An evaluation of Cayman’s public service pensions system that was completed in early 2009 has not seen the light of day since.
The 21-month delay, which is dated 1 January, 2008, was completed on 17 March, 2009. The auditor general’s office stated in its recent review of government accounts that the Public Service Pensions Board fulfilled its obligations in preparing the report and submitting it.
“The valuation report has not been tabled in the Legislative Assembly as required by law,” Auditor General Alastair Swarbrick noted in his financial performance and reporting report, which was released to the public on Thursday.
The actuarial report on the public service pensions is typically done every three years and is basically a review of the financial state of the pensions system – which serves as the retirement fund for Cayman Islands civil servants, judges, and lawmakers.
It determines how much unfunded liability – potential future debts not covered by current assets – a pension fund contains. Those liabilities are generally estimated over a rolling 20 to 30 year period.
There are two types of retirement accounts for civil servants under the public service pensions plan; a defined benefit account, which provides monthly pension payments for retired government workers; and a defined contribution account, which provides a one-time lump sum payment to retirees.
The unfunded liability figures apply only to the defined benefit accounts and are currently estimated in the Cayman Islands government budget at about $179 million.
However, that figure is from a 2005 actuarial report and has never been changed since the 2008 report was completed.
“We haven’t even seen the  report yet, that’s our main concern,” Mr. Swarbrick said. “We can make no assumptions about what it says at this stage.”
In a public bond offering last year, the Cayman Islands government put its public sector pension unfunded liability at US$248 million (approximately CI$204 million). That was based on the 2008 actuarial report auditors said they had not seen.
A more recent estimate from mid-2009, put the unfunded liability figure at US$325 (CI$266 million).
In order to properly calculate government’s net worth, Mr. Swarbrick said the most up-to-date figures for pension debt should be used.
“Its how much government has to pay out in terms of pensions…in the future,” he said. “It would demonstrate whether that liability goes up or down.”
A higher projected liability generally means that government would have to pay more each month for each civil servant’s retirement fund to ensure future payments can be made, Mr. Swarbrick said. A lower project liability could serve to lower those payments.
Public service pension liability figures also impact the overall net worth of the Cayman Islands government.
If the $266 million figure was used, instead of the $179 million in the budget, Cayman’s net worth would sink by $87 million.
Government net worth would still be in positive territory, but it would not remain at the current $512 million levels.