Two-year-old pension report awaits Cabinet review

Representatives of the Finance Ministry have declined to release a Jan. 1, 2014 financial evaluation of the Public Service Pensions system twice in the last six months, citing a pending review of the documentation by Cabinet ministers to occur at a date in the future.

The actuarial evaluation of the three retirement plans managed by government, for civil servants, Grand Court judges and politicians, was initially submitted to government in fall 2014, then revised and completed as of fall 2015. Its release was not objected to by Mercer, the consultants who completed it on behalf of the government.

However, ministry officials said in mid-October 2015 that they were “deferring” the release of the final pension plan evaluation until March 2016, to allow for a Cabinet review of the matter.

In March 2016, the Compass again requested a copy of the actuarial report and were told that Cabinet still needed time to review the document.

“The decision to defer release of the reports to May 31, 2016 will allow for sufficient time for the reports to be presented, deliberated and accepted by Cabinet,” Financial Secretary Kenneth Jefferson said.

The Compass is appealing the financial secretary’s decision to the Information Commissioner’s Office.

Whether or not the information compiled by the actuaries has been released to the public, some financial difficulties for public sector pensions were revealed by the Cayman Islands Auditor General’s Office in a report made public last October, shortly after the government ministry denied requests for the pension plan evaluations.

According to the auditor’s office, the Cayman Islands government’s financial statements did not recognize an estimated $1.39 billion in pension and healthcare payments it’s expected to owe retirees over the next 20-25 years.

The estimated payments, broken into $1.18 billion in post-retirement healthcare costs and $213 million in pension payments is more than double the total revenues the Cayman government would earn in any given year.

Mr. Jefferson explained that neither of the amounts are due immediately. The estimated pension payments, due from participants in the defined benefit retirement plans, are spread over a 20-year rolling period.

An amount for the pension liabilities is currently included in the government budget, but it is based on estimates dating back five years, Acting Auditor General Garnet Harrison said.

The Jan. 1, 2011 actuarial report – the last report which has been made public by government for Public Service Pensions – contained a dire warning about the state of those systems.

“The actuary has determined that a continuation of the current level of contributions to the defined benefit plan is projected to result in the depletion of the defined benefit allocated fund by the year 2026,” the board’s evaluation, contained in an annual report, noted.

Basically, Mercer evaluators have recommended, over a period of years, that employee contributions to the civil servant retirement plan be increased. The government has yet to follow that recommendation at any time.

It is not known what recommendations are made in the 2014 actuarial report.

Acting Deputy Governor Jennifer Ahearn told the Legislative Assembly in December 2014 that the overall performance of the three retirement plans maintained by the government had seen vast improvements in investment returns since 2011.

Annual reports showed net assets maintained by the three retirement plans increased from about $340 million in 2011 to nearly $485 million as of June 30, 2014 – a total increase of some $145 million. The Jan. 1, 2011, pension plan evaluation put total liabilities of the pension funds at $495 million. No figures had been released on liabilities as of the Jan. 1, 2014 report.