"It is not that we stop playing when we start aging, but that we start aging when we stop playing."
Caribbean countries in general and St. Kitts/Nevis in particular have young populations. It is a fact, which probably explains why presently there is no serious provision to deal with elderly in the society. The title of this paper has been deliberately selected in order to prompt those persons whose hair is black, either naturally or otherwise to think of the changes in finances and lifestyle that will come when the hair will begin to turn grey.
The number of retirees who will increase rapidly over the next few years as indicated by the available statistics will significantly impact on the economy of the Federation of St. Kitts & Nevis by their consumption patterns and lifestyles. The World Bank has cited aging of the world's population as a crisis in the making.
The paper begins by briefly presenting the theories underlying the analysis of aging. In the second section, the state of preparedness of the inhabitants to deal with retirement is discussed. It deals with the costs and benefits of living in retirement on St Kitts and Nevis. The final section identifies the public policy that must be implemented to ensure a high standard of living of the grey population. The expectations of the returning migrants are also considered.
The perspective of the elderly in the society as they impact on the economy of a country has changed over the years. Initially they were viewed as being removed from the labour force. thereby reducing their contribution to government revenue in the form of taxes and social security contributions. An alternative position identified that the consumption pattern of the elderly could assist the economy, this is a new focus.
World Bank (1994) and Chand and Jaeger (1996) are proponents that the aging of the world's population is a crisis in the making. The Life Hypothesis Cycle (LHC) of Ando and Modigliani (1963) is the theoretical framework for the World Bank's position. The LHC develops a consumption and saving function from the macroeconomic behaviour of the individual. According to the LHC, individuals plan their consumption and saving over their lifetime in order to maximise utility. They tend to plan for a constant or slightly rising population individual is low in the early years, high at the peak of their working life and low in retirement. In the developed countries, the result is that it evens out over the lifetime of individuals. Young persons borrow to acquire a certain level of lifetime consumption; they save to pay off their debts and for their retirement. During their retirement years, they dissave to maintain the lifestyle to which they had become accustomed.
Messkoub (1999) points out that it applies a micro framework for analysis and prediction at the macro level without taking into account the methodological and empirical pitfalls. The LCH focuses almost exclusively on the expenditure side and little attention is paid to the role of changes output and investments when the aged dependency ratio is calculated.
It had been observed however that in the USA (Dazinger et al, 1982), evidence exists to show that the elderly do not dissave to finance their consumption at retirement and that in fact they saved significantly more than the elderly. There is uncertainty about their health, longevity and depletion of human capital and financial capital. There has been no established reason for this observation nor have the influence of these factors and their high level of income been linked.
The tables attached show the dependency ratios and index of aging for Caricom countries. The figures for St Kitts and Nevis are in bold. Whether the predictions made for the developed world will hold in the Caribbean in general and for St Kitts Nevis in particular will be dependent on what happens to changes in employment and productivity and how St Kitts and Nevis uses the persons who retire while they are still able bodied.
|
Census Years |
||||||||
|
1960 |
1970 |
1980/81 |
1990/91 |
|||||
|
COUNTRY |
Index of Aging |
Median Age |
Index of Aging |
Median Age |
Index of Aging |
Median Age |
Index of Aging |
Median Age |
|
Bahamas |
11.0 |
(a) 17.6 |
14.7 |
17.7 |
9.5 |
18.7 |
5.4 |
22.7 |
|
Barbados |
6.3 |
20.8 |
4.6 |
20.2 |
2.7 |
23.5 |
5.4 |
28.4 |
|
Belize |
11.0 |
17.1 |
12.2 |
14.3 |
9.2 |
15.8 |
11.0 |
16.8 |
|
BVI |
8.0 |
15.1 |
7.8 |
24.1 |
5.7 |
22.6 |
4.5 |
26.5 |
|
Dominica |
9.0 |
17.0 |
8.3 |
14.5 |
4.9 |
18.0 |
3.8 |
22.2 |
|
Grenada |
8.6 |
15.3 |
7.8 |
15.3 |
5.4 |
18.3 |
4.8 |
20.1 |
|
Guyana |
15.7 |
16.0 |
11.8 |
15.3 |
10.2 |
17.6 |
8.8 |
20.8 |
|
Jamaica |
10.2 |
18.9 |
7.5 |
16.5 |
5.7 |
(b)18.8 |
- |
- |
|
Montserrat |
5.2 |
- |
3.6 |
19.2 |
2.4 |
23.3 |
1.8 |
27.9 |
|
St. Kitts & Nevis |
9.2 |
16.4 |
7.0 |
14.6 |
3.7 |
18.9 |
3.4 |
22.6 |
|
St. Lucia |
8.8 |
16.9 |
9.8 |
14.2 |
7.3 |
16.6 |
6.2 |
20.1 |
|
St. Vincent & The Grenadines |
12.2 |
14.4 |
10.2 |
13.6 |
7.2 |
16.4 |
5.3 |
19.6 |
|
Trinidad & Tobago |
10.8 |
17.9 |
8.2 |
17.5 |
5.7 |
20.6 |
5.7 |
23.1 |
* Ratio of 0 – 14 population to the 65 plus population
(a) 1963 (b) 1982
SOURCES: CELADE (1995)
|
COUNTRY |
Dependency Ratios (per 100) |
|||
|
1960 |
1970 |
1980/81 |
1990/91 |
|
|
Bahamas |
7.7 |
5.7 |
6.9 |
7.4 |
|
Barbados |
10.7 |
14.5 |
18.6 |
18.8 |
|
Belize |
7.7 |
8.5 |
10.2 |
7.7 |
|
BVI |
13.1 |
8.9 |
10.0 |
9.0 |
|
Dominica |
8.3 |
10.8 |
12.5 |
12.2 |
|
Grenada |
10.6 |
12.8 |
12.7 |
14.8 |
|
Guyana |
6.0 |
8.2 |
7.3 |
6.6 |
|
Jamaica |
7.3 |
12.2 |
13.2 |
- |
|
Montserrat |
16.0 |
22.4 |
23.2 |
23.2 |
|
St. Kitts & Nevis |
10.2 |
15.9 |
18.9 |
17.8 |
|
St. Lucia |
9.8 |
10.9 |
12.0 |
10.5 |
|
St. Vincent & The Grenadines |
8.5 |
11.4 |
11.8 |
12.5 |
|
Trinidad &Tobago |
7.5 |
9.2 |
10.0 |
10.0 |
SOURCE: CELADE (1995)
Demographic aging is defined as the rise in the proportion of elderly persons in the total population and this is affected by the returning nationals and their families. This is different from the aging of an individual, which increases with time. A clear distinction must be made between biological aging, which bears a close relationship to chronological age and socially constructed notions of aging, such as retirement age. In St Kitts/Nevis, it is financially beneficial to retire after 24 years and 11 months of work in the public service. Individuals can retire as early as age 50 and must retire at age 60. Retirement takes place in the private sector officially at age 65. However formal retirement is not equivalent to withdrawal from the world of work (Hurd, 1990) The period during which persons can continue to work, be productive and function socially would be well beyond the official retirement age. Functional aging depends on physical and mental capacities that are determined by genetic and environmental factors. These factors affect individuals differently and perhaps explain why the age of retirement varies from country to country.
Hard evidence on the financial and other conditions of the elderly in St Kitts and Nevis is difficult to obtain, as persons are very private about these matters. It is symptomatic of the society and explains the absence of concrete plans and a coherent policy on this issue.
Most people look forward to the day when they can give up work and spend more time with the family. Lifestyles today are different from twenty years ago when the extended family provided for the retired in St. Kitts/Nevis. It has been observed that the retired in our community find it necessary to return to work to be able to make ends meet. There are 42 persons over age 55 in the public service that are continuing to work. This situation has arisen from lack of preparation for retirement by individuals who are in the age range 50-60 years old. There are currently 157 persons in the public service that will retire by the year 2005.
From the seminars on Planning for Retirement conducted here in St Kitts by the author, the conclusion is drawn that many persons do not think of retirement until they are a year or two away from the actual date. They felt that all persons over the age of 40 should be encouraged to attend. These are some of the views expressed at the end of a workshop.
There are only five companies in the Federation of St Kitts and Nevis, which have company pension plans. The position was taken by employers when asked if they would sponsor employees to attend a Planning For Retirement Seminar or pay for them to be held in house "….Planning for retirement is a personal matter…"
There are three main areas where preparation is required:
After having worked for thirty-five or forty years, it is often difficult to fill the new found leisure time. Many organisations in the Federation of St Kitts and Nevis expose their senior staff to time management techniques, however they give them no preparation to deal with the increased hours which they all have available upon retirement. At one institution, which has a very generous pension plan, during the presentation on Planning For Retirement, several senior employees expressed surprise that ensuring money is in the bank upon retirement was not the only area of concern. It is recommended that strong inner circle support systems are developed to replace that support formerly given by co-workers and colleagues.
The leading causes of death of males and females 65 years old as disclosed in the Pan American Health Organistion's publication "Health Conditions in the Caribbean" (1997) are shown in the figures attached. The top killers are cerebrovascular and heart disease. These two illnesses are caused by our eating habits and exercise pattern. Macaroni pie, rice and bread are consumed in large quantities. Greasy fried chicken or fish and hot pepper sauce are served at most social gatherings on St Kitts and Nevis. No wonder Fraser et al found in 1993 that 10% of men and 30% of women in the Caribbean were obese, that is, they weighed more than 20% above their ideal body weight. St. Kitts/Nevis is not excluded. This obesity is the primary cause of much of the osteoarthritis, which causes the consumption of thousands of dollars worth of non-steroidal anti-inflammatory drugs. A survey of 25 households in St. Kitts with persons over the age of 65 showed that there was at least one resident in the house who suffers with pain and swelling in the knees and hips.
Eating patterns are a cultural problem, so is diabetes mellitus. The fact that Basseterre is known as "Sugar City" may have some link with our affinity to sugar. St Kitts has 1,000 known diabetics; this is 2% of the population. Drinking aerated drinks is a habit preserved by commercial advertising. Perhaps in the future, the production of carrots, beetroot and celery will provide the opportunity for competitive alternative 'anti-ageing' refreshment juices.
We have become lazy. Television and the motorcar are the key factors for this unhealthy habit of inadequate exercise. A regimen of exercise in the form of walking, aerobics, swimming, gardening or any other activity should be cultivated depending on the physical condition.
For most persons in St Kitts and Nevis, the main source of income in retirement will be a pension from Social Security or from Government, if they were employed in the civil service. However, Social Security begins to pay a pension at age 62 and it will only pay 60% of the insured earnings. Although inflation in St Kitts and Nevis is low, Social Security payments are not indexed linked and one must consider if the amount received will maintain us in the lifestyle to which we have become accustomed. It is therefore to be suggested that individuals be encouraged to set up their own pension plans as well as purchase some shares in public companies. The dividends can boost retirement income or when shares are sold, the capital gains can be invested in less risky vehicles such as fixed deposits or Treasury Bills. The development of an investment portfolio should become achievable once the Eastern Caribbean Securities Exchange becomes a reality. This institution would also be useful to persons who receive a gratuity or lump sum from their place of work and currently have very few options for investment.
Where you live in retirement is also important, because individuals should be comfortable in their golden years. The issue of housing is one, which surfaced in the study done on the Returning Nationals. Elderly persons want to be independent, but there may come a time when they can no longer look after themselves and it therefore becomes necessary to have round the clock care. On St Kitts there is neither a nursing home nor a Senior Citizens residence. There are two on Nevis. When persons continue to live on their own, the houses need to be accessible i.e. on one level with facilities for wheel chairs if necessary.
The adequacy of the finances of a retiree is linked very closely to their health and psychological well being. A holistic approach to retirement is required if the best quality of life is to be achieved.
The youthfulness of the population in the CARICOM countries is reflected in the indices of aging given in Table 1. The index of aging is the ratio of the population age 0-14 expressed as a ratio of the population age 65 and over. The index is relatively high for most countries, although it is declining in all countries except for Barbados and Montserrat. It will decline more rapidly as the return migration trickle turns to a flow. An obverse pattern is noted for the median age. The median age in St. Kitts & Nevis is 22.6 years.
This section of the paper discusses some of the public policy initiatives that should ensure that the retirees on St Kitts & Nevis live healthy and meaningful lives. The areas of concern can be analysed with respect to the following: human resource utilisation, access to medical services, health, housing, financial and social services.
The policies recommended below should not be considered to be exhaustive, but can form the basis for a document to be used by the Ministry of Community Affairs and Social Services:
(i) Human resource development
Many of the retirees including the returning nationals have acquired skills, which are in scare supply. They are in the area of technical and professional services; they also have a work ethic which is absent in the youth. Since they could still be in their productive years, the utilisation of these skills can positively contribute to the economy of the country. The retirees can be used to conduct short courses or through day release, or mentoring programmes participate in the human resource development of St Kitts and Nevis.
(ii) Access to medical services
With the onset of middle age, there are certain ailments, which increasingly affect individuals. Since there exists no medical benefits scheme for the elderly in St Kitts/ Nevis, the burden of payment for health services all fall on the retiree. As these persons will be living on a reduced income, it is suggested that some arrangements be put in place to ensure that generic medication for hypertension and diabetes is available at a concessionary rate for persons over aged 60. Medical examinations may also be offered at the government run community health centres free of cost. Deafness was an affliction that was cited by a small number of returnees; they were concerned about the repair of hearing aids.
(iii) Health
The practice of preventative medicine is to be encouraged. Public education programmes should be introduced in the print and electronic media to emphasize the importance of health issues in retirement. It would focus on the need to be conscious about nutrition and fitness in the five to ten years leading up to retirement.
(iv) Housing
There are several persons who wait until they are a few years away from retiring to obtain (build/purchase) a house, so that by the time they have reached retirement age they are still faced with a ten-year mortgage. They either have to ask for a deferral of their retirement or use their entire gratuity to pay off the mortgage. If the latter is the course of action taken, they then have nothing to live on. The returning nationals also found difficulty in becoming homeowners once they had arrived on the island. They indicated that it would be useful if there were readily available information on financing for the acquisition of housing as well as lists of contractors/construction companies, which are reputable. This information would make it easier for both groups of persons to obtain housing without undue hassles.
(v) Social services
Even the most active retirees would need to be cared for and hence the country ought to plan for the additional care they would need. The delivery of long-term care takes one of two forms - skilled care or personal care. Skilled care is generally provided on a 24 hour per day basis in a nursing home setting, where skilled personnel, registered nurses, physical therapists etc. tend to deal with medical conditions. Personal care is long term care that helps the individual perform what are known as activities of daily living - bathing, dressing, toileting, continence, transferring (ability to move in and out of bed, chair or wheel chair) and eating. Good persons with these skills are not readily available and individuals should be encouraged to obtain training in these areas.
(vi) Financial services
Financial institutions should take up the challenge and begin to offer this lucrative segment of their customer base, good investment advice and opportunities that are well developed, properly targeted and effectively marketed. The fifty plus should be given incentives to start their own private pension plans.
(vii) Establishment of a Bureau of Migration
It is suggested that a Bureau of Migration be established to provide legal and social support to returnees in the period of transition. There are returnees who have lost touch with family members during their sojourn abroad and need to be assisted with the resettlement process. Women, who lose their spouse after returning to the country, are a particularly vulnerable group. The Bureau would also be responsible for developing programs to be aired through the Government Information Service to sensitise the existing residents of the economic benefits to be derived by encouraging nationals of St Kitts and Nevis to return home when they retire. It will go a long way to smooth the re-entry of those individuals who have noticed pockets of resentment in the workforce and society.
The grey population of St Kitts and Nevis could be around for a long time, particularly if they take the opportunity to retire early. The policy initiatives recommended in this paper, if implemented in the long and medium term would cause the country to avert any crisis that may loom large. In summary, the paper seeks to highlight the economic benefits to be derived from having active elderly persons in the system as well as the fact that their consumption patterns could outweigh any expenditure required by government to accommodate them if they are prepared mentally and financially for retirement.
Ando A. and F. Modigliani (1963) "The Life-Cycle Hypothesis of Savings: Aggregate Implications and Tests" American Economic Review, 53 (1) 55-84.
CARICOM Secretariat (1995) Aging in the Commonwealth Caribbean. Georgetown.
Chand, S.K and A. Jaeger (1996) Aging Populations and Public Pension Schemes, IMF Washington D.C.
Chaderton, Robertine Managing Your Money – Personal Financial Planning Series Forthcoming.
Dazinger, S., J van der Graag, E. Smolensky and M.K. Taussig (1982) "The Life-Cycle Hypothesis and the Consumption Behaviour of the Elderly" Journal of Post Keynesian Economics, 5: 208-27.
Fraser et al (1996) The obesity epidemic of the Caribbean WIMJ 45:1.
Hurd, M. D (1990) "Research on the Elderly: Economic Status, retirement and Consumption and saving" Journal of Economic Literature XXVIII June 565-637.
Lewis Lowell Montserrat Alive Magazine August 1999.
Messkoub, M (1999) "Crisis of Aging in Less Developed Countries: Too much Consumption or Too little Production" Development and Change, 30: 217-235.
PAHO "Health Conditions in the Caribbean" 1997.
The College for Financial Planning (1998) Planning for Incapacity, Disability and Long Term Care.
The Broad Street Journal "The truth of the fifty plus" March 4, 2000.
World Bank (1994) Averting the Old age Crisis: Policies to Protect the Old and Promote Growth Oxford University Press.
The author recognizes the contribution made to this paper by Dr. Wendell Samuel, Senior Director, Research and Information, Eastern Caribbean Central Bank.
URL http://www.uwichill.edu.bb/bnccde/sk&n/conference/papers/RChaderton.html
© R. Chaderton, 2000. HTML prepared using 1st Page 2000, revised September 29th, 2000.