Growth & Jobs | JN Life urges Jamaicans to boost retirement savings amid longer life expectancy

Othneil Blagrove, chief, sales and marketing manager at JN Life Insurance Company, is encouraging Jamaicans who participate in individual retirement schemes to increase their contributions to the statutory maximum of 20 per cent of earnings, where financially possible, warning that low contribution levels could result in inadequate income during retirement.

Under Jamaican law, individuals are permitted to contribute up to 20 per cent of their earnings to approved individual retirement schemes, and these contributions qualify for tax deductions under the Income Tax Act.

“Workers who are part of a pension scheme should aim to contribute up to the maximum of 20 per cent, where possible,” Blagrove said. “At the minimum contribution level of five per cent, your pension may not be sufficient to maintain your standard of living after retirement.”

His remarks come against the backdrop of an ageing population and rising longevity. According to data from the Pan American Health Organization (PAHO), life expectancy at birth in Jamaica stood at approximately 71.6 years in 2024, while projections show continued increases in longevity over the coming decades. People who reach age 60 can expect to live an additional 13 years or more, highlighting the need for sustained income well into retirement.

Blagrove noted that although most employed Jamaicans contribute to the National Insurance Scheme (NIS), its benefits are designed primarily as income support rather than full income replacement. As of 2025, the maximum NIS old-age pension stands at $4,620 per week, or just over $240,000 annually, following recent benefit increases.

“That amount alone is unlikely to support a comfortable retirement, especially in the context of rising living costs,” he said. “Personal pension savings must therefore play a critical role.”

Blagrove illustrated the impact of higher contribution rates using a hypothetical example. An individual who begins saving at age 44, earns $800,000 annually, and contributes five per cent would accumulate approximately $1.5 million by retirement, assuming a five per cent rate of return. By contrast, contributing the maximum 20 per cent could result in savings of about $11.8 million over the same period.

Beyond higher retirement income, he emphasized that maximizing contributions also delivers substantial tax benefits. Contributions to approved retirement schemes are deducted from gross income before Pay As You Earn (PAYE) income tax and other statutory deductions are calculated.

“By contributing the maximum amount, individuals not only increase their retirement savings but also reduce their taxable income,” he explained. “This means immediate tax relief and higher net savings over time.”

Blagrove also underscored the urgency of early and consistent retirement planning. Investment and actuarial experts generally recommend 40 years or more of retirement savings to accumulate sufficient funds, a timeline many Jamaicans may already be behind.

“If you start planning late, no matter how much you save, it becomes difficult to maintain the same lifestyle in retirement because you have lost valuable years of compound growth,” he said.

Demographic data support these concerns. PAHO estimates that people aged 65 and over accounted for more than eight per cent of Jamaica’s population in 2024, a figure that has steadily increased over the past two decades. Other studies estimate the population aged 60 and older now represents close to 15 per cent of the total population, intensifying pressure on public pension systems and family support structures.

“As Jamaicans live longer, financial independence in retirement becomes even more important,” Blagrove said. “Many retirees may need to support themselves for 15 years or more after leaving the workforce.”

He added that retirement is unavoidable for anyone who lives long enough, making preparation essential.

“Retirement is not an option, it is inevitable,” Blagrove said. “Contributing the maximum 20 per cent may be difficult in the short term, but the long-term benefits far outweigh the sacrifices. You will need a reliable income when you retire, and you do not want to depend on others at that stage of life.”