Public service pension exceeds $1B

| 15/07/2020 | 59 Comments
Cayman News Service
Deputy Governor Franz Manderson in the LA, 1 July 2020

(CNS): The success of the Public Service Pension Plan was heralded by Deputy Governor Franz Manderson recently after the plan became the first in the Cayman Islands to exceed $1 billion. According to the 2019 annual report for the plan, which provides pensions for government workers, the fund grew by more than $228 million and provided a return of well over 26% last year, supporting past claims by the premier that the scheme is much better than anything the private sector has offered.

News that the pension fund for public workers has done so well comes at a time when all private sector schemes and the entire mandatory system for non-government workers have been exposed as a disaster.

Manderson outlined the work of the Public Service Pension Board (PSPB) that had led to “an amazing year” for members. He also revealed that, despite the challenges brought on by the COVID-19 pandemic, the pension fund did not lose any of the gains made in 2019 and had already bounced back to a position exceeding last year’s numbers.

As members in private schemes learned just how badly their plans were doing when they applied for the emergency withdrawal following a change to the national pension legislation, the public sector pension continues to grow to record levels.

Over the last few weeks long held concerns about how the private sector plans are being managed and how the current system is failing workers, employers and even the pension companies themselves have been brought into sharp focus.

In April, Premier Alden McLaughlin said the national pension system needed a radical overhaul. He said the scheme that government adopted two decades ago was not fit for purpose and had been sold to the country on the basis that the public sector could never do as good a job as the private sector.

Worried that the current system will bankrupt future governments, as they will be asked to plug the gaps in the woefully inadequate provision for retirees, he said the system had to be changed.

“The government pension scheme has found a way to make it work. That is the model that we ought to have a adopted for the private pension schemes as well,” McLaughlin said, adding that whatever happens in future, it had to be a national scheme run by government.

See the report in the CNS Library.

See Manderson outline performance and achievements of PSPB on CIGTV below:

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Category: Government Administration, Politics

Comments (59)

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  1. Anonymous says:

    I hope and trust that before we go independent (and it’s coming), that the UK will enforce, yes enforce, a requirement on us that trained and experienced UK officials will oversee and manage a total REFORM of our Civil Service, it’s relationship to the political arm of our governance and its obligations to the public for a few years!! If not, within a decade thereafter we’ll become the worse run of any territory/colony ever given independence!

    This was how it was done upon the amalgamation of Government services to create the CS starting from the mid-1960s. A suitable, well-educated Caymanian with experience in managing several different Government “departments” (14 years at that point) was university-trained over a 3-year program and designated as the facilitator. All under the visionary administration of Sir John Cumber! It started its life well then got “snuffed” after politics took hold from above! By the early to mid-80s all the “old guard” senior civil servants who knew the ropes were retired. Nosedive ever since.

    Check it out!!

    • NB says:

      4:20 which island are you referring to. You clearly aren’t keeping up with current events or just don’t want to face the truth. Our Civil Service is more advanced than the private sector.

  2. Garyv says:

    That’s great news for everyone- Caymanians, you now have more to dip into and doesn’t have to be paid back, the government has mor
    e ‘surplus” to prop up welfare and healthcare and expats… well you will just have to live longer. At 1000 KYD per month you need to be living past 100 to see the benefits.

  3. Anonymous says:

    S&P up 29%, fund up 26%… big deal. Wonder how the fund was looking in March?

  4. Anonymous says:

    It’s a little unlcear from the statement how the plan is up 26pct, does that includes contributions to the plan during the year, or if that’s all growth of the investments. It’s also a bit rich that there is a comparison with private pension funds as the investments they are mandated by law to hold (40% cash and equivalents) are not the same rules as the PSP plan follow. The difference is if the PSP get their investments wrong the taxpayer is there to bail them out, at least for the defined benefit plan.

  5. Anonymous says:

    How can he compare a defined benefit plan with a defined contribution plan from the private sector? Also, last time I checked there was a significant unfunded pension liability on the government’s balance sheet.

    • Anonymous says:

      Defined Benefit Part
      All existing participants of the Plan automatically became participants of the Defined Benefit Part on 14 April 1999 when the Legislative Assembly passed the Public Service Pensions Law, 1999. However, all participants of the Defined Benefit Part have the option to transfer to the Defined Contribution Part at any time, but once you elect to join the Defined Contribution Part you may not elect to return to the Defined Benefit Part.

      Defined Contribution Part
      If you were employed on or after 1 January 2000 or if you were not a participant of the Plan prior to 1 January 2000 then you will automatically join the Defined Contribution Part and may not elect to transfer to the Defined Benefit Part. If you are employed on or after 1 January 2000 then as long as you are over the age of 18 you become an active participant in the Plan on the first day you are employed by one of the participating employers. If you are not yet 18 when you are first employed you will join the Plan on the first day of the month next following your 18th birthday.

  6. Anonymous says:

    If civil servants had been able to touch their pension you best believe government would be worst than Fidelity right now. Paying out is NOT the government’s strong point. FACTS.

    Mr. Franz, until government can pay bills on time, you. can’t. tell. me. nothing!

    • Anonymous says:

      How on earth can this be bad news. Come on folks get a life. The negativity here is frightening.

      Congrats to the PSPB and the DG. I am a very proud pensioner and really appreciate all of the great work of the PSPB. Thankfully I didn’t work in the private sector.

      I strongly suggest that the Government pass a law to allow the PSPB to manage all pensions in the Cayman Islands.

      The private sector deserves a world class pension fund too.

      • Anonymous says:

        It’s not about being negative, the current Government does not have a strong track record when it comes to being open and transparent. As for the PSPB being able to pay out, I agree with the anon 9:52pm. The money simply isn’t there!!! You’d be a fool to think so. Good luck surviving on CI 1000 per month in arguably the most expensive place in the world. You can’t even make this crap up.

      • Anonymous says:

        This world class pension fund you speak of is in massive deficit. To be clear this means the amount it has promised to pay out exceeds the size of the fund; it can do this because the government implicitly promises to make up the $1/4 billion+ out of other revenue, assuming it can (a debatable point going forward). If it were a private fund it would be insolvent. So back to your point, no the private sector does not deserve such a fund.

  7. Anonymous says:

    Is this a defined benefit plan or a defined contribution plan? I thought it was a defined benefit plan. If so, one year asset growth is irrelevant. The real question is how well is it funded to meet future obligations. What is the answer to that question? The answer should be in the actuarial report.

    • Anonymous says:

      Notes and disclosures to financial statements should clarify it. Annual FS must be published on CIG website.

    • Anonymous says:

      From Unaudited quarterly September 30 2019 Financial report (
      Core Government’s most significant recorded liability was the Debt Balance which stood at $404.6 million as at 30 September 2019 ($287.0 million of which is due within one year); this is $25.7 million lower than the debt balance at 30 September 2018. The Debt Balance continues to decline with scheduled principal repayments being made. The Government will repay its outstanding US$312 million bond obligation in November 2019. Additionally, the Unfunded Pension Liability was $425.6 million (with respect to the Defined Benefit portion of Public Sector pension plans).

      So it is appears there are 2 plans: defined contribution and defined benefits. I recall the change took few years ago.

      2018 Audited FS, but it only report current liabilities.

  8. Anonymous says:

    What do you expect when retirees are being corn-swabbed from their entitlement…living proof…had to battle the PSPB for over a year to earn my rightful entitlement. Smoke and mirrors.

  9. Anonymous says:

    I’m not sure how the info in Franz Manderson’s release could be based on the current performance of the fund. The article gives comparatives between what is now and 2019 performance, so it suggests they’re current. How could any true performance data be determined for this year as yet (even with quarterlies), and certainly not with the second-quarter impact of global lock-down?

    The rose-coloured glasses through which this info is initially seen may be cracked.

    PSPB Board and Management and Cabinet need to examine and verify this data very carefully and quickly!

  10. Anonymous says:

    My private pension has also bounced up to pre-Covid levels, they were all bound to and people should have waited to withdraw.

    • Anonymous says:

      It’s a spec bounce on expectations of a V-shaped recovery. Few industries have the earnings to support current valuations. This is the sell in May and go away…on steroids.

    • Anonymous says:

      That was my plan, thanks for the reminder to withdraw now.

  11. Anonymous says:

    Still not getting more than $1000 a month out of it so what does it matter, unless you plan to live to 120.

    • Anonymous says:

      AND there’s no way you could live to 120 on 1k at month. You’ll starve or I will at the rate I’m eating.

  12. Anonymous says:

    The best thing about pretend funding is that you can make up any performance figures you want. Highwater marks for everybody!

  13. Anonymous says:

    26% return in an down S&P year. Something is not right.

  14. Anonymous says:

    Probably invested in crypto.

  15. Anonymous says:

    As a direct beneficiary, I often wonder about the PSPB’s investment portfolios and plans – periodic reports to members just breeze through general munitiae. Without meaning any disrespect to anyone involved, I wonder if our PSPB benefits from real good and legit investment advice with known reputation, which can be costly, or fall victim to some less reputable advice, or worse, which can be even costlier in the long run. Someone mentioned Ponzi scheme? Hmmm.

    The DG’s revelations today certainly send a bright message, on the surface, but analysts, some of whom apparently posted comments, can see what we average peons can’t. Anyway, hope all is on the up-and-up on the investment side and hope PSPB scrutinizes well and remains vigilant.

    Meanwhile, I appreciate my little bump.

    • Anonymous says:

      The government pension scheme has found a way to make it work. That is the model that we ought to have a adopted for the private pension schemes as well

      This comment could easily apply to so many private sector businesses.

      The PSPB is a model public service entity. It has an highly capable Board and a strong management team.

      I am actually considering joining the civil service after 15 years in the private sector. Joining an employer that actually cares about its employees would be a great change.

      • Anonymous says:

        Yeah, it’s called Monopoly money in imagination land. Everything works there – and look the trees are lollipops!

  16. Anonymous says:

    Franz Manderson is Cayman’s ultimate politician. He is more interested in the nice guy image and spin than holding the civil service accountable to high standards and efficiencies. Look at his management team and those that get promoted. Would any major company in the private sector give them such a senior or high paying role for continued mismanagement and professional negligence? The bar is so low in the civil service that they now dress up the lies to sell it as positive news. This story is another classic. The Deputy Governor reminds me of Alden McLaughlin he is now more interested in spin than substance and truth.

    • Anonymous says:

      …which is why he is so popular and has gone so far: the pivotal enabler.

      • Anonymous says:

        5:29 he has enabled so many Caymanians to realise their dreams. That is why he is so popular. I should know I have worked with him for 15 years.

        • Anonymous says:

          Totally. The dream is to be paid 6 figures, while never having budget-linked performance targets, answer to public satisfaction criteria, or pressure to keep track of expenses. Unpopular coworkers and rabble-rousers can be furloughed on indefinite paid leave until you feel better about having them around, next regime, or find them another department to slot in. Eat your patties and don’t rock the party train!

    • NB says:

      4:42. Let me see if I understand what you are saying. Our DG reads an annual report and financial statements approved and audited by the audit General and you somehow conclude that it is spin.

      The fact that you spew such hate probably means that our nice DG held you accountable.

      Get over it!

      Thank you PSPB if only my pension provider could deliver similar results.

      • Anonymous says:

        Name one department of the CIG producing Audited Financial Statements and quarterly or Annual Reports?!? How about name one with a website updated in the last 5 years…while paying full time IT and media and web departments.

        • Anonymous says:

          9:29 where are you living? Every civil service entity produce annual reports and audited financial statements. Oh and they are all unqualified. Look at the legislative assembly amazing website. Wake up please zzzzzz

    • Anonymous says:

      4:42 get a life. The DG read a report. Clearly you know nothing about an Annual Report and Financial Statements.

      You still locked up?

    • Anonymous says:

      Our DG is an exemplary leader and I am honoured to serve in the civil service. You refer to our DG failing to hold staff accountable. Clearly you don’t know the DG. Don’t mistake meekness for weakness.

  17. Anonymous says:

    So why not allow private sector employees to also contribute to that same fund? It will lower the administration costs for all and everyone wins (except some people in Bermuda and the Bahamas).

  18. Anonymous says:

    Anyone who follows the markets knows full well that the dollar will cease to exist by the end of this year All those whose wealth is pegged to it are going to be surprised.

  19. Anonymous says:

    If KYD$226mln was their admission of what was missing of employee 12% payroll contributions four years ago, what is the unfunded deficit 10, 20, 30 years from now at 26% per year. Get your net present value discount tables out, and whatever you do, don’t mention the public healthcare deficit. Mercer would like to remind everyone that it’s more than zero, but far less than fully funded. Got it.

    Possible Depletion of PSPB by 2024:

  20. Anonymous says:

    Cayman should be very afraid and skeptical of all claims we are not allowed to independently verify. Recall just a year or so ago, they were telling us they didn’t need to fund pension and healthcare liabilities, because that money wasn’t needed until the future. Lols. Classic ponzi scheme.

  21. Anonymous says:

    So the developed markets are up say 300 percent since 2009.

    PSPB is up probably around 110%-135%

    The other pension up maybe 40%

    My self directed portfolio up around 300 percent to 400 percent. And I don’t take any risky positions

    It’s not rocket science for example I bought 7k worth of CUC share in 2009. Now with dividend reinvestment worth North of 21k.

    So my contributions of 100k over last 15 years should valued about 400k and I only have 180k in pension balance and I am with govt.

    They should just have an inspector where you report your own investment and limit the investmemt catagory.

    So basically stripping out the investment arm of the PSPB and replacing it with an option of say mutual funds and bond funds. All administration costs covered directly by Govt say by using funds from abandoned accounts. Teach accountability and link the data to work permit board so that they can see who’s paying pensions etc when deciding to renew work permits.

    • Anonymous says:

      How do you even liquidate the CUC shares?

      • Anonymous says:

        Electrical fire?

      • Anonymous says:

        Pretty easily actually. Listed as “CUP-U” on Toronto Stock Exchange (in USD) or “CUPUF” on USA Over the Counter markets. Any investment broker or online trade platform can buy/sell even board lots. CUC will buy/sell odd-lot share quantities without a broker. There’s a strong tax free dividend yield (from ripping us off continuously). USD$0.70 per share, around 4.52% <–all you have to do is lever up on a $1mln CIDB loan @1% and then you can pocket the free 3.52% spread.

  22. Anonymous says:

    Wow. 26% is amazing, and a billion is a lot of assets to spread the administrative costs across. Is Franz going to comment on what the liabilities are though?

  23. Gray Matter says:

    The only way to convince joe public is to open the books for us to see the amazing feat that only Government can do with Pensions.

  24. Anonymous says:

    “The Plan is in a deficit position as of January 1, 2017. Based on an ultimate discount rate of7.25%1, the Plan has a deficit of $187 million at January 1, 2017 and the funded ratio of the DB Part of the Plan is 60%. Using an ultimate discount rate 6.25%2, the Plan has a deficit of $252 million at January 1, 2017 and the funded ratio of the DB Part of the Plan is 53%.”

    • Anonymous says:

      If it’s anything like most public sector db pension schemes the assumed investment returns and discount rates will be hopelessly optimistic. I’ll wager a realistic defict is far worse.

  25. Anonymous says:

    More lies. this scheme is a liability.

  26. Anonymous says:

    A very poor leader. Led by the smell of money.

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