Gov’t ordered pension payments withheld

Several million dollars worth of pension payments to Cayman Islands civil servants were withheld over the past few months, and some still have not been paid, because government simply didn’t have the ability to pay on time.

Mr. Duguay

Mr. Duguay

According to records obtained by the Caymanian Compass through a Freedom of Information request, some $1.1 million in monthly or bi-weekly pension payments was still owed by several departments at the end of December.

A review of delinquent pension payments since June found that more than $4 million was owed by about 20 different central government departments, statutory authorities and government-owned companies. As available funds came in, some of those past due payments were made.

One government agency that didn’t make any pension or health care coverage payments between August and October was the Auditor General’s office.

Records obtained by the Compass showed that a $13,140.28 pension payment due in August from the audit office was paid 3 December. Another $11,930.92 pension payment for September and a $12,381.52 from October weren’t paid until 15 December.

When questioned about the late payments, Auditor General Dan Duguay said the explanation was simple. He was told not to send requests for those payments to the Treasury Department.

‘We got directions over a period of three months not to make pension payments,’ Mr. Duguay said. ‘My understanding is that it was a cash flow issue.’

E-mails between the audit office and the treasury bear that out.

One response received by the audit office in early September asked the auditor general ‘to post pone (sic) the payment…for the August pension.’

In mid-September, Deputy Auditor General Garnet Harrison again e-mailed the treasury to ask if the audit office could run pension cheques for August and September.

The response received read: ‘Please be advised that CIG (Cayman Islands Government) only has the capacity to entertain payments directly related to September payroll, with the exception of pension and CINICO (health care) disbursements.’

Again in October, the audit office was told that government was not in a position to process pension cheques.

Records compiled by the Public Service Pension Board show that some past due pension payments were made in October; among them a $154,781.74 payment made for Planning Department employees on 29 October, and more than $26,000 paid on that date to the judicial department employees’ pensions.

The delinquent payment list shows that government was slowly clearing up past due payments as the funds became available, and did manage to whittle down the sum owed to just more than $1 million in late December.

Typically, the Cayman Islands Government doesn’t receive its greatest amount of operating cash from company fees, customs tariffs and tourism-related revenues until the start of the calendar year; the months of January-March in particular. The government’s budget year starts the previous July and so begins with the leaner revenue months during Cayman’s ‘low season’ for tourism.

Mr. Duguay said the delay in pension payments causes two problems. First, it’s a bookkeeping hassle with employees leaving the civil service. For instance, if a worker’s pension payments weren’t made in August and September, and that employee leaves the service in October; the department has to calculate the past payments that weren’t made into what it must pay out to the departing employee in cash.

Second, Mr. Duguay said investment opportunities can be lost.

‘This means that for a three month period the pension board receives less in cash, and those were three months (referring to August, September, and October 2009) where the stock market was going up,’ he said.

The auditor general said he believes government will continue to make good on pension payments as soon as it is possible and that this is not the first time government agencies have been seriously late with pension payments.

‘We know that there are (agencies) that don’t pay as often as they should,’ he said.

Financial Secretary Kenneth Jefferson was contacted by the Compass about the pension payment issue earlier in the week, and said he is in the process of compiling information to provide a comprehensive response. Those comments will be run in a follow up story in this newspaper.


Comments are closed.