CIG still dodging CI$2.2B CS retirees healthcare liability

| 15/03/2024 | 59 Comments
Deputy Governor Franz Manderson at Thursday’s PAC meeting

(CNS): At a Public Accounts Committee meeting on Thursday, senior officials once again dodged questions on how and when the Cayman Islands Government proposes to place its liability for the future healthcare needs of retired civil servants squarely on its books. This financial liability is currently only included in supporting notes that form part of the annual Entire Public Sector accounts. The CIG does not include the liability on the balance sheet because this would wipe out all of its assets, and it could, as a result, lose control of its finances to the UK.

Deputy Governor Franz Manderson, Financial Secretary Kenneth Jefferson and Accountant General Matthew Tibbetts all told the PAC that the missing liability is one of the remaining reasons why the government’s consolidated accounts are still being given adverse opinions by the Office of the Auditor General. There are more than a dozen other reasons, but the one that continues to present the biggest headache for the CIG is this liability and its likely impact on the budget.

Placing this liability on the balance sheet is now a requirement under the public finance legislation, but it is proving to be exceptionally challenging.

As PAC members questioned senior officials about the OAG report, Financial Reporting of the CIG – General Report, which covered the status of the government accounts in 2022, the problem of this significant liability was raised, but the committee received no answers as to how it would be resolved.

Manderson said the issue was “a tough one”, and that it involved decisions at a political level about whether or not to place this on the books. “I can’t say with any degree of certainty that I can give a commitment to this committee that we are going to solve this,” he said. “It is a very… difficult issue to resolve and is going to take some hard decisions.”

The deputy governor said there was a desire to get this right and a need to focus on it, especially given the progress made elsewhere in improving the government accounts. However, there had not been progress on the full consolidated accounts, he said.

This is a significant public interest issue as the EPS is the only place where certain parts of government’s finances, such as executive expenses and revenue collection, are actually documented. But with the continued adverse opinion, the public does not have a reliable assessment of the CIG’s books.

Jefferson explained that details of the liability were, in fact, disclosed in the notes that accompany government’s financial reports, but putting it on the books was fraught with problems.

“The placing of the post-retirement healthcare liability fairly and squarely on the face of the balance sheet of government… we have not done that,” he said, noting that the pension liability of around $440 million is on the books but placing the $2.2 billion there would reduce the government assets, which is about $2 billion, to zero. Under the law, the CIG’s liabilities must be less than assets and there is a danger that this would breach a major ratio in the Framework for Fiscal Responsibility.

He said that was “one major consideration”, not just for the current governments but for past administrations as well. He said it would also impact the surplus and another ratio requirement. The operational surplus of government for 2023 is in the region of $30 million, Jefferson revealed, but the year’s potential accrual for healthcare liability could easily exceed $150 million, so the operational surplus would be wiped out, leading to a large deficit.

“It is fairly difficult for a government to take the decision to put this matter fairly and squarely on the face of its primary financial statements because of the fear of their being non-compliant with at least two of the FFR ratios and the consequences of that they simply don’t want to deal with,” Jefferson said, adding that it would be more likely to happen at the start of a new administration.

He pointed out that this is the most significant reason why government continues to get an adverse opinion on the EPS, though there are several other barriers to a clean opinion. But Jefferson said he was sorry that he could not offer any hope.

Auditor General Sue Winspear said she appreciated the dilemma but pointed out that not placing the liability on the balance sheet does not mean it isn’t there. “The fact that it is not being divulged doesn’t mean its not an issue for the fiscal framework because its a liability that’s not being disclosed,” she added.

She noted that it will only get bigger as the statutory authorities and government companies all begin to adopt the same healthcare packages for all public sector workers under the Public Authorities Act, which is designed to level the playing field between civil servants and the wider public service.

“I think there is a really big policy decision that this government, a future government, or some government at some point will need to face. But not disclosing it won’t make it go away,” Winspear added.

Asked by PAC Chairperson Roy McTaggart if the UK has raised the issue of breaching the FFR, given that the information is in the notes, Jefferson said he had not had any feedback from the UK that it was seen as non-compliant at present.

One solution that has been raised is a sinking fund (money set aside to pay off a debt), which the accountant general said would help in conjunction with taking a different approach to how the issue is resolved.

See the PAC proceedings on CIGTV below:


Share your vote!


How do you feel after reading this?
  • Fascinated
  • Happy
  • Sad
  • Angry
  • Bored
  • Afraid
Print Friendly, PDF & Email

Tags: , , , , , ,

Category: Government Finance, Politics

Comments (59)

Trackback URL | Comments RSS Feed

  1. Anonymous says:

    any comment mrs governor?????

  2. anonymous says:

    The Elected side used to be separate and apart, but somehow got hitched to civil service benefits years ago. so now they get every COLA and raises as well.
    In addition to granting themselves raises (last one was days after being elected – none refused it), and big executive benefits.
    for Life!
    This along with the STATUS Grant Fiasco; the MisEducation plague; and Darts NEVER ENDING CONCESSION Package, have sealed our fate as formerly proud locals!
    We deserve it for not standing and speaking.

    12
  3. Anonymous says:

    They’ll pull the Tory card. Run the NHS into ruin so much that if you need anything other than trauma treatment, you’re at the back of a queue so you just go private, if you can afford it. If not, tough.

    I bet you that will happen!

    3
    3
  4. Caymanian says:

    I am in the accounting field and I am curious at how you can just not count a liability.

    You either owe or do not owe. I am baffled at all in the accounting there. Did not know you could just disregard things to make your books look better. Or even for UK to okay that even. I am left scratching my head.

    is this not false accounting? Fraud even.

    15
    • Anonymous says:

      What kind of accounting are you in? No it’s not fraud. The future costs are expected to be paid out of future revenue just as current costs are paid out of current revenue. Similarly they don’t “account for” future income either. It’s not particularly prudent economic management, it’s certainly kicking the problem down the road and it relies on a constant increase in revenue to work but its pretty much what every country does because most electorates are economically illiterate and they can.

      5
      1
      • Anonymous says:

        She’s not talking about that. (How do you know 1:48 is female. Not that it matters, but I intuited it.)

        1:48 is talking about current liabilities. If you owe money, that is a liability, not a projected liability.

        2
        2
  5. Neverwanabeacivilservant says:

    Simply put, the Civil Service is our major voting bloc- this explains everything.I suggested decades ago that new hires be required to take out their own health insurance as the gold plated free medical that all civil servants and families receive must run into millions of dollars each year. Every year they get COLA increases on top of their salary adjustments and now big increases in maternal and paternal maternity benefit far exceeding the private sector. All this without any accountability for poor performance.

    7
    3
  6. Anonymous says:

    It’s a mess! There is a broad misconception in these Cayman Islands that ALL public servants and retired public servants get free medical care at public health-care facilities. That is indeed a MIS-conception and far from the truth.

    I am a retired public service officer of 40 years service. In 2014 had to pay almost $25,000 of my recently-earned pension in legal fees to fight for health-care coverage from my previous public service employer. Upon retirement, I discovered that my organization and quite a few other public entities had NO provisions for retiree health care. Why? Because DG Franz Manderson UNILATERALLY excluded some public entities from the Government “umbrella” for retiree health care and until that time, nothing had been implemented in its place. My legal action opened the door for countless retirees in my organization to be covered. To this day, we still pay 20% for ALL medical services and prescriptions we receive from the HSA! That is fine but I wish I didn’t have that legal battle and still had my $25k!

    Ironically, I am able to get prescriptions at private pharmacies CHEAPER than at my HSA district clinic!! Go figure!

    Anyone who doubts me, GFY!!

    4
    3
  7. Anonymous says:

    classic head in the sand stuff from cig and the civil service.
    nothing makes sense in cayman….

    22
    • Annonymous says:

      Don’t think the UK includes theirs either.

      • Anonymous says:

        It doesn’t because it’s a future liability to be paid out of future income. They, we and everyone else doesn’t include future liabilities in the same way, they and we don’t include future income as an asset.

  8. Anonymous says:

    lunatics in charge of the asylum…
    why would any civil servant want to address this issue
    whats next, turkeys voting for christmas??
    welcome to wonderland

    21
    2
  9. Anonymous says:

    the civil service…an anchor around cayman’s neck….

    23
    3
  10. Anonymous says:

    8:24, sorry but they get free medical from Government….same as civil servants, pensioners and indigents so what is your point in mentioning insurance?

    5
    6
  11. Anonymous says:

    As a retired public servant I have zero access to cinico and a lousy pension allowance of 12k a year. I have been told that I can ‘apply’ to cinico, but there would be a monthly fee of a couple thousand dollars. After decades of public service I do not get anything civil servants get.

    18
    5
    • Anonymous says:

      It’s even better than that. You can spend $250/month for the Silver Plan, which pays nothing toward your regular health care, however it does fairly decent for catastrophic incidents. What have we learned? Allow everything to progress to the point where it is life-threatening, and then hope for the best. 🙁

  12. Anonymous says:

    Death by corruption, authored by the perpetually dense Caymanian votership.

    27
    2
  13. Anonymous says:

    Put a $60 million dent into this liability by cancelling the unneeded and unnecessary Brac school.

    Give me a like if you agree.

    68
    3
    • Anonymous says:

      She has no problem over-spending the country’s money. I heard through the grapevine that she overspent on a sliver of land along the airport’s boundary in Tropical Gardens. Most people try to get a bargain, not her, always top dollar.

    • Michel says:

      my tought exactly

  14. Anonymous says:

    The pension liability will grow exponentially as Juliana continues her reckless CIG pay raises.

    She literally can’t help herself.

    40
    2
  15. Corruption is endemic says:

    If you consider the full impact of pension and healthcare liabilities the Civil Service has already bankrupted Cayman.

    But there are a few ways to deal with it:

    1. Pretend it isn’t there
    2. Raise revenue with co-pays and other taxes
    3. Cut benefits

    CIG is spineless so we have been taking the first approach.

    36
    2
    • Anonymous says:

      4. cut the civil service and stop hiring just to keep money
      5. contracted workers not to be given same level of pension AND moratorium on these contracts unless specialised medical jobs

      4
      1
  16. Anonymous says:

    Is it just retired civil servants….or is it also existing ones plus prisoners plus indigents?

    11
    2
    • Anonymous says:

      Prisoners are not insured by anyone

      2
      11
      • Anonymous says:

        So, you’re saying that prisoners get no health care?

        10
        • Anonymous says:

          8:24 doesn’t know which end is up, 10:31. Prisoners get free government health care, same as civil servants, pensioners and indigents.

        • Anonymous says:

          Apparently that is what is being said,10:31, which of course is total BS as they get it provided free by government. Like Civil servants and pensioners and indigents.

          • Anonymous says:

            Prisoners aren’t insured in the sense of having a policy, but Government does pick up the cost of their healthcare whilst they are in prison.

      • Anonymous says:

        Prisoners are insured. Prison offers one of the few routes for people to access healthcare.

  17. Anonymous says:

    I’m going to solve this for CIG: you cannot afford to provide these people with free healthcare indefinitely into retirement. You do not have the funds for it. Full stop.

    You openly admit that even listing on the balance sheet would bankrupt the country on paper and lose control to the UK. Heads in the sand pretending it doesn’t exist.

    You have two choices and that’s about it:
    1) reduce the benefit you’re planning to give these people.
    2) raise taxes somewhere to pay for it.
    Or some combination of the two.

    Frankly, civil servants already get more generous benefits than the private sector by a long shot. Each round of politicians gives them more and more perks to keep getting elected. Meanwhile their cost to the public grows and grows disproportionately to the overall service they provide. Full stop.

    CIG budget is spiraling out of control and soon the only way to fund it will be direct taxation, at which point people will have no more incentive to live here. People will leave en masse and the economy will collapse. Funds will move to Delaware, and the financial services industry will be a relic for the history books.

    Fix this nonsense with the liabilities now. Do everything Sue says and do it now because all I ever read is how, yet again, CIG has failed miserably to take care of its finances.

    47
    5
  18. Anonymous says:

    Our civil service has been allowed to become too powerful, wasteful, expensive and unwieldy. It is an employment agency for large numbers of persons from the region who are not the best in the world at what they do, and who are being allowed to bring large numbers of friends and family in with them. They are exempt from usual rules as to health insurance and pension, and even considerations as to whether a Caymanian can or should do their job. Whole departments are dominated by single foreign nationalities. They award themselves benefits which greatly exceed anything available in the private sector, and too many of them are milking Cayman for all they get.

    Thousands now feed at the trough and defecate on Cayman in the process. So many could be replaced by systems, technology, and outsourcing to the private sector – but no.

    The game goes on, and Cayman loses. The problem is not the accounting treatment. The problem is that the liabilities exist in the first place. They are unaffordable and should not be being incurred in the manner they are arising.

    10 years service and free healthcare for life? No matter where you are from? Are we insane?

    41
    4
    • Anonymous says:

      And free healthcare to anyone they marry – even if they marry after retirement!

      16
      1
      • Anonymous says:

        And for life, even if they are 40 years younger than you.

        • Anonymous says:

          3:20, exactly what the seamen and veterans are doing. Marrying young Filipina girls who get their benefits when our old timers die a few years later. Total scam.

  19. Truth says:

    Third world accounting. What a surprise. Caymanian rule is now only a piece of paper in your hand. Your children will pay your dept with a lifetime of servitude.

    20
    3
  20. Anonymous says:

    Mine is only an opinion, as opposed to pretending to be an accountant, but it does sounds like the cig is in the s@#t and basically decided the best way to deal with this financial timebomb is by simply ignoring it. Austerity, when it does finally have to be implemented, is going to be brutal.

    26
    1
  21. Anonymous says:

    Deferring the inevitable, incompetents the lot of them. Franz Manderson is the ringmaster in this circus and needs to go down along with the all our cabinet ministers, pointing the finger at cabinet for a decision is a blatant dereliction of duty and hypocrisy.
    How long does he and Jefferson they have their ropes running short are most likely can feel their nooses tightening? This is the proverbial cluster bomb waiting to explode, the knock on effect will not only put us on notice with the UK but have major ramifications for both CIG healthcare, pensions and the financial industry as a whole.
    I urge every Caymanian to get their paperwork in order now so they can jump ship when the torpedos hit.

    19
    3
  22. Golden Fleece says:

    If Cayman is going to offer gold plated pensions and healthcare for politicians and civil servants, then the politicians and civil servants (especially the senior chief officer celebrity class) need to give up the various perks of office.

    When you see a black Range Rover flying a Cayman flag parked at an outer district eatery around 3pm, then you know someone is just taking a jolly on the government dollar.

    33
    1
  23. Anonymous says:

    #worldclass

    10
    2
  24. Anonymous says:

    They don’t want to even acknowledge it because the curtain would fall down and the entire charade that this isn’t a completely corrupt and incompetent jurisdiction would be out in the open instead of an open secret.

    Nearly every, single Caymanian 90%+ of the working age Caymanians work for Government or it’s offshoots. These islands are the biggest welfare state in the world which is why they refuse to raise minimum wage.

    The house of cards is at the very edge of falling down and they know it. Why do you think their only solution is development? That is the only thing they can do, work permits and development because anything else risks the entire thing falling down.

    24
    6
  25. Anonymous says:

    Ken Jefferson, Franz Manderson, and successive PPM, UDP and Unity Cabinets were the architects of this multi-decade financial conspiracy to conceal disqualifying liabilities from the territorial Balance Sheet. It was done to retain perceived compliance with the FCO’s FFR and the UK backstop on a loan book and preferential lending terms,,that has expanded, during the greatest period of economic health the islands will ever see. The victims of this unprosecuted financial crime will be a couple generations of voters saddled with the aftermath. Legge was right.

    24
    1
  26. Junius says:

    All successive Ministers of Finance (including the incumbent Premier, Hon. Julianna O’Connor Connolly) as well as all successive Cabinet Ministers (with collective ministerial responsibility to Parliament) all share in this epic failure.

    This clearly evidences the Cayman Islands’ non-compliance and breach of the “Framework for Fiscal Responsibility”, contained in an agreement between the Governments of the Cayman Islands and the United Kingdom (dated 23 November 2011), the terms of which are set out in Schedule 6 to the Public Management and Finance Act.

    Successive Governments (specifically UDP, PPM, Unity, PACT and UPM inclusive) have failed the Caymanian people miserably, especially fiscally.

    The Hon. Premier (who is also the current Minister of Finance) now needs to do the right thing: request that H.E. the Governor prorogue Parliament and call an early election.

    Perhaps holding early elections in November (as it was before being extended for 6 months to May, after Hurricane Ivan) is the best option.

    27
    1
  27. Anonymous says:

    So…to paraphrase DG Franz Manderson, “I don’t have a freaking clue about how to address this dilemma. Actually, that’s my position on just about everything else wrong with the Civil Service.”

    21
    1
  28. Anonymous says:

    I will gladly pay you Tuesday for a hamburger today.

    13
    1
  29. Anonymous says:

    Clearly it’s time that the very well paid civil servants should start contributing towards their benefits.
    Everyone else has to , on far lower salaries.
    As. Margaret Thatcher said.
    “ The problem with socialism is that sooner or later , they’ll run out of YOUR money.”
    I’m no math genius but to me it seems it’s going to be Sooner.

    29
    3
  30. Anonymous says:

    Look we have plenty of money and if we happen to run short we can just ck up some more fees. Everyone needs to just chill out as our wonderful leaders have everything in hand.

    2
    14
  31. Anonymous says:

    The Civil Service is too big. The benefits available to its members are too generous. Those are the problems to be solved Mr. Manderson. Not the question of how to account for it.

    It is the numbers that are unsustainable. Not our accounting treatment of them.

    27
    4
  32. Anonymous says:

    Civil service needs new ideas, a new leader and someone that believes in accountability and value for money. Sadly that is not Mr. Manderson. He has become the face of failure

    21
    1
  33. Anonymous says:

    Franz Manderson is officially the king of fluff and excuses.
    The most powerful man in these islands is a smiling charlatan that runs a world class circus full of highly paid jokers that he selected at the top of Cayman’s biggest union. The civil service and its continued mismanagement and poor results represents the single greatest to threat to the continued success of these islands.

    27
    2
  34. Anonymous says:

    The Civil Service, rather than serving us, will destroy us. It generous with the Caymanian People’s money beyond any capacity to pay. Worst of all, many of those benefitting the most are neither from here nor remaining here.

    21
    3
  35. Anonymous says:

    Black List.

    2
    1
  36. Sunrise says:

    I am trying to understand this, please be patient with me and if you have any suggestions, please let me know.
    What was the contribution for every government employee, with the health insurance? I am sure that there was a lot more collected, than was spent on health care. So if there is a surplus, where is it at? I have been informed that the funds that go into pensions and healthcare, may actually be used in other government expenses. Is this a fact? What about saving some revenue, by not allowing concessions on these hotels, condominiums, and other developments, that they are allowing. Also, please don’t spend unnecessary funds on such stupid ideas as the Marriott beach restoration, it will never work. I could go on forever, on how government is spending the people money, unnecessarily, but I will relax for now. Waiting to hear some answers from the elected and appointed members.

    16
  37. Anonymous says:

    This is old (Miller Shaw) news and something we’ve been at pains to point out each year when they brag about the surplus that isn’t really there. I wonder what else isn’t on the books?

    17
    1
    • Anonymous says:

      We could start with the >KYD$1Bln in unfunded pensions liabilities from same reports, but the real cost will be from cancelation of the UK backstop and preferential loan rates. That’s billions more in service costs and principal. Cayman’s voters, even after being told a few times, don’t seem to grasp the financial peril and what that could mean for sustainability of livelihoods built here. This was an organised financial conspiracy where we have the names and addresses of who authored it….still nothing.

      8
      1
  38. Anonymous says:

    Civil Service will fare better than the rest of us, but we’re all going to grow old and die hard, and there doesn’t seem to be much help for it. Health insurance in the Cayman Islands is disastrous. Work hard all our lives and die in pain.

    Cinico should have been nationalised long ago. Broader insurance base, everybody onboard with the same level of health care.

    18
    • Anonymous says:

      Totally agree with anonymous at 7:30 pm. When Cinico was set up mainly for the civil service members. It was done under the premise that eventually every man woman and child in the Cayman Islands would be insured under CINICO. ( CAYMAN ISLANDS NATIONAL INSURANCE CO). Whoever wanted additional funding could keep their private pension coverage or enroll in private sector insurance coverage ( whichever applied) along with CINICO. From its’s inception the private insurance companies had an issue with that and too many politicians assisted them in undermining CINICO. CINICO never had a chance. Now it appears to be the biggest debt on the government, so huge that it cannot fit on the balance sheet. Like many other initiatives it was set up and was just expected to limp along with no real guidance or foresight . So I cannot understand what else did Fran’s and Ken Jefferson expect would happen!? Do they believe in Fairies? This is not a fairy tale but a freaking. Embarrassing nightmare that we cannot wake up from. The longer it stay in this state the worse it will get so you all better get busy in fixing it.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.