CEO bemoans meagre pension for CAL staff
(CNS): Retired Cayman Airways Ltd (CAL) workers are facing a bleak future as the private pensions they accumulated are nowhere near enough to live on and they do not have post-retirement healthcare. Answering a question at the Public Accounts Committee hearing last week from Bernie Bush MP (WBN) about former airline staff struggling on meagre pensions, CAL CEO Fabian Whorms said it was a significant issue that required “a lot of funding”.
He said it was an issue for shareholders to address since it’s “impossible for Cayman Airways to print money on its own” to fix the problem.
Appearing before PAC to answer questions on a recent special audit of the airline by the Office of the Auditor General, Whorms said this was a long-standing problem that successive administrations have been aware of.
He pointed to the significant financial impact of applying the Public Authorities Act, which requires government companies to make the pay and benefits of their staff equal to those of civil servants. However, he said it was not possible to address the pension shortfall on the airline’s current budget, and the CIG would have to finance this.
Whorms explained that workers do not receive much more than $1,000 a month when they retire, and it was distressing to watch employees who, after decades of service, are now struggling on such a small amount, unable to pay bills and with no health insurance. “This is very sad and painful for me as CEO, at times,” he added.
Whorms said this was one reason the airline is managing “the risk”, as noted by the OAG, of an ageing workforce because management was not keen to “kick people out of the organisation” even at retirement age, given what retirement had in store for the staff.
The CEO said that even his own pension and that of the senior management team will be inadequate as the airline’s private pension was completely out of sync with the wider public service. “We don’t know what’s going to happen when we retire,” he said, referring to the management team. “We do not think we will be able to survive and that’s something that I think is very serious.”
However, given the airline’s current financial situation, the airline cannot address this alone, he said and suggested the possibility that the government accept responsibility for Cayman Airways retirees under the Public Service Pension Board provisions and offer them post-retirement healthcare benefits through the HSA and CINCO.
Whorms said that whatever the CIG decides to do, he was hoping the day would soon come when it does something “tangible” to deal with this.
During this review of the airline, the OAG found that implementing the Public Authorities Act would cost CAL another $6 million per year, even though it is already underfunded and runs at a loss.
Nevertheless, Whorms said that, in general, staffing retention was far better than people think, with an average of around 11% and turnover among pilots less than 2%. CAL does not, despite perceptions, have a problem with retaining pilots, he said. The airline will have its workforce plan documented by the end of this month, he said, but noted that even without a written plan, CAL had been succession planning, especially with retiring captains.
Whorms said he did not have concerns about the average age of CAL employees. He said that when many older workers joined the airline, their original contracts did not have a mandatory retirement age. If staff members want to stay and keep working, the management is happy about that as they have a lot to offer, he said, adding that there are about ten people who are over 65, and the airline benefits from their experience and see it as a positive.
Nevertheless, he accepted that there was a higher turnover among other jobs, such as flight attendants, because that is a more transient position throughout the industry; it is the type of job that is great when people are young but not always a great fit as people settle into their careers.
He said CAL provides many entry-level jobs, but after a few years, people may find the airline business is not for them. “Some love it… but others don’t,” he added.
See the PAC hearing on CIGTV below:
- Fascinated
- Happy
- Sad
- Angry
- Bored
- Afraid
Category: Government Finance, Policy, Politics
Private sector pension “scheme” really bites. Mine has lost so much money.
The only good gig in town is working for government. All else, no benefit, no pension, no cry.
The Cayman pension funds have followed returns in the market. I don’t think you’ve actually lost money over time. What would you propose as an alternative.
Check your returns since inception…
I would proposed allowing everyone to share in the only good investment in the Cayman Islands — the Credit Union.
I have monitored my pension and returns for the last two decades. Good for you if you believe an overall return of 1.5% is acceptable. You know what? Never ONCE has the Credit Union lost ANY money in a customer’s account. EVER.
CAL will always have a loss. Not because of incompetence but due to pure greed.
Have an indebt audit of how much CAL is paying for things they should outright own then see how much money is being syphoned from the airline by the same old greedy people.
1. Who owns the counter space at the airport? How much does it cost to rent the space?
2. Who owns all the ramp side equipment? How much does it cost to rent?
3. CAL does handling for other carries and should be in a position to keep the full handling fee. Instead they have to share parts of it with the same people. Some get the baggage handling, some get the push back cost, some get the security etc etc.
4. Brac should never be operated by the jet. Many years ago there was discussion for a 40 seat ATR to service the Brac and Honduras which would have lowered the operating cost dramatically. This could have freed the jet for other opportunities.
5. The cost of a flight to anywhere from here is high due to the taxes. Cayman collects $140.00 per passenger in taxes then Jamaica adds another $140.00 for their taxes. Thats $280.00 dollars before the Airline even adds anything. Why no complaint about that?
For a very long time, every politician and crony have milked the airline and continue to do so. So whose fault is it if the airline cant make nay money.
At what point should adults take responsibility for their own finances? I can forgive someone in their 20’s not planning for their eventual retirement but 30’s, 40’s, 50’s? Seriously? How do you get to your 60’s before realising 1k a month isn’t going to be enough to live on.
Whatever your Pension Plan you cannot retire on it – totally ridiculous. Needs a complete overhaul
A Pension Plan is a small bonus component of what should be a more robust Retirement Plan, backed with private lifetime savings. Adulting.
I will end up retiring somewhere else, purely due to the cost of living here. Pension money won’t go very far at all. I feel sorry for the locals who’s whole life is here, they really have nowhere else to go.
Island too expensive for persons born here to retire, and people don’t want to develop Brac, so no other options than to leave.
Good Caymanians can apply for a UK passport and relocate just about anywhere too, including the UK.
Where the healthcare would be free
This sad. However, this will be on a national level for the aging public in the next 10 years. The run on pensions was really a bad idea and continue to be the same everyday considering people are still withdrawing for construction and mortgage repayment. A house is going to do you good when you have no income to cover the basics at retirement. Not to worry though, our politicians will save us the retirement public when we have nowhere else to go but in the new $60m cayman Brac school.
People wake up, we are going to lose the whole islands with the terrible decisions they have made.
why the hell did Cayman Airlines give Kel Thompson a big retirement package. The guy is a millionaire and flying was his hobby. Its who you know!
A lot of money was also wasted on that stupid ill- advised jaunt to Barbados! I suggest we transfer 50% of the Minister’s monthly salary to the pension fund for the staff.
Whoever authorises jet flights from GC to the Brac needs a reduction in their pension.
cal…the only airline in the world that can make a loss from charging folks $400 for a 70 min flight…
welcome to wonderland
Don’t they have the same pension plan as the private sector? if everyone and their dog was not flying for free Cal would make a profit. Board member. fly for free. passed employee and family member fly for free. previous board member free. employee and family free. etc.
i travelled twice this week on Cal. One flight was delayed 10 hours and the second was delayed 3 hours.
it is hard to feel sympathetic when you have that level of service. How do you support such a poorly run airline. Poor Cayman 🇰🇾 😢 islands. Cal is a mess. AG can you review Cal operations and see if it is world class?
They allowed him to manage their meeting and demonstrated their inability to ask the more pointed and meaningful questions such as number of employees by nationality and department. Also how much is being made of current technology. And how much is owed and remains unpaid to local suppliers including our own Government Departments.
They just sat there and basically allowed him to spoon them with his one sided defacated verbosity.
thought they were meant to be grilled following the ag report that highlighted their failures and incompetence….
but now it turns out to be a platform for begging for more money????
the PAC is a joke and they are all dirty players on the same team.
just another day in wonderland
As I said… bring back Ezzard..!
Ezzard presided over some of the most egregious wastage of our times, and didn’t do anything.
Ezzard is one of the biggest wastages of our time.
3. Sell shares to public, give shares to staff each year.
2. Run CAL like a business..partner with CAA.
1. Cancel the front and back notice staff contracted on Permit, and train locals for ticket counters etc.
If CAL was a real business it would have been put out of its misery years ago. Either subsidize with full transparency or shut it down.
Ha. Don’t you know who owns those counter, ground handling and Security contracts!
And do they realize that this JFK route (which they say is loss making) lands at JFK at 10 pm so impossible to connect onwards from there without overnighting. Have it land at 5 pm and I think they’ll be happy to see how much more use it gets!
And even those staying in New York, I choose Jet Blue every time simply because I don’t want it to be midnight by the time I get to my hotel.
I would love to know who decides on flight time. They obviously don’t consult regular travelers for feedback.
It’s a negotiation between the destination airport authority. They have certain slots available. JetBlue are literally based out of New York, have a massive stake in JFK and have many, many slots for their aircraft so naturally they will have the most opportune times. It’s not that CAL can say “okay we’ll go in at 5PM”. It’s much more intricate than that.
Well I get that but I don’t even give Cayman Airways enough credit to know to try to get a better slot.
JFK is one of North America’s largest airports, and Cayman Airways one of the smallest airlines. They can’t just choose their slot. Airlines will literally fly planes with no passengers on board (known as ‘ghost flights’) to keep the best time slots.
All their slots are basically useless for connections. LA also arrives too late to connect thru to many places and definitely departs too early to get into Cayman on the same day!
You just demostrated that cal management knows nothing about running an airline. They will soon fly to Barbados 🇧🇧 and wonder why they are not profitable and then go to PAC and ask for a golden parachute.
if they worked for
AA,United,Delta,or SW they
would be unemployed.
As the 100% stakeholder in the airline, the decision to operate the JFK flights as afternoon departures was driven solely by the Dept. of Tourism.
I fly that route twice a year and used to always fly with AA. Now, I take JB to NYC and KX back to GCM, but I’d much prefer to use KX for the entire trip. Arriving at 10 pm is ridiculous and wastes a whole day.
Well maybe CEO Whorms can turn this around into a profitable company….and then he can compensate his employees as he sees fit.
The pensioners are no longer employees.
In the meantime, like all other government departments, dip into the public purse with no accountability.
Bet you his compensation is pretty. But I guess that’s “commercially sensitive” information as well. Pretty good promotion coming from a mechanic.
There is no incentive to make a profit as it never needs to. This will only happen when every civil servant answers their telephone.
What a joke! Chairman of a highly subsidised Airline, now suggesting that the Public Purse should subsidise Pensions for former Cayman Airways Employees? They are not “Gods” or above any of the rest of our working population who will also end up in the same boat.
The Pension Plan law in Cayman is flawed and needs to done away with altogether or streamlined. Employers and Employees cannot afford the payments that seem to only benefit the Providers.
What is flawed was letting people draw out of their pensions in 2020. And now complaining that they aren’t enough to sustain in retirement!! Smack my head!!
You again? Pensions do not replace the lifetime task of setting aside retirement savings, and investing them properly. Many people happily liberated that capital so it could produce market-rate returns elsewhere. Meagre pensions are never supposed to be solely-relied upon to sustain life in retirement. Bailing out simpleton losers should not be the CIG’s full-time role, all appearances to the contrary.
“Many” people did take money out to make better returns elsewhere. But not most. Most drew it out and p*ssed it into the wind!
Brett was right!
Speak for yourself.
I drew mine out and invested it in the Credit Union, which paid FAR more than the pension ‘scheme’.
My pensions generally suck. I’m not waiting to find out the level of how much it will suck when it’s all I have. I started late, but now in my 40s, I’m trying to invest a couple of thousand a month. This isn’t a small amount, but I’m not pissing money away on a new Changan/Jeep/BMW or similar. I’m not buying TVs bigger than a dining table, I’m not buying clothes at all unless I happen to travel.
My point is, I’m lucky enough to try to avoid this fate, should I be lucky enough to live long enough to retire. People need to remove their blinkers and check out what awaits them in the future. With so many living paycheck to paycheck here, it’s a timebomb ticking away like the obesity one, too.
Very well said!!
Preach!
All very worthy plans, but still not enough to live here, sorry. If you want retirement income of, say 80k/year, you need to have a pot of money saved of about $2mio. Planners will tell you not to take more than about 4% of your fund as income, this should allow the fund to continue to grow and adjust for future inflation. This in not investment advice! …or get elected, do 8 years and get a pension for life of $86k for a base MP, or $120k as Premier, plus free health….
I’m not planning on retiring here. The cost of living here is plainly ridiculous. Somewhere a little cooler, and a little cheaper will work.
Same, unfortunately.
Don’t blame you!
Let me get the world’s smallest violin out. So the problem apparently is that CAL employees don’t like to be on the same pension footing as anyone in the private sector? They are special and should get the same gold plated pensions as civil servants, even though they are meant to be a for profit enterprise that routinely cost the tax payer tens of millions of dollars a year. Cry me a river. Instead of whining about how CAL need another $6 million a year to improve their employees pensions, how about a) government allowing people to take pensions with overseas pension providers who won’t cap the amount you can take out or who will let you buy an annuity, and b) start running an airline tht minimizes the burden on the tax payer before asking for more hand outs.
Pensions were suspended for two years and cashed out by the workforce to finance government’s tyrannical and ill conceived lockdown. But let’s never talk about that.
Haha! Yes – let’s draw money out of our pensions and buy new cars and then complain there isn’t enough money to live on the pension in retirement.
We would have cashed it all out if we’d been allowed. There’s much faster money elsewhere in this game of life. Pension savings are a drag on household savings target, somehow managing to consistently underperform global market rate benchmarks, in a land of no taxes. We’d pass on that drag if we could!
CNS : were their pension contributions less than other private sector pensions?
Or is he only just realizing that no private sector employees will be able to live the same lifestyle on their pensions?
The solution is simple. Young Philippinos are immigrating to the Cayman Islands because they can make more money than at home, just let old Caymanian emigrate to the Philippines where their small pensions can actually be enough for a good life.
It’s becoming increasingly clear that Cayman is the wrong place to live and/or invest money.
It’s richer and more prominent and more populous than ever before but you do you.
By prominent you must mean in transparency sanctions talks?
Isn’t Bernie an MP? Bernie you were elected to fix these problems. All you are doing are asking questions and running bad jokes. Come on west bay. You must be can do better.
civil servants dont get health benefits unless they retire in service…right politicians? lol
Their benefits thoooo!!!!!
psst…it a problem even for civil servants….
I think we will all find that our pensions are not enough to live on come retirement. All of us should be trying to save more and cut out unnecessary items. Everyone has unnecessary spending regardless of how bad we feel our income is.
Maybe if we all cut out Netflix is will finally trickle down? Are our MPs that meet up twice a year or so doing the same?
Doesn’t really matter how much you put into your ensign pot when the government allows the pension companies to only take &12 k a year out after retirement no matter how much you have in there.
It sounds like the Government needs to decide how much it can afford to lose on CAL’s ‘Strategic Tourism’ routes. Particularly, if the OAG report says there’s another $6m of costs that need to be covered.
If the contention is that CAL operating on certain routes helps maintain competitive pricing, vs say airlift to Turks and Caicos, seeing data trends that support this could help inform decision making.
We should be asking, can more be done to analyze expected load factors (based on historical experience), then sell the anticipated empty seats by means of advanced, non-refundable bookings at diminishing discounts to the target revenue per seat? As is done by Europe’s budget airlines.
Also, it might be helpful to analyse the load factor trade-off and potential landing slot flexibility (ability to test routes) of flying-into smaller airports with lower landing fees, taking a point-to-point approach and offering lower fares. Instead of the bigger airports, costing more, that cater to connections (hub-and-spoke) where we compete directly with major airlines.
Did employees not know the details about the pension amount that they would receive, and plan accordingly for their retirement by saving for retirement while they were working? Personal responsibility.
Same as all the others not working for government. Not just Cayman Airways.
A sad situation, faced by all private sector employees. Any accounting for the decades of free flights for friends and family?
Many people that work for government get a free truck to drive for personal business and kid drop off, with no maintenance or gas costs. But why are you not complaining about that? Many airline staff travel for the cost of taxes, it is an industry standard benefit and is only if there is space available.
Government and Private Pensions are supplemental to RETIREMENT SAVINGS AND INVESTMENTS, which are the main capital pools grownups are supposed to have set aside, saved, invested, for life beyond retirement at 65. Far too few have bothered to understand their own Home Economics. Calling Bernie won’t help.
The smartass has entered the chat room. A very high percentage of people do not earn enough to save additional for retirement. In many countries the pension is enough to live on because they do not have private pension ‘plans’ and do not have greedy administrators taking a chunk of your savings. They have guaranteed index linked pensions. The CI government has made laws that restrict how much of your pension you can receive. The GOVERNMENT controls citizens pension money!
Great, if you seek full socialism, or an autocracy, move to Russia and enjoy the borscht. Cayman is supposed to be a democratic territory, responsive to voters, yet falls short on nearly all fronts because of the narrow field of self-approving boneheads that Caymanians choose to reshuffle into power every four years. The current unqualified Premier, Education Minister, and leader of Cabinet, received just 266 endorsed votes in 2021. 2025 is certain to be all the usual suspects again, and voters will whine until 2029, when they get back in power again, and again, and again. how does that get fixed without change to the Elections Law? Who is going to demand those changes?
Welcome to the real world!
Rediculusly expensive airfares.
This is exactly why CAL should be privatised. As a CEO you can’t run an organisation as an efficient service to customers and a welfare service to aging employees at the same time.
Give the company a $10m 25 year contract for sister islands service and hurricane evacuations and then list half the shares for sale to the public. Make it run like a proper company that answers to someone or it will consume ever more “taxpayer” money every year.
Better to have ‘aging’ employees working than going to the NAU for financial assistance. Nothing wrong with over 65s working, many employers prefer it. They show up and work! Other countries are increasing the retirement age to lessen the burden on the state.
This makes logical sense so the government won’t consider it.
Although it sounds attractive to try and privatize some, or all, of CAL (and the losses), such as by trying to sell shares to the public (investors). The problem is that without prospects for making a profit, the business will turn an investor’s $1 into less than a $1, so it makes no sense to invest.
Would you buy half the CAL shares for $100? I would. It doesn’t matter how much they sell it for, what matters is that SOMEONE will hold them accountable.
Interesting hypothetical. My short answer is No, I wouldn’t buy half, even for $1.
Why?
As of 2021, the latest full set of financials I’ve seen, CAL had a negative net worth (i.e. net liabilities) of US$27.4m.
And, in the 5-1/2 years from June 2014 to December 2019 (pre-COVID) it required an average annual government injection (by way of output purchases, grant income and share subscriptions) of US$31.5m per annum.
If you were to own 49.9% of CAL, irrespective of your purchase price, unless you had access to those sorts of sums your ability to hold it accountable would be extremely short-lived. The first time it needed money, you could vote No. The government would then inject the money needed and your ownership stake (and voice) would be quickly diluted away.
If you were to own 50.1%, and didn’t have access to the necessary financing, the only accountability you could offer would likely be to force the liquidation of the business. The lessors would re-take possession of the planes, then remaining creditors would get cents on the dollar, if anything.
Would be interested if you disagree with the logic and are willing to pen a response.
Our money losing airline has standard private sector pensions and they would like to have gold plated civil service ones and free healthcare for life.
No problem except that there is no money to pay for this. The pension plan in Cayman should be looked at as only one source of income for retirement. People should be saving 10-20% of what they earn on top of that. Incredibly difficult for many with the high cost of living.
But there is money to pay for, record government surplus and 50 million to build one school, there is plenty of money.
The only people on ‘gold’ plated pensions are the ones that do not need it.
He is right, despite the publics perception public servants do not benefit the same way civil servants do. After a whole career in public service you are left with a tiny pension and zero health care and unable to afford health insurance.
Welcome to the real world outside of the civil service. Non government workers all have this issue.
The post was about public misconceptions between civil and public servants not comparing with the private sector.
You mean like the rest of us? Pensions here are a joke, if you don’t have 2 or 3 rental units paid off by the time you ‘retire’ you aren’t going to be able to live. Basic pension payout might just cover your healthcare costs, but you still have to find money for food, housing, insurance, utilities. I would really like the politicians being paid a pension of 8k/month (by us) to try and live off a private scheme.
On his own behalf, if Fabian hasn’t been alert to the problem and has failed to plan accordingly he should not be receiving a CEO’s salary.
How is Cayman Airways Public Service?
Wholly owned by government