Minister plans to tackle public pension shortfalls
(CNS): Although two of the government’s three public pension funds for public sector workers are short more than $178 million, the finance minister has stated that there is no need to panic as government has time and also has a plan for making up the missing cash. Speaking in the Legislative Assembly on Wednesday morning, Marco Archer laid six reports relating to the various pension Actuarial Valuations for both 2008 and 2011 on the table of the House, making them public documents. Archer said the next evaluation would be in January, when the impact on the government’s balance sheet would be updated.
Despite the significant total shortfall across two of government's three funds of CI$178.3 million, Archer said there was no immediate cause for alarm as government has some twenty years to address the shortfall between assets and liabilities of the funds. It will gradually eliminate the shortfall by making extra payments into the funds alongside the ongoing contributions for all public sector employees, the minister told his legislative colleagues.
The largest liability is for the civil service fund, which is short more than $165 million, while the MLA’s fund is short by around $12 million and the judicial scheme is now in surplus.
Archer said CI$11 million was already paid in this year and central government had agreed to pay a further CI$23.5 million in payments over next two years. In addition, the funds were expecting to earn more returns, and with the tri-annual reviews, the government could keep a close eye on thevalues.
Archer explained that the funds began with a shortfall when the fund was created in 1990 and government inherited some 26 years of liability of existing civil servants who would be entitled to pensions. He explained that at first pension payments to retired civil servants were paid from general government coffers but in 2000 it started paying pensions from the actual fund.
Although there is a large deficiency, the minister said it did not pose any immediate danger to the pension funds themselves and retiring civil servants will receive their payments. Cayman, he said, was ahead of many advanced countries because the CIG discloses its deficiency and its liability for that in its financial statements. It has also structured a plan and has “the desire to deal with it", he said, stressing that there was no need for immediate concern
Archer stated that there was enough time to address the liability and government was able to pay its regular contributions. He said the 2011 reports contained recommendations for future contribution rates, all of which this current government had now accepted and it would be passing regulations to legitimize the rates.
See the six reports below.
Category: Local News
Timing issue may exist on defined contribution plan whereby people are not getting exactly what theu were suppose to get…..3 year rolling bands instead of yearly cycles means lack of proper allocation of monies…..soon come out….expat civil servants could be getting shortchanged others makinh off with monies….
For starters government should pay their pension contributions and secondly get rid for this stupid law that you can draw your pension to purchase a house. This only reduces the total pension fund amount for reinvesting for higher and better returns for existing and future retires.
thirdly mr. Archer I thought you said at an earlier throne speech the government would have a surplus. Was this shortfall taken into consideration?
looks like more smoke screens once again by our brilliant politicians.
Minister Archer appears to be taking the correct approach.
– The problem has been identified.
– A solution has been identified.
– Action is being taken to solve the problem; 11 million has been paid into the fund this year and at least 11 million is to be paid in for the next two years.
This 11 million is more than is drawn from the fund each year so this means we are making progress.
I struggle to see how people can be critical with that approach/performance.
Marco, keep up the excellent work and dont get distracted by those who fail to see the wisdom of your actions.
Well the MLAs can vote to wipe out the shortfall by reducing the pension payments. Easy. $12m of problem gone in an instant.
Cayman Islands is the Greece of the Caribbean unless it starts to take financial management seriously and get the situation under control. It is incredible that a country of 30 thousand locals with a transient workforce finds itself drowning in unquantifiable debt and no one in a leadership role sees this as a reason to panic. Drastic measures are necessary in order to continue the Cayman miracle before the country slides into third world quality of life which will result in the transient work force fleeing and investors scrambling to get out on the next flight. It has happened to others it can happen here.
We all should look back to the different articles about the country of Greece and the financial disaster caused them by the Dart family. What would make our people think that the same thing would not happen to us when we welcomed this family into our little country and giving him the same power as Greece did and not realise that "what man has done, man will do". Unfortunately for the Cayman Islands, our big businesses rushed to move so much to Camana Bay, leaving the city center in George Town literally dead, except when the cruise ships are in port. Speaking of Cruise Ships, did the naysayers and supporters of the Chinese port builders see those 4 huge ships sitting in our harbor the other day? Wonder what the Chinese port suppliers had to say about that? Looks like we are getting just as many ships as we used to.
Financial disaster in Greece was caused by – wait for it- Greeks! Imagine that.
Actually Puerto Rico is the Greece of the Caribbean. Uncle Sam will have to bail them out after the wheels fall off completely.
Cayman is in nowhere near that kind of shape and actually has the cashflow to correct things.
But I take your point that the appropriate remedies must be put in place as a matter of urgency.
Here is anotherLeak…!!!
Here is something else we're missing about $110,000.00 per year !!!, and it's only 1 Trade and Business Type "REAL ESTATE AGENT"
Am I missing something? Why are we loosing over $110,000.00 per year in uncollected Real Estate Licensing fee's? As I could only find 19 licensed CIREBA Principals or Agents who paid their fees out of the 167 CIREBA AGENTS LISTED!
Under Trade and Business Licensing Law
9: Real Estate Agent – (Being a person who as principal or agent deals or offers to deal in real estate or tenncies therof.
Must pay a (annual ) $750.00 Fee for each professional member of the business.
I think these guys and girls are professional,at least I hope so………..
Pension funds have been raped and pillaged by hedgefund raiders for years now. Their pension funds have now become Ponzi schemes. There is not much left. This is a problem not just Caymanian, but globally now.
The Caymanian middle class have been well and truly screwed over by the financial elite.
I'm sorry you got a "troll" for speaking the truth. I could have saved $7,300 dollars by putting my contributions in a sock under my bed; that's how much has been "lost" from my fund from bad investments. These people managing the retirement fund should have to paid upon commission. The funds should have to be insured. I seriously doubt there will be much for me and my family when I retire in 10 years………. 10 years, unless I am forced out earlier.
The pensions board is one of the few authorities with up to date audited accounts. Check online… They are probably available or can be requested. The past service liability while daunting…is audited at least.
LOL this guy is almost as funny as Big Mac
There is no comparison at all between the two.
Make sure you get rid of some of those post office employees who take 40 minutes to sell you 16 stamps – really. No queue, just the time at the counter a week ago! I relish paying their salary and their pension.
What would they do for a living? Like Customs, Fire and Immigration, the postal service is 100% Caymanian staffed. They are not university graduates. In fact, very few if any even have O levels so they rely on government for a job. This is the social employment aspect of the civil service.
"What would they do for a living?"
Probably have to earn it like the rest of us, unlike now. This is the biggest welfare drain on our society, so much that it has become a laughing stock. Even the Brac has three post offices, divide that by the population living there and do the math.
If it was earning revenue and paying for itself, I would not have a problem. If it does, no problem, if it doesn't then get rid of it as soon as possible.
Shocking stuff when you consider the Minster of a Finance also claimed a 100m surplus.
He may be a nice person with a great resume but Marco Archer is delusional if he thinks the government should not panic and take drastic measures to correct the situation.
All of the liabilities impact Caymans financial status which has placed us at the mercy and reliant on the good will of the FCO.
Panic has never helped anyone yet. He is taking the right approach: calm, measured but addressing the problem.
To put this in perspective I should point out that the UK’s total public sector pension liabilities (including the state pension and the retirement schemes of public sector workers) are estimated at £5 trillion (US$8.15 trillion).
It is similar story in most developed countries. They don't appear to be "panicked" or taking "drastic measures". Are they all "delusional"?
http://uk.finance.yahoo.com/news/state-pension-cost-146-000-134406728.html
http://www.americanlegislator.org/new-study-shows-unfunded-pension-liability/