Four senior managers at the Cayman Islands Public Service Pensions Board are earning more than $120,000 per year and the top manager is making $160,000 according to information released under the Freedom of Information Law.
By way of comparison, Cayman Islands Premier McKeeva Bush earns about $160,000 per year, factoring in a 10 per cent salary cut he took in 2010. Cayman’s Opposition Leader earns about $115,000 per year, including a 10 per cent pay cut in 2010, and backbench and opposition members of the Legislative Assembly earn between $105,000 and $112,000 per year.
The figures for the LA salaries were released in 2009 by Premier Bush, following an open records request by the Caymanian Compass.
According to government financial records, total annual salaries for the four top managers at the public service pension system during the 2009/10 budget year were $675,000; that figure includes payments for health care and pensions.
However, in the previous year, 2008/09, total salaries for the top managers at the fund were $353,000.
“The increase in 2009/10 from 2008/09 in the senior management salaries for the PSPB was as a result of occupying vacant positions of the deputy managing director (designate) and the director, plan administration department,” according to information released by the board.
According to salary information released as part of the newspaper’s open records request, “Senior Manager No. 1” of the fund was earning $160,000 per year as of May 2012. The salary includes a 3.2 per cent cost of living pay increase provided to all civil servants by the government in December.
“Senior Manager No. 2” was making $126,624 per year as of November 2011, but is no longer employed at the pensions fund. “Senior Manager No. 3” is making $124,752 per year and “Senior Manager No. 4” was earning $121,548 per year.
The figures provided for salaries of the fund managers for 2011 and 2012 do not include pension or health care emoluments.
Pension fund troubles
The Caymanian Compass reported last week that severe underfunding issues had been identified in a 2008 report within both the government workers’ main pension plan and the parliamentarians pension plan; both of which are managed by the Public Service Pensions Board. The report, dated 1 January, 2008, was released earlier this month under yet another open records request.
“Pension amounts are expected to grow very rapidly over the next 20 years as the majority of the DB [defined benefit retirement plan] participants approach retirement ages,” the report, completed by pension board actuary Subramanian Sundaresan.
The report noted the public service retirement fund would continue to remain underfunded in the foreseeable future, but that liability for inactive members – current pensioners and their beneficiaries – is covered for the time being.
That’s not the case for the parliamentary pensions fund; the fund that pays retirement benefits to legislators, according to Mr. Sundaresan.
“Assets allocated to the plan cover only 24 per cent of the past service obligations,” the actuarial evaluation noted. “The plan’s assets are also insufficient to cover the benefits currently in payment.”
The parliamentary pensions plan had about $4.7 million in assets as of 1 January, 2008, with $19.4 million due in past service liability. Those figures created an unfunded liability, or actuarial deficiency of $14.7 million.
The main public service pension plan had assets of $174.3 million and past service liabilities of $366.7 million; for an unfunded liability of $192.4 million.
Financial Secretary Kenneth Jefferson, who is chairman of the Public Service Pensions Board, acknowledged last week that the Compass reports regarding the pension underfunding were accurate. However, he said they did not necessarily provide a “proper context” in terms of the worldwide difficulties experienced in funding public retirement systems.
“Most of the major industrialised countries in the world do not put their pension obligations on the face of their financial statements as transparently as the Cayman Islands government does,” Mr. Jefferson wrote. “This does not mean that these large countries do not have pension obligations that dwarf that of the public service in the Cayman Islands.
“In comparison to most other countries, the Cayman Islands Public Service Pensions [fund] is actually in a favourable position.”