In less than five years, the Cayman
Islands government’s estimates for what it will owe its pensioners – but does
not currently have the ability to pay – has more than doubled.
The amount, known as an unfunded
liability, grew from an estimated CI$116.5 million in mid-2006 to an estimated
CI$266.5 million by mid-2009.
The $116.5 million figure was
revealed in an annual report from the Public Service Pensions Board made public
in the Legislative Assembly last week. That report, for budget year 2005-06,
took four years to release.
The 2006 figure for unfunded
liability in the Public Service Pension plans was supplanted by an actuarial
estimate of CI$165.7 million.
A subsequent assessment in 2008,
the full report for which has never been made public, put the unfunded
liability figure at US$248.4 million, or roughly CI$204 million. Another figure
estimated for mid-2009 put that unfunded amount at US$325 million, or CI$266.5
An unfunded liability is the best
estimate of what will be owed over a rolling 20-year period to maintain pension
benefits for retired civil servants who receive monthly payments.
The CI$266.5 million figure is not
contained in any government budget, but rather was released as part of a bond
offering prospectus last year.
The government’s current budget
contains a CI$178.9 million figure for unfunded liability in its public service
pensions system. That figure was derived from the actuarial report released in
Concerns about whether the
government was putting enough money into its three separate public pension
plans (for civil servants, lawmakers, and the judiciary) were raised during
budget reviews in the Legislative Assembly’s Finance Committee last week.
Opposition Leader Kurt Tibbetts
noted that government had, in both the 2009/10 year and in the current 2010/11
year reduced payments into past service pension liabilities to less than $2
million each year. Those payments, which
go to support current retirees’ pension benefits, had previously been funded at
between $12 million and $15 million per year, he said.
“This was not done last year. Is
that the same situation again this year?” he asked.
Deputy Financial Secretary Sonia
McLaughlin said government couldn’t afford to maintain the higher payments
toward past pension liabilities in the current financial environment.
Employment Minister Rolston Anglin,
who has responsibility for national pensions, has previously said that Cayman
Islands law does not require specific amounts to be paid toward past service
However, he acknowledged that those
amounts would eventually have to be paid in future years to make good on commitments
to public sector retirees.