PUBLIC sector workers want the Government to use the billions of dollars deducted from their salaries under the Widows and Orphan Fund to start the proposed contributory pension scheme.

Currently, the more than 130,000 public sector workers enjoy a non-contributory pension benefit on retirement. Patricia Sinclair McCalla, who heads the Public Sector Transformation Unit (PSTU), told members of the Public Administrations and Appropriations Committee (PAAC) of Parliament that the workers have suggested that the Widows and Orphans Fund be used as a source for the contributory scheme.

“There is need for a clearly defined contributory pension scheme. One of the issues when we meet with public sector workers (is) why we can’t use the family benefit that currently takes from each individual’s salary four per cent towards the family benefit. Why can’t we use that towards a contributory pension scheme?” she told the committee in the unit’s final appearance before completing its report tomorrow.

The PAAC was told that $3 billion-$4 billion goes to the Consolidated Fund annually from a compulsory four per cent salary deduction but that only a small percentage of retired public sector workers apply for funds. The surplus, she said, remained in the Consolidated Fund.

“It currently goes directly to the Consolidated Fund and I cannot say that a large percentage of public sector workers on retirement actually draw on that fund…,” Sinclair McCalla said.

She has asked the finance ministry to submit the level of reforms underway for the sector in the hope that by mid-to-late 2011, a mechanism can be in place to define a pension scheme for entrants to the public sector.

Sinclair McCalla said the unit has made definitive recommendations on the matter and by 2012, she also hopes that a comprehensive study would be completed on overhauling the scheme.

Committee member Ronald Thwaites asked for an exploration of the issue, suggesting that a springboard on which a contributory scheme could be started had possibly been found.

According to him, the funds, if invested and compounded overtime, would accumulate significantly and would assist with the current pension scheme.

Professor Alvin Wint of the PSTU said the figure does not offset a very significant liability, but said there was some relief, and agreed that it provided the basis on which the contributory scheme could be started.

However, Wint said the current model was not being handled in the form of a contributory scheme.

“…It is already in place in terms of the amount and it is not being handled properly. In others words, it is not being handled in the form of a proper contribution pension scheme. It is just going into the Consolidated Fund without the appropriate apparatus in terms of the investment activities and also recognising that it is in fact a pension scheme…” Professor Wint said.