Some Cayman Islands civil servants who spent their entire careers in government jobs will receive little or no pension benefits.
Complaints Commissioner John Epp. Photo: File |
That’s the finding of an investigation by the Office of the Complaints Commissioner. The results were revealed recently close to two years after the office first started looking into the problem.
‘These persons are now left in the position where they may face future…hardship because of a lack of pension benefits,’ said Complaints Commissioner John Epp.
Before the island’s Public Service Pensions Law was revised in 2000, contracted civil servants who were expatriates hired locally or who were the spouses of people hired from abroad, were not eligible for pensions.
Mr. Epp said some received what’s known as a contracted officer’s supplement, others did not. Many obtained permanent resident status over the years.
There were also a few native Caymanians who Mr. Epp said are not eligible to receive pension benefits.
Information was collected from about 100 people between mid-2005 and April 2006, after the OCC went public with requests for anyone with a grievance related to the pensions issue to contact its office.
For example, It was determined four Caymanian status holders who worked for the government between 10 and 23 years, and who were now retired or were nearing retirement age, would receive no pension whatsoever.
Three more status holders who had retired with 20 or more years in the civil service were getting pension benefits of between $23 and $50 per month.
The investigation also identified four native Caymanians who joined the civil service after age 50. They were not able to complete the mandatory 10 years of service needed to receive pension before reaching retirement age.
The OCC’s report makes no recommendations to the Portfolio of the Civil Service. Mr. Epp admits these employees knew what they were getting into at the time.
‘Many of the persons understood…that they were not contributing to a pension plan and that they would not be entitled to pension benefits,’ he said. ‘However, some may have not grasped the full consequences of accepting employment in which they were not eligible for pension benefits.’
Moreover, Mr. Epp notes government is now between a rock and a hard place in deciding what to do with these workers.
‘If the decision is taken not to include long-serving civil servants in the pension scheme, the government’s social services department and other aid agencies may need to help these people financially in their golden years,’ he said.
But he said simply adding them onto the Public Service Pension Scheme isn’t an easy choice either.
An evaluation of that pension system as of 1 January, 2005, showed it had an unfunded liability of more than $165 million.
At the time of that review, the Public Service Pension system had about $135 million in assets and more than $300 million in liabilities, meaning the system was less than 50 per cent funded.
Financial Secretary Kenneth Jefferson has said benefits to current retirees are more than fully funded, and that the unfunded liability was not a problem that needed to be eliminated within a very short space of time.
However, the actuarial firm that performed the review noted the pension fund continues to be severely under funded and that it would remain under funded for the foreseeable future.
‘If the government decides to include more people in the Public Service Pension plan, they must be aware that a huge capital injection will be necessary,’ said Mr. Epp. ‘This makes the question of including more people one that must be very carefully taken.’
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