Pension freeze confusion
(CNS): Government has still not confirmed if it will be implementing a pensions holiday or a pensions suspension or whether the civil service’s pension contributions will be made for August. CNS understands that although salary slips will show that 12% contributions (and not 0.25%) have been made to the civil service pension fund for this month, chief financial officers may be directed not to write cheques for the 12% to the pension board. There are now two fundamental questions relating to the freeze of civil servants pensions that have not been answered. One is whether the payments will ever be paid back and the second is how and when the suspension can begin.
Chief Secretary Donovan Ebanks (above) said that the plan was still a work in progress and that the memo sent by Financial Secretary Ken Jefferson last week to chief financial officers was merely guidance and that the freeze may now have to start in September. Ebanks also noted that under the Public Management and Finance Law, paying back the pension and taking off the balance sheet for the 2009/10, may not be possible. “Various things have still to be set in motion,” he added saying that the questions would be answered by the end of the month. Although CNS contacted the financial secretary regarding the freeze paybacks and the start date, he referred CNS back to the chief secretary.
According to Auditor General Dan Duguay, if this temporary cessation of payments is a holiday it will still have to be accrued in this year’s budget as indicated under the Public Management and Finance Law. Given that the government’s goal in freezing pensions is to reduce the deficit to have to still accrue the payments would defeat the purpose.
Although Leader of Government Business McKeeva Bush said at a televised press briefing on 10 August that government would be obligated to repay the missing contribution sometime in the future, CNS understands that on Friday, 21 August, Bush called CaymanCrosstalk, a local radio phone in show, and stated that he now “hoped” government would be able to pay it back sometime in the future but that it may not be able to do that after all.
Duguay told CNS on Monday that, as the government auditor, he hopes that it will soon be made clear to everyone what government’s intent is regarding the freeze, whether it is a holiday or suspension. “If this is a holiday and the payments are going to be made sometime in the future then it must be accrued now. If it’s a suspension of benefits then it doesn’t have to be accounted for,” he said.
James Watler, President of the Cayman Islands Civil Service Association, also said it’s time to make it clear that this is a pension suspension and not a holiday as he believes it cannot be paid back. He noted that while his members were more than willing to help reduce the deficit and recognized that sacrifices needed to be made, he remained unconvinced that freezing pensions was the way to go. Moreover, Watler said that the subject had not been raised at the civil service meeting held recently at George Hicks to discuss reductions in government spending.
Ebanks told CNS, however, that people should not be surprised by the move because if they believed the government could reduce the expected deficit without some significant cuts they were living in a fairytale world.
The memo from the Financial Secretary’s Office to chief financial officers last week indicated that the freeze will be in the form of a reduction from 12% contributions to a nominal payment of 0.25% starting from August. The decision to make a nominal payment rather than a freeze means government will not have to change the law, merely the regulations. However, these changes have not yet been made and government departments are due to send cheques to the public service pension board before the end of the month as pay slips are indicating that the normal 12% contribution has been made.
Consequently, the dilemma facing chief financial officers is that, while the financial secretary’s office is asking them to budget for 0.25%, the Pensions Board will be looking for cheques representing contributions of 12%.
Duguay said that until the regulations are formally changed his office would continue to make the 12% contributions to the Pensions Board. “My office will and I would expect all government chief financial officers to follow the law, which states that pension contributions are made at 12%. We have not been informed of any change to the 6 and 6 percent contributions,” he said. “If and when the changes are made to the regulations then we will follow the new rules regarding the law.”
Bush told the press on 10 August that the ‘pensions holiday’ was one policy measure that could reduce the anticipated $133 million budget deficit by as much as $49million.
Category: Headline News
Please correct me if I am incorrect someone. Someone working on a work permit for the CI government for 8 years—can resign, claim their pension, get their check and go home never to come back right?
A Caymanian working for the government for 8 years — and then resigns at age 32 has to wait until age 60 to claim their pension right? And if the Caymanian is moving to Japan — he/she still can’t have their pension until a certain time period. If this is correct: Would it not be better to be a working class expat in Cayman? It’s even better if your country of origin will give you a substantial sum of money in exchange for your CI. You could be set for life…or off to a very good start! The story is quite different for the working class uneducated native grassroot Caymanian.
The natives need the government. Government does not need the natives. Some natives are only a drag. The "New" Caymanian will lead. The native will be left behind—unless he is smart!
————————–
Quincy Brown
GUILT BY ASSOCIATION,
Ladies and Gentleman consider this carefully. Your politicians are the ones who are making the decisions about Pensions – they are the ones in charge of our Government finances. So they are guilty.
However, there is also Guilt by Association, with that being
1. Chief Officers of Ministries, along with all their Deputies.
2. Managing Directors, General Managers, Supervisors and Management Personnel of all Government owned companies and Government Departments.
3. In the Sister Islands it would be District Commissioner.
4. All Civil Servants
Your silence and lack of ability to stand up for your co-workers and employees do notspeak well for you.
Sign Me,
Yalove to gossip in the office, but unnas tongue all twist up in public forum.
Easy way to get out of this mess!!! sell cayman to dart!
Pension holiday…..
Pension suspension……
Its all a fancy way to say pension default…
Civil servants will not be paid back….
Imagine the headlines the day after election in 2013….
Last Govt. left the Country Broke…$200 Million in Unpaid Pensions Falls Due…..
Govt Coffers empty….
Spent on more loss-making govt entities.
My advice is that every single Civil Servant fight through the Civil Service Association and other means to keep your pension terms as they are….
Good Luck!
Here are some financial numbers to put this pension "suspension" in perspective.
If you earn $60K, the government is contributing $7,200 (12%) in your pension plan. By stopping contributions for 1 year the financial impact at retirement will be:
10 years to retirement = $11,858
20 years to retirement = $19,531
30 years to retirement = $32,107
This is base on a conservative interest rate of 5%. The higher the interest rate earned, the greater the financial impact.
Goverments all over the world withhold payment to civil servant pension funds why didn’t these just do that and kept there mouths shut, but no they must go and publicly say we are broke and the UK isn’t allowing us to borrow, have these guys never played poker before, you bluff until you make the winner fold, we will have no negitiating power as a goverment for anything, everyone now know we are broke, it embaress me to see in the headlines the LOGB begging for advise like some calf blinding by the headligths before the truck hits them, if you don’t have enough advisers and briliant minds in your cabinet maybe you should all resign and let people competent run the country because it same like the bunch that was there before put us in the mess and the bunch there now don’t know how to fill a bucket of water to clean the mess.
Might I suggest as citizens we all make a effort to pay or back bills to the goverment whether it be garbage or hospital bill and try to pay them on time that will go along way in helping.
Also another suggetion this free education thing must stop who the heck you hear of paying $150 to get children educated for a whole year, increase the fee to maybe $100 a month or something like that I’m paying over $800 a month to have my daugther in private school and both me and my wife are borned Caymanian’s with both our childern borned in Cayman, so they are in private by choice.
All you returning residents pay your custom fees when u are returning with your huge bags and boxes I collect my recipts and pay my fees if they are over it is just a extra $50 to $20 but me along with the other 3 honest people normaly per fligth help pay for the hard working custom offices in the whole airport on that occaisions, we as citizens can do more than just taking and not giving back because we will be giving back alot if income tax or sale tax have to be introduced, also use more goverment services like the post office instead of overnigth mail, it is cheaper and brings revenue direct to the goverment also the goverment migth need to start competing with the private sector use there resorces for private stuff GIS photo op’s and events radio cayman more events, PWD more involed with construtions why are we letting private build these schools or PWD did it years ago make them take on part of the contracts the money same to be real good, tourisum department make a marketing and reserch dept make people pay for all that satistics they got and as for us blowing over 40 million a year in adverts make the hotels and condos help foot that bill, make the cruise ships pay a tax on those tours they are selling a tour for like $75 and paying the local parties like $15 and that includes the transportation and entrance fee.
Get rid of the first time buyers no transation fees on land purchases, because all it does is force the cost of land and homes up because it is cheaper to pay the tax than to pay the extra on the first cost of the purchase.
NHB
The 12% only applies to the Civil Servants on the Defined Contribution pension plan (those employed after 1999).
What about those Civil Servants pension contributions like me who were employed long before 1999?
We were told that the funding for our Defined Contribution pension plan required government to fund it at a level of about 24% of my salary and I believe that for many years government have not been contributing at the level of what they should be doing to get the underfunded civil service pension plan solvent. Just another promise broken, so what else is new about government?
Can I depend on future taxpayers being happy to pay for my retirement income all because the money was not put away in advance of when I needed it?
If you were employed before 1999, you are on the platinum plated defined benefit plan which has now been phased out in Cayman-as every where else in the world (except for our judges-God bless them, spit). Your pension will not be affected EXCEPT that pension "holidays" simply mean the funding of your plan (and mine) makes it less financially viable.
See James Watler and make him and his crew tell you where things are at.
Attention Civil Servants/Members of the Public on Cayman Brac & Little Cayman:
The Honourable Leader of Government Business will be holding a public meeting at the Aston Rutty Civic Centre Friday 28 August from 9:30 AM to 12:00PM. Come one come all.
Refreshments scheduled to be served (with PPM as majority):
Turtle Meat, Conch, Beef, chicken, 3 choices of fish. (also numerous door prize drawings to encourage attendance).
Refreshments scheduled to be served (with UDP as majority):
City water (please bring your own cup). A donation of CI $5.00 per ounce is strongly encouraged. We hope to raise enough funds to pay for our airline tickets, hotel accomodations for the weekend, rental vehicles and, food allowance. Attendance will be taken – those of you are supposed to be working should not be here. Any opinions differing from the majority Government will not be tolerated!
Now that I have made you laugh, go to the meeting. I know all of the politricksions (politicians) are full of promises and leave them at the airport on the way back to Cayman. Unna politicainswant to save, well then invest in a webcam and have a teleconference!
Sign me,
Got one last cup with hole in it . . . help me Lord!
PPM, UDP and IND you cannot do anything positive without GOD.
Got cup with hole . . . . .help me Lord!
The common law (which applies to Cayman) would suggest that an employer cannot unilaterally reduce the benefits (which includes pension) to an employee. Should he do so the employee can sue for damages for breach of contract. It only needs one civil servant to win and that would set a precedent for all the others to follow. More worryingly civil servants should ask this question – if the government had to borrow money to pay this month’s salaries and the UK government has (according to Cayman Compass) said no more borrowing – how are they going to pay next month’s civil service salaries let alone pension contributions.
Less Government, More Responsibility and Accountability and with the Grace of God a Better Society!!!!!
I do hope that enough people can see through the politics that Mac is playing with the Civil Servants. He has now suceeded in setting them up for his next move, which was the plan all along. “Well, you said you didn’t wanta pension holiday, so the only other options are broad layoffs or a paycut across the board. Which would you prefer?” It was always his intention to let you decide your own fate!
My, my I did not see it that way, but you are right.
Now armed with your eye opening revalation Mac’s tricks are exposed.
Mac has really given us Civil Servants an alternative, do you want to be hung with the RED rope or the GREEN rope?
Either way we dead, dead.
Mac ya think ya smart but we have found out your trick now, dump all the RED ropes and GREEN ropes, call new elections, ban all current politicians from running in the next election and those that have been in Governmnet since 1990.
The Cayman Islands needs a new breed of politcian and I am interviewing them now for the job.
Fed UP Voter
PPM left the country in shambles. Now all they want to do is criticize all proposals or unpopular choices that the UDP now has to make. Thanks to all PPM supporters for giving their useless PPM government a free reign to destroy us in a short four years. I propose first getting rid of the useless MLAs for the PPM who are doing nothing but collecting their big salaries. Does anyone ever see Anthony Eden anymore! They should all hide in shame!
Trying to blame UDP lack of focus and rational policies on the "shambles" PPM left the country in won’t cut any ice. You were elected to get the job done not to pass blame to the previous government for your failing to get the job done. If the UDP would just shed the idea that it should look only to UDP supporters for ideas and help in managing the country we would be further ahead. They are putting party before country.
Sorry, UDP got the train on the wreck rails with their hairbrained schemes like trying to make the Turtle Farm a Disney World or Sea World and we have to pay the bill. Us poor fools that reelected them thinking that things would be different this time.
The PPM were not smart enought to really recognize the financial trap the UDP set for us.
Do not allow the UDP to borrow any more money, borrowing more money only puts us in more debt, please some one tell Mr. McKeeva that for me.
Then McKeeva, Dart, Imperato, Burns, Joe O’Brian (Mac is back and so is he, the flies are returning) and Naul want to move the port and air port to East End. Fool be the Caymanians that allow this to happen to us.
Pension freeze confusion – now that is a lie – it is plain as day that what is happening is that the UDP does not really understand what they are doing to the future workers to dump such a large debt for old people on the next two generations of workers. If the UDP really understood what they were doing and did it anyway then the should be charged with treason because it is against the very fundamentals of good government.
That is my two bits any way.
Da wa unna get. Didn’t appreciate the PPM so had to have Mac A** back and in his first 100 days how many F*** Ups have we seen ? Politicizing of the Civil Service with the dismissal of several senior experienced civil servants; Renaming Pirates Week; Suspension of the New Education Law and educational reforms; dismantling the port development plans and the announcement by Mac A** that there will be NO EIA; the pension ‘holiday’ for civil servants; announcement that the government is BROKE while at the same time talking about opening offices in China, Dubai and London, taking world tours and carrying a 31 person delegation to Miss Universe last weekend complete with limo service for guests etc; delaying the plans for the development of the Owen Roberts International Airport and the Little Cayman airport; dismantling of the Go East Intiative; stopping the Coe Wood project in BT; dismantling of the ongoing reforms at CAL and reinstatement of managers that FAILED the management audit/tests that was carried out; mismanagement of the Swine Flu Pandemic and health services; suspension of the PPM’s affordable housing plans; PPO1 and PPO2…..should I continue ?
WHAT ABOUT THE PRIVATE SECTORS AND THE CONCERN OF THE SMALL BUSINESS.
HOW CAN GOVERNMENT INFORCE PRIVATE SECTORS TO PAY PENSION???
CAN SOMEONE TELL US IF THE PRIVATE SECTORS ARE ALSO GOING TO HAVE A HOLIDAY FROM THE PENSION?????????
LEGALITY OF MODIFYING CONTRACTS,
Ha, ha, ha, you think Government is worried about you Contracted Employees!!!! That contract you signed is in the process of being made null and void. Either you accept the changes and stay on your job or make noise and your contract simply won’t be renewed – plain and simple.
Ha, ha, ha Contract you say. Watch and see what happens. There will be some provision that allows Government to modify the language to suit their needs under some sort of emergency conditions. You heard it from me first.
Lets face the facts people – our Government is a very large employer who pay 100% of the medical benefits and 100% of the pension benefits for its’ civil servants. Civil servants should pay for one-half of their CINICO and Pension just like the private sector.
Whether you make a 12% pension contribution of 1/4 of 1% pension contribution you still have the same bureaucratic process/paperwork. In many instances the paperwork/time that it costs the employer will exceed the actual pension contribution on behalf of the employee (someone making $2000 per month will now get a $5 contribution instead of $240).
Here is an idea since this is going to be forced on the Civil Servants, why don’t you just make one pension contribution for the whole remainder of the budget year (11 months *.0025 = 2.75%). So now the $2000 employee gets $2000 * .0275 = $55 pension contribution. I have now saved you an immense amount of time processing just one transaction instead of 11 -(based upon contribution $5 per month for 11 months).
Sign Me,
Wish I could be a picture on the wall or a lightbulb anywhere to record all of the actual "work" that goes on in Government departments.
My Report Card
Mr. Donovan Ebanks – F
Mr. James Watler – F
Hon Ken Jefferson – F
Civil Servants Morall Courage – F
I agree. A very clear example that there is something wrong with the principle that in a democracy ANYONE, regardless of their qualifications and intellect, can run for public office.
What a royal mess !!!
Here we go again, Mr. LOGB blabbering off his mouth and not get all the facts together. Now that is a leader, man think before you speak, if you can’t think have your consultants tell you what to say. Everything that you say is conflicting, poor old Rolston he is having to do the clean up afterwards. Donnie and James sunk you this week.
Man get your act together, you are the leader. I think we all can see why higher learning is imperative, Mr. LOGB is a fine example.
What a shambles. Has anyone addressed the position with companies owned by the Government such as Cayman Airways.A freeze or holiday may not be quite that simple. Plod on Mac.
Any comments on the legality of modifying the contract if both parties are not in agreement to the modification as it relates to pension contributions?
"Bush told the press on 10 August that the pension holiday was one policy measure that could reduce the anticipated $133million budget deficit by as much as $49million".
Clearly, Mr. Bush is confused. The Govt. has now had 3 months in office. It’s time that they get their act together. Right now they seem thoroughly disorganized and disoriented with all sorts of rash and contradictory statements being made. Function like a govt., please.
CNS, will you produce a first 100 days report card?
Wait, I bet Cayman NetNews has started on the report card already.
Now what punishment will the UDP get for their failing grade?
Can we send them for Special Ed.?