Cayman Islands Grand Court judges receive 30 per cent of their annual salaries above and beyond their annual pay from government to assist in supporting their pension plans.
According to an actuarial valuation of the Judicial Pension Plan as of 1 January, 2008, just released to the Caymanian Compass under the Freedom of Information Law, judges contribute 10 per cent of their salaries toward their retirement plans and the government contributes an additional 30 per cent of the salary above what the judge earns.
By way of comparison, civil servants pay six per cent of their own salaries toward retirement savings and government contributes a matching six per cent – despite recommendations contained in the 2008 report that state the civil servant retirement fund requires some 44 per cent of salary to meet retirement fund requirements.
Unlike the civil service retirement plans, where thousands of current and former government workers participate, there were only three Grand Court justices who were members of the Judicial Pension Plan at the time the study was completed in January 2008.
“Only the three existing participating judges (Justices Smellie, Levers and Henderson) are eligible for benefits defined under the defined benefit part,” the pension report states. “Benefits for future participating judges will be provided through the defined contribution part.”
In January, 2008 there were no other judges in the Judicial Pension Plan, although since then a number of new judges have joined the bench in the Cayman Islands.
Defined benefit plans provide monthly pension payments to members and the spouses of members until their deaths. Defined contribution plans operate with a finite amount of savings that can be paid out in a variety of ways, including partial lump sums, yearly or even monthly payments.
Typically, pension system underfunding issues – such as those that currently exist with the civil service and legislative retirement plans in the Cayman Islands – result from defined benefit systems, where retirees must be paid a set level of benefits over the course of their lives.
The Judicial Pension Plan, with just three members in 2008, had no such funding issues and actually showed a modest $21,000 surplus in assets as of 1 January, 2008.
Unfunded liabilities in the civil service pension plan were estimated at more than $192 million at that same date, while the legislators’ retirement plan was only 24 per cent funded, according to the actuarial evaluation.
The Judicial Pension Plan’s normal retirement age is 65. The plan provides for unreduced benefits for retired judges at age 60 if they have completed at least eight years of pensionable service.
Although the judge’s retirement fund is managed by the Public Service Pensions Board, the judges pensions operate under the Judges Emoluments and Allowance Order  which arose out of the law of the same name from 1997. Civil servant retirement plans are governed under the Public Service Pensions Law, while the lawmakers’ retirement fund is governed under the Parliamentary Pensions Law.