legislation. A team of officials, including a chief executive officer, will be hired to assist the Commission.

Plans for mandating private sector pension plans have been in the works for a few years, but only got off the ground with a 1995 discussion paper. Currently many private sector employees are only covered by the Contributory Pension Fund, set up and administered by Government and to which all employers and employees currently contribute.

In a previous interview Finance Minister Grant Gibbons has said it will be up to the proposed Pensions Commission to decide on what to do with the current Contributory Pension Fund.

Employers are currently not required to set up private plans, although many of the larger ones have. Some employers have stated that private pensions schemes will be an additional financial burden and could hurt smaller businesses.

The Government operated Public Service Superannuation Fund, the Government operated Pension Fund and the Government Ministers and Members of the Legislature Pensions Fund are exempt from the legislation.

A previous draft of the bill sent around for comment to businesses did not require companies to provide pension plans for foreign employees.

Grant Gibbons