Advice to be sought: Gov’t, civil servants to share pension liability
Government will be hiring a contractor to give advice on how to change the current non-contributory pensions and gratuities scheme, which has become an increasing financial burden on the state.
Financial Secretary Glenroy Forbes told BVI News that talks have already begun to change the scheme from non-contributory to contributory so civil servants will be made to pay pension.
He said the soon-to-be-revised pensions scheme will allow civil servants to pay a percentage of their pension while government pays the remaining percentage.
Neither the exact percentage each party will pay nor an implementation date for the new pension scheme has been decided.
Forbes, however, noted that certain terms of the revised scheme must be a mutual agreement between the government and its employees. He further said the revised scheme must be sustainable.
“It has to be viable that will endure into the future because right now it is not the best way to be administering a pension scheme,” said Forbes, adding that the current scheme has always been a concerning liability for government.
He explained: “Currently, government makes an appropriation to pay those persons who are pensioners as well as those persons who are projected to be retiring for a particular year. To put it to the extreme, if everyone in the system who can claim a pension would decide to retire and take that pension, it would be millions of dollars that would be funded by the government.”
He said current legislation such as the Public Finance Management Act of 2004 makes provisions for the pensions fund.
Millions paid out in the last five years
According to statistics from the Ministry of Finance, government has spent almost $80 million for pensions and gratuities to its employees in the last five years.
Government appropriated $18,092,342 for pensions and gratuities in the annual budget last year but only $16,884,838 was spent.
In 2016, government allocated $16,631,200 and $16,631,181 paid out.
Some $18,693,650 was set aside in 2015 but only $16,491,044 of that sum was paid.
Government budgetted $14,822,200 in 2014 and $14,946,766 was expended.
Some $14,733,800 was budgeted in 2013 and $14,347,326 was spent.
Copyright 2024 BVI News, Media Expressions Limited. All Rights Reserved. This material may not be published, broadcast, rewritten or distributed.
This thing where politicians getting pension after spending 5 years in office need to be cut out, It is highly unfair
I agree with you 100%. Politicans have a steal of a deal when it comes pension. Their package should be looked into ASAP. Five years of work should not guarantee them such a huge pay out.
The GOVT pension scheme is unfunded. When the govt runs out of money, as it inevitably will, the pension payments will stop.
If a private company was running such a scheme, then the directors would be disqualified.
The GOVT needs a properly funded, civ L servants paid, pension scheme administered by a reputable pension company. It can be administered by another statutory board and lend money to the GOVT.
I agree wholeheartedly with your comment but it is not 5 years. They have to have done at least two terms which is about 8 years, which is still not enough.
8 years sometimes only coming to a Legco meeting 10 times a year and substantial pensions that is not justified.
You are partially correct. They must serve a total of five years in two consecutive terms. In other words, they don’t have to complete the second term just the first year of the second term.
The current public pension scheme IS unsustainable and Glenroy is right: it must be reformed, and teh sooner the better.
Like @strupes, I would sincerely like to see Government also take the bold step of abolishing the absurd pension rules for members of the House of Assembly. No one should be receiving a public “pension” when they are still of full working age, and receiving a generous (and completely unfunded) pension for life after a mere 8 years of service is just crazy.
Retiree pension is an unfunded liability approaching approximately $400M. Currently employee pension is paid through a pay-as-you (paygo) system through an annual budget appropriation (~$16M); employees are not contributing anything towards their retirement with government carrying the full retirement burden. The current retiree funding mode is vulnerable to reduce government revenues; with reduced revenues, government may have to prioritize/reduce what gets funded, including pensions. As such, employee pension needs a different funding stream.
Suggest establishing an employees retirement sinking fund for new employees and some current employees. Current pensioners and some current employees may have to remain on the paygo system. The sinking fund can be managed by a statutory body. With the sinking fund, employees will contribute a percentage of their salary, ie, 5-7%……etc and government matching employee contribution, ie $1: $2, $1:$1, $1:$0.50………etc.
The statutory body will managed and invest the empolyee contribution and at retirement employees will be paid an annuity from the sinking fund. To start up the sinking fund, government may have to provide some seed money/working capital. Employees leaving the service before retirement may have their contributions plus interest refunded.
Elton, I agree with *almost* everything you say. But I don’t think we need (yet another) statutory body. There are hundreds of professional pensions management companies worldwide – most of them deal with much larger groups of employees than BVI Government.
Government should just use an experienced professional firm who does this sort of work full-time already, rather than setting up a new statutory body which would be both expensive, inefficient and would almost certainly have senior positions filled by people who are local and well-connected, but have no prior experience in pensions management.
Let’s just hire a proper professional firm. Most serious businesses in the BVI already do this.
There is no need for another professional firm to make money off this pension scheme, they can pay into Social Security just like the rest of us and the previous missed portions of contributions need to be made up by the Government. Easy Peasy
All these comments are rather false.WO says civil servants don’t contribute to their pensions? Have they ever seen a cvilservant payslip without pension deductions ?
The study was done years ago and what to do to get it implemented. I believe the foot dragging is by whoever is in power, and they are trying to determine when is it politically the right time to implement and not affect the next election’s votes. While this may be the thought process, this unfunded liability is increasing each year, and approaching a 1/2 billion dollars. Does the unfunded liability take into account the High Court judges? Would they (judges) also have to contribute to their own pension plan?
I believe the High Court Judges are employed by the Eastern Caribbean Supreme Court with headquarters in Castries, St. Lucia and therefore not BVI government employees. However the staff for the BVI judicial system(Registrar, DPP prosecutors, clerks, managers, etc.) are definitely BVI government employees.
Where does ECSC gets its funding to pay the judges? Please do your research. Judges are employees. Do not get it twisted. Payments come directly from the jurisdictions. Do your research before you write….pleeeeaaassseee.
Very good ideas locally and a lot of examples here and a broad exist, so I hope that the scope of works for the contractor doesn’t end up recreating the wheel for this very necessary change.
Successive governments faiked to address the unsustainable government employees pension plan. Taxpayers are saddled with an unfunded liability to the tune of several hundred million dollars. This problem needs to be address urgently, it needs to be fixed now rather than later. Procrastination will only exacerbate the problem.
Pensioners need more certainty and reliability in receiving their monthly pension. Let’s learn from our USVI neighbors; their GERS (government employee retirement system ) has some problems that needs to be shored up. Gov Mapp is proposing tens of millions to shore up the system.
Moreover, there needs to be retirement eligibility equity between elected officials and civil servants. Elected officials (politicians) qualify for retirement with 2/3 of their salary for 8 years of consecutive service. This is approx 1/3 of the service time required for civil servants; the current system is far too generous.
Retirement equity is needed. Nonetheless, we shouldn’t depend on politicians to effect any changes; for change to occur, it will have to be demanded by the people, the electorate. What is in place now appears similar to what is in George Orwell’s classic Animal Farm: “All animals are equal but some animals are more equal than others.” Equity, Equity, Equity.
“What is in place now appears similar to what is in George Orwell’s classic Animal Farm: “All animals are equal but some animals are more equal than others.”” This is deep mai boi. Point well made and taken, though.
“Retirement equity is needed. Nonetheless, we shouldn’t depend on politicians to effect any changes; for change to occur, it will have to be demanded by the people, the electorate. “ This is the only way change in the retirement inequity between politicians and civil servants will occur; people have to demand change. While we are at it, how about changing politicians’ $2000 per month housing allowance? Do civil servants get a monthly housing allowance? No.
It is simple – pensions are paid AT PENSIONABLE AGE (usually 60-65 years old). I dont know any other countries or corporations with such a crazy unfundable and inequitable scheme as BVI.
Social security is the state pension, this can be increased. Government pension needs to be contributary
Invest in bitcoin
This pensions liability is like a bomb waiting to drop. Good job Glenroy in starting to sort this out
That if the current government allow the bill to go to cabinet and leave cabinet to go to HOA and get all of the readings in the house before the next election. It may mess up the potential votes from among the few thousand government employees.
They mismanage the people’s money and now they trying to squeeze it back out from under us…this is a shame and disgrace…didn’t they increase pensions for politicians some years ago? Didn’t they increase Ministers salaries some years ago. This is a total disgrace…the people will patiently wait for elections to come.
Plenty of civil servants don’t merit their salaries never mind overblown pension schemes.
I see NDP setting up dem boy Cl—- before they get vote out.
Why not go straight for a contributory national mobile pension scheme under Social Security?