Cayman Islands lawmakers who served only one four-year term in parliament between October 1959 and August 2004 would be eligible to receive a pension under a proposed amendment due to come before the Legislative Assembly later this year.
The change, if approved by a majority of lawmakers, would add some new pensioners to a retirement plan that government financial advisers recently described as “severely underfunded.”
According to the Parliamentary Pensions [Amendment] Bill, 2016, a pension “shall be payable” to any person who served as an elected member of the House or as Speaker of the House [who was not already an elected member] for one full parliamentary term at any time between Oct. 1, 1959 and Aug. 23, 2004. Government officials estimated half a dozen former lawmakers would receive pension payments after being added to the plan, if the amendments were passed.
The purpose of the brief proposed change, according to the bill, is to adopt the current eligibility requirements for pensions on behalf of those legislature members “who are otherwise ineligible to receive a parliamentary pension.”
The legal amendment that allowed Caymanian lawmakers to receive a parliamentary pension after serving just one term in the House took effect after Aug. 23, 2004 and was not retroactive. Previously, Cayman’s retirement plan for elected lawmakers did not provide a pension after elected officials served a single four-year term.
All pension payments in the legislative retirement plan are adjusted annually for inflation.
Under the old retirement system prior to the 2004 amendment, lawmakers would get one-third of their salary in a pension after two terms – eight years of service – in the House. After three terms, or 12 years, they would receive half pay in retirement, and after four terms – 16 years – they would get two-thirds of their ending salary in parliament as a pension.
The Parliamentary Pensions Law now sets a sliding scale for retired lawmakers, with a maximum post-retirement earning of two-thirds salary after 20 years – five terms – in the House.
Lawmakers serving one term now receive one-fifth of their maximum pension allowance [which is two-thirds of their ending salary]; a lawmaker who serves two terms would receive two-fifths of the maximum two-thirds salary and so on until five terms of service provide the full two-thirds of their ending salary in retirement.
The parliamentary pensions plan also allows legislators to retire at 55, which is five years earlier than the age at which civil servants are allowed to retire and receive full pension.
The civil service retirement age has been proposed to increase to 65 years. Parliamentary pensions operate separately from the main civil servants retirement plan and are governed under a different law.
The plan that provides retirement benefits to Cayman Islands legislators is now “severely underfunded,” according to actuaries who last reviewed the state of government’s retirement funds more than two years ago.
As of Jan. 1, 2014, the parliamentary pensions plan listed assets of nearly $8.5 million against liabilities of more than $22.5 million. That means the plan is only 36 percent funded, according to the 2014 estimates.