…but company claiming fund surplus
Instead of a deficit, the Guyana Sugar Corporation (GuySuCo) is claiming that based on the last actuarial report done on their Guyana Sugar and Trading Enterprises Pension Scheme (GSTEPS), the fund reflects a surplus.
This is according to the entity’s Corporate Communications Manager, Audreyanna Thomas, who in a statement on Tuesday noted that the last full actuarial valuation of the scheme was done in 2015. That was three years ago.
“Due to the restructuring of the Corporation and the reduction of the number of employees in the scheme, the full valuation has been brought forward one year to 2017,” Thomas also related.
“The actuaries will also be evaluating different models/scenarios of operation to determine the best way forward for the successful continuation of the scheme. It should be noted that the actuarial report will be completed by July 2018.”
According to Thomas, the GSTEPS fund is funded by pension contributions from both GuySuCo and the returns on any investments made using the contributions. She noted that employees are paid a defined amount based on their salaries and years of service.
“The contributions are held in trustee administered funds, which are separate from the Corporation’s finances and the pensioners are paid from the trustee administered funds,” she related.
“Employees who have retired and are not members of the pension scheme, these include employees below junior staff level, are paid ex-gratia pensions.”
“(This) used to be partially recoverable from the Sugar Industry Price Stabilisation Fund (SIPSF); this is no longer the case and these pensions are fully funded by the Corporation from its own cash resources. These employees are not required to make any contributions to a pension fund as in the case of the employees who are members of the GSTEPS scheme.”
Thomas noted that current ex-gratia pensioners at the vested estates in Wales, Enmore, Rose Hall and Skeldon, continue to receive their pension from the Corporation.
She added that severed employees who are eligible for ex-gratia pensions will also being paid by the Corporation.
GuySuCo’s statement, however, runs counter to what is contained in the entity’s own 2016 audited financial accounts. According to that financial statement, there is a defined benefit obligation of $44 billion, contrasted with a value of assets of only $11.2 billion. This means that there is a net deficit of $32.8 billion.
The audit opinion shows that GuySuCo does not have the resources to fund its liabilities including that of the pension. And since the statement does not quantify this ‘surplus’, questions remain over how this deficit will be funded.
Workers have been questioning the future of their pension benefits and whether they would be treated like the bauxite workers, in Region 10 (Upper Demerara-Berbice). A senior manager who is part of the fund told this publication that, in 2002, the then Government had signed an agreement with the two large bauxite unions, providing six weeks’ severance pay for every year of service, with a cap of 104 weeks.
Additionally, the Government committed to pay the pension plan deficit and bring up to date outstanding payments for NIS and PAYE. The manager said that almost $3 billion was paid out by Government to fulfil these obligations.
This publication was also told that separate from the pay out, the Bauxite Industry Pension Plan (BIPP) was wound up and the full benefits were paid to all members of the bauxite industry pension plan.
This is a major concern for another beneficiary of the GSTEPS pension plan, which is the largest pension plan in the country. Its officials have said there seems to be no focus on protecting the workers’ benefits and ensuring fair treatment of sugar workers.
Just over 5400 sugar workers were dismissed as Government closed four sugar estates and vested their assets into the National Industrial and Commercial Investments Limited (NICIL) since the end of 2017.
There is major fear that Government would shortchange the workers, a former employee told this publication on Saturday.
“Instead of the workers being paid both their contribution and that of GuySuCo, workers are concerned that they may end up with far less than the same treatment enjoyed by the bauxite industry,” a former senior staff stated.
The STEPS fund has a history of negative figures, but several persons have opined that with the closure of several estates and the downsizing of the industry, there will be an influx of persons into the pension system.
Reports are that the Employees Retirement Benefits are in negative territory by $1.1 billion, as opposed to $2.4 billion in 2014, according to the 2015 financial statements produced by GuySuCo.
And according to well-placed sources, the state of the fund has not improved.
A former employee of the Corporation had told this publication that Demerara Distillers Limited (DDL) pulling out from the fund has added pressure to the fund.
The employee had expressed the view that Government had to be aware of the dilemma. He said this on the basis that there was no likelihood that foreign investors would have joined the fund, as the Financial Act currently prohibits certain levels of offshore investment.