Civil servants left in limbo on retirement change

Opposition members of the Legislative Assembly said last week that some civil servants are being forced out of their jobs after reaching age 60, despite government’s stated intention to raise the public sector retirement age later this year.

The legal change required to increase the retirement age from 60 to 65 for public sector workers is expected as government seeks to reduce pension and healthcare liabilities in its annual budget.

In practice, Deputy Governor Franz Manderson said the civil service for a number of years has allowed Caymanian workers over age 60 to continue working on fixed-term contracts as long as they are healthy and job performance has not been affected.

“The policy we have in place now is that unless there are serious performance issues, you will continue to work until age 65,” Mr. Manderson said.

However, East End MLA Arden McLean said he was aware of two public works department employees who were forced to retire in April prior to reaching age 65.

“In certain cases you are forced to retire? Encouraged? Pushed out?” Mr. McLean asked.

Mr. Manderson said he was not aware of the specific instances referred to by Mr. McLean, but that new contracts would not be issued for government workers over age 60 if they were not performing adequately in their jobs.

Since the Progressives-led government proposed increasing the retirement age for public sector workers last year, there has been some uncertainty in the civil service about how workers between ages 60 and 65 would be treated. Mr. Manderson said, generally, government workers would be given an option.

“If I am 62 and I am receiving my pension … and the law changes tomorrow, I will have the option on my next contract renewal to say … ‘thank you I’m retiring’ or ‘I want to work until I’m 65,’” the deputy governor said. If the latter option is chosen, the civil servant would stop receiving pension payments and resume making contributions to the pension fund until age 65. Just because a worker reaches age 65 does not mean he or she will be forced to leave the service, Mr. Manderson said.

“If they are fit and ready to do the work, then they … can stay on for a while longer,” he said. Employment beyond age 65 would be on a fixed-term contract basis, he said.

The government expects a significant impact on the jobs market as a result of increasing the public sector retirement age. The government Economics and Statistics Office recently reported that overall unemployment fell from 6.3 percent in 2013 to 4.7 percent in 2014. Caymanian unemployment fell during the same period from 9.4 percent to 7.9 percent.

Government projections for the 2015/16 budget year were that overall unemployment would remain at 4.7 percent during the period that runs through June 30, 2016 “because of an expected increase in the labor force.”

“If you increase the retirement age from 60 to 65, you increase the working population, so your labor force grows,” Finance Minister Marco Archer said. “The [worker] pool from which you are drawing will get bigger.” The Cayman Islands Civil Service Association has not opposed the change, but has sought to obtain further details about how the retirement age would affect workers’ pensions and healthcare payments.