Public pension liability ‘not cause for alarm’
Finance Minister Roy McTaggart in the LA
(CNS): Finance and Economics Minister Roy McTaggart has said that the historic liability in the public pension funds will be met, so the current $197.2 million deficiency is “not a cause for alarm”. As the minister presented the latest actuarial reports for these plans to the Legislative Assembly earlier this month, he said the liability was a future prediction and the government had 20 years to fill the hole. There are three public pension plans: one for judges, another for members of the legislature and the largest one for civil servants.
“The actuarial deficiency results from a comparison between the value of assets at 1 January 2017 and the value assessed for the liabilities or obligations that are due to public servants,” he told his colleagues.
McTaggart explained that the shortfall would be eliminated over the next two decades as government continues to make payments to reduce the liability in addition to the monthly contributions paid by the public purse on behalf of government’s employees.
He said that in the 2018/19 budget years government had already allocated $21 million and the funds were expected to continue “earning robust returns”. The minister said that government would maintain contributions in accordance with the findings of actuarial reports.
McTaggart explained that the hole in the civil service fund had existed since it was created in 1990’s because when arrangements for public sector pensions were initiated in 1963, there was no fund. Therefore, for 27 years there were no assets to use to pay retired public servants, so it was paid from general revenues until 2000, when the fund was able to begin paying retired government workers.
This was evidence that, although there is an actuarial deficiency, this “does not pose any immediate financial danger to the continued payment of pensions”, the minister said, noting that government discloses the value of the deficiency in its financial statements.
“The existence of an actuarial deficiency is not a reason for immediate concern because the government does have some time to eliminate the deficiency and is taking actions to do so. In the meantime payments of monthly pensions continue to be paid from the funds without any difficulties.”
He said that government had accepted the recommendations in the funding valuation reports regarding the contributions it must make for its employees. The rates government will pay each month range from 30% of pay for the judicial services defined pension to 12.4% for civil servants.
Category: Government Finance, Politics
Sleigh bells ring, are you listening…?
“Not cause for alarm” because this clown knows he wont be the Minister of Finance when the shit hits the fan, he will be long gone as will every MLA currently or previously in the house who sat back for the last 20 years and watched the issue grow
It will be pushed off as the problem of the next generation, and when these same MLAs are old and grey (assuming they aren’t already old and grey) they will sit back and chastise the new MLAs and the generation in power for letting the problem get out of hand
While sitting back with their separate pensions laughing
Maybe you should reserve the remark “clown” for the politicians that held office before 2000 when the pension payments were being paid from the country’s general revenues. It was them that did not have the foresight. In any event, we have not adopted a culture of savings and to rely on pension alone upon retirement is not advisable. People are struggling to live off the private pension fund wherein you receive about $1,000 per month until it runs out and it will run out!
“….when pensions payments were made from the general revenue….” – where do you think the premiums paid now come from, because it sure isn’t from civil servants pockets.
A pension plan for elected officials should be ceased. Being an MLA is a job. Anyone being elected now should be coming from a previous job with a plan, even those that were self-employed. Therefore the MLA contribution could be paid into that plan for the years that they have the MLA job. Then when they leave or are not re-elected, then would simply continue paying into the same plan when they take up their new job. Or maybe they “retire” and then begin to collect a pension. No difference from any other worker changing jobs.
That way the existing pension plan can slowly but surely be closed down. Let’s get rid of this benefit which too many greedy persons see as a big perk.
Blimey. Next you’ll be suggesting they stop double-dipping!
Present value??
The Minister is correct. We only have a problem if every public servant who qualifies for a pension decide to retire tomorrow.
The same with Heath Care liability Everyone is not going to get sick tomorrow
If the private sector would stop kicking their staff out with insufficient pension and no helathcare CIG would not have to pick up the slack.
But on a present value basis we have a deficit which will need to be funded with future contributions.
Yes, like my mortgage is a deficit which will have to be funded with future contributions.
No. Your mortgage gets paid with agreed contributions if you make this you keep the house. The deficit means the agreed monthly payments won’t be enough to pay the mortgage. More has to be paid over and above the agreed rate. If I told you that you had to increase your monthly mortgage payments by 10% or you would lose your house on the final payment, would you say that wasn’t a cause for alarm?
Wanna buy a bridge? To the Brac?
You would make a great MLA. Or an Education Minister. Because you are as dumb as a sack of rocks, or wilfully ignorant of the underlying problem. A deficit means that everyone who retires today has pension that is funded in part by those that don’t retire. Or by the tax payer if additional contributions over and above the standard payments have to be paid to cover the whole. The pension fund doesn’t run out of cash immediately, no, but it doesn’t and at current contribution rates will not have enough money to cover everyone in the scheme. It’s like you reducing your mortgage payments in exchange for a massive final payment that you won’t be able to make in the day. Sure you keep your house for now, but judgment day doesn’t go away.
Roy, let’s assume for the sake of argument that we accept this explanation of part of the CIG pension issue, what about the unfunded/unaccounted healthcare and social services liabilities, estimated by Cayman Compass (a few years ago) at over a Billion?
1:52pm, Same argument
Well we are in this situation largely due to the same mentality (kick it down the road and let it be someone else’s problem).
…..said the mayor of Hiroshima upon hearing a loud bang.
No need to be Coy Roy , set yourself free !
Should have gave the pensioners the 5% cost of living increase that was giving to civic servants last year, the pensioners only 1.9 %, the pension law section 22 says pensioners
sre to get the cost of living increase.
12.24pm If you were in the private sector you wouldn’t get any cost of living increase, count yourself lucky the taxpayer gives you something.
lucky?? That’s MY money which I was forced to pay by government! Taxpayers didn’t GIVE me anything, and considering the profound amount of money the fund has lost, I would be money ahead if I’d have buried it in a coffee can.
The Pension Scheme is a compulsory sham. I have managed to save on my own much more than has been lost, but I wish I had all of it to do with as I wished. I won’t ever be able to “retire”; I will just eventually reach a place where I am no longer paid for my efforts.
True. So then who should be insisting on this payment correction – the MLAs?
Really? How did they come up with 1.9% instead of 5%?
CPI in 2017 increased by 1.9%
You believe that nonsense the ESO churns out? LOLZ
12:24 you did not read the document that came from the public service pensions board explaining that the 1.9% pension increase was in line with the CPI increase in 2017 of 1.9%. Public service pensioners receive increases every year when/if the CPI increases (some years there is no increase). Civil servants received no cost of living adjustments for several years, hence the 5%.
8:31 am. Pensioners never got a cost of living increase since 2015 until 2018 , that is fact, and if the cost of living went up 5% then they should got the 5% not 1.9 %
Sorry, bobo, you are wrong. Check the public service pensions office and let them explain since you obviously don’t believe me.
It’s not a cause for alarm to any of them because their pensions will be just fine. Ask him why they need a separate plan. What’s wrong with the one tree commoners have?
What’s he talking about – it’s not a cause for alarm for himself, fellow Ministers, judges and our army of civil servants. It is however a MAJOR cause for alarm for the private sector who will be paying for all this.
What u talking about. We/our employera do not even pay for our pensions
How do we pay for gov employees?
A) You and your employer pay pension contributions and b) you pay for civil servants through increased taxes numb nuts.