The Keith Mitchel-led New National Party (NNP) government has put forward proposals to Grenada’s public sector unions to bring an end to the 34-year old contentious issue of pension for established civil servants.
Public officers were disqualified from receiving a state pension following the enactment of a People’s Law in 1983 which created the National Insurance Scheme (NIS).
The local courts have ruled the law that was passed by the left-leaning People’s Revolutionary Government (PRG) of late Marxist Prime Minister Maurice Bishop to be null and void and not in keeping with the requirements of the Grenada Constitution.
In recent years, public servants have been calling on government to restore the pension.
Prime Minister Mitchell has for the first time put on the table for consideration by public sector unions a plan that could cost the country over EC$1 billion in pension payments for public officers.
“Government holds as a general principle that no eligible officer should receive a pensionable income stream which is less than fifty per cent (50%) of their final salary inclusive of the National Insurance Scheme pension benefits under this new proposed arrangement”, Cabinet Secretary Beryl Isaac told PWU President Rachael Roberts in a letter dated October 6, 2017.
Isaac also urged the PWU female boss to review the proposal and to give the necessary feedback.
Following is the full text of the letter:
Ms. Rachael Roberts
Public Workers Union
October 6, 2017
Dear Ms. Roberts,
Reference is made to your meeting with Dr. the Rt. Hon Keith Mitchell, Prime Minister on Tuesday, October 5, 2017 at which meeting the current matter regarding Public Officers’ Pension was discussed.
As was re-affirmed by the Prime Minister at that meeting, it is both his personal desire and that of Government to resolve the long outstanding Pension issue. There is also the desire to intensify efforts towards finding an amicable and negotiated pension solution.
Against this backdrop, Government wishes to advance the following towards finding a fiscally sustainable and just pension solution.
(1). To afford increased Pension Benefits to eligible Public Officers who joined the Public Service on or after April 4, 1983.
(2). It is proposed that the Government pension benefits to be paid to eligible officers should be in the form of a combined pension premised on the principle of a top up on the pension benefits paid by the National Insurance Scheme (NIS).
(3) Government holds as a general principle that no eligible officer should receive a pensionable income stream which is less than fifty per cent (50%) of their final salary inclusive of the National Insurance Scheme pension benefits under this new proposed arrangement.
This proposal is subject to the completion of a comprehensive data collection exercise as well as the undertaking of an actuarial study.
Consequently, Government places on the table in principle the formula below for calculating the pension benefits under this new arrangement on the understanding that the cost of the liability has to be first determined and any agreement would be subject to affordability and sustainability:
*Pensionable Income Stream equals half of the difference between one’s NIS pensionable benefits and the value of sixty-six percent (66%) of the final base salary paid by Government plus the NIS pension entitlement.
However, for finality to be reached on this or any proposal, there is critical need for the completion of data collection process and the conduct of an actuarial study to guide on the following inter alia:
*the modelling of the pension scenarios;
*the financial quantum of the respective scenarios; and
*the financing options.
It is anticipated that the studies can be completed within a four-month timeframe and it is Government’s desire to have all relevant trade unions assist in informing the parameters of the studies.
Cognizant of this timeframe, Government also presents for consideration an option to make part payments to eligible Public Officers who have retired, are deemed necessitous and have been identified through agreed criteria with all relevant trade unions.
While the foregoing outlines Government’s proposal to treat with the retrospective period, there is need for consideration to be given to the sustainability of the Public Service pension system well into the future.
In this vein, Government wishes to advance the need to look at the design of a new Contributory Pension Scheme that could be integrated with the National Insurance Scheme and which could even be administered by the National Insurance Scheme on Government’s behalf.
In closing, Government places on record its appreciation for your commitment to this process and re-affirms its own commitment to working with you and other trade union partners to find a financially sound and equitable solution in the shortest time span.
Government trusts that you will receive the above proposal as the basis to recommence engagement, and looks forward to meeting with you and the members of your team around the table for continued meaningful discussions.
Friday, October 13, 2017 at 10 a.m. is proposed as a possible meeting time at the Ministry of Works Conference Room, 4th Floor Ministerial Complex.
We shall be most grateful to be advised of your availability or to receive your suggestion of an alternative meeting time.
Mrs. Beryl Isaac
SECRETARY TO THE CABINET