Shaw

Finance Minster Audley Shaw disclosed Tuesday that government owes private pension funds some $7 billion in unpaid withholding taxes, but said some of the debt would be paid down this financial year.

Yesterday, pension fund managers said the freed-up cash would allow them to invest elsewhere to build up the pension portfolios they administer.

They had long grumbled that the previous government's failure to refund the taxes on time was equivalent to foregone returns on new investments and counted as a cost on the funds.

Cut arrears

Shaw said Tuesday he would cut the arrears "substantially" this year.

"We've inherited arrears of about $7 billion, that is to say, money that ought properly to be in various hands, including the pension industry, instead of being on the budget," Shaw said at a pension seminar hosted by the Private Sector Organisation of Jamaica and Prime Asset Management Limited in Kingston. "Built in the budget this year is a substantial reduction for that liability, I have given instruction that in particular to the pension industry, we must cease withholding the tax so that we will not continue to build up arrears like those."

There are more than 500 pension schemes in Jamaica in the process of being registered by the Financial Services Commission (FSC). So far, only 100 have been passed by the FSC after two years of the programme.

He said the government was actively looking at giving conditional approval to schemes that achieved a minimum of require-ment by the FSC to help speed up the process of approval of pension schemes.

The current govern-ment has already signalled it would be amending the with-holding tax policy, and has introduced legis-lation to that effect.

Shaw signalled that fund managers seeking refunds going forward would either have to be registered with the FSC or be going through the approval process.

Under the amended withholding tax policy, pension fund managers can apply for refunds without tax being deducted at the source once they meet certain criteria set by Tax Administration and Audit Department, and the FSC.

Shaw also said to date a there is a 20 per cent compliant rate in terms of fulfilling the requirement of the application process.

Of the 500 applications of pension schemes at the FSC, 100 have complied with the requirements.

susan.gordon@gleanerjm.com