I work at a Government Executive Agency (EA) and I am due to retire in a couple of months. The agency where I work, was one of four entities granted executive agency status by the government in April 1999. and after four years the Executive Agencies Pension Scheme was introduced by the Government on April 1, 2003.
The chief executive officer (CEO) of the EA at which I work sent a letter to the financial Secretary of the Ministry of Finance and Planning (MOF) dated January 17,2020, in regard to an anomaly relating to Pension Benefits for Employees having both Service in Central Government and Executive Agency and who transitioned to the Executive Agency Pension Scheme in 2003.
The CEO in the letter called on the financial secretary to “use your good office to correct this grave injustice meted out to two employees who have retired and three employees who are left to be retired from the EA in relation to the payment of their retiring benefits. The correction would include revisiting the salaries used to compute the retiring benefits of those employees.”
However, to date the EA has not received any response or acknowledgement of receipt of the letter from the MOF.
We are requesting your urgent assistance in this longstanding issue.
The CEO’s letter requested the financial secretary’s help “ in righting an egregious wrong” in the pension calculations for persons who had given over forty (40) years of service to the Government of Jamaica (GOJ) and had elected to leave the GOJ’s Non-contributory Pension Scheme and join the Executive Agencies Contributory Pension Scheme in 2003.
The letter to the financial secretary stated that: Prior to the implementation of the Executive Agencies Pension Scheme employees were asked in writing by letter dated May 2, 2002 to elect in writing whether they wished to”Remain on the GOJ’s Non-contributory Pension Scheme for Public Officers or Join the Executive Agency Contributory Pension Scheme.
Employees were instructed that they would be given up until March 31,2003, to make a decision and if no election was made, it would be concluded that they wished to join the Executive Agency (EA) Pension Scheme.
Several officers did not make their elections by March 31, 2003, since they were not sure of the advantages and disadvantages of each of the two Pension Schemes.
Officers were given until April 17, 2003, to sign and submit their election forms (backdated to March 31, 2003) to the Human Resources Unit failing which the Agency’s payroll would automatically commence salary deductions for the EA Pension Scheme.
Points made by the CEO in the letter to the Financial Secretary included the following:
(1) “The management team of this Executive Agency was not integrally involved in the process of disseminating information to staff about the pension arrangement as this was left to the professionals at the Office of the Services Commission, the Ministry of Finance and the Public Service and the West Indies Trust Company (WITCO).
2 While employees were given one (1) year to make an election regarding their pensions, it is evident that even after April 2003 the employees had not been provided with sufficient information to make an informed decision.
3. It is evident that employees were misinformed about Life Insurance Coverage and remaining on the GOJ Pension Plan. The question therefore arises if they could have been also misinformed regarding benefits under each plan.
This Executive Agency is of the view that employees did not base their election on reliable and accurate information. This resulted in employees who elected to move from the Government of Jamaica (GOJ) Non-Contributory Pension Scheme to the Executive Agency Pension Scheme being on retirement, in a significantly worse position than their counterparts who remained with the GOJ Pension Scheme. This GOJ Executive Agency is convinced that this could never have been the intention of the Government of Jamaica to deprive employees of significant pension payments.
We set out below an example of the significantly worse position that employees who elected to join the Executive Agency Pension Scheme have experienced: In 2015 one of the employees (in a supervisory position) who did as encouraged and joined the EA Pension Scheme retired. It should be noted that although her employment with the GOJ continued albeit under a different government arrangement, that is through the Executive Agency arrangement, her GOJ pension was computed using the salary that existed prior to the implementation of the EA Scheme.
The consequence is that this employee with forty-three (43) years of service has ended up being worse off than an employee not holding a supervisory position and having less years of service and who did not join the Executive Agency Pension Scheme.
We outline below pension calculations for Employee A — the employee who did not join the Executive Agency Pension Scheme— and Employee B —being the employee who joined the Executive Agency Pension Scheme:
Employee A was not a supervisor and had three years of service less than Employee B in the same entity. Both worked continuously for the GOJ. However, Employee A ended up with a Lump Sum ($2,865818.68 that was 141% more than Employee B ($1,187,473.72 ) and Employee B also receives a monthly pension ( $27,444.51) that is about 48% of the pension that the lower paid Employee A ($57,276.37) receives. Employee B’s GOJ Pension was computed at the rate prior to joining the EA Pension Scheme. No reasonable person could conclude that this was the intention of the Government of Jamaica for employees opting for the Executive Agency Pension Scheme to end up being significantly worse off than their GOJ pension counterparts. Neither could this have been the informed choice of the employee.”
We are requesting your urgent assistance, as a response is needed from the MOF in respect of this long-standing issue.
On June 1, 2020 Tell Claudienne sought clarification from the director of the Pensions Unit at the Ministry of Finance on the pensions anomaly issues pertaining to staff at the Government of Jamaica Executive Agencies. Within hours, Tell Claudienne was informed by the Pensions Unit that “the matter is being reviewed internally and a response will be provided to the executive agency as soon as it is completed”.
On Thursday July 2, 2020, the director of the MOF Pensions Unit informed Tell Claudienne that a response from the financial secretary had been sent to the CEO of the Executive Agency to which you are employed.
The letter from the MOF to the CEO of the Executive Agency in regard to Pension Benefits for Employees with Service in both central government and Executive Agency stated the following:
“Reference is made to your letter dated January 17, 2020 regarding the captioned subject.
This serves to advise that the concerns raised regarding the pension paid to a retired employee who transitioned from Central Government to the Executive Agency and elected to join the Executive Agency Pension Scheme has been noted.
It must, however, be highlighted that the Government in effecting the Pension Arrangement for the Executive Agencies adopted a three-pronged approach in an effort to facilitate seamless transitions.
(1) Giving affected employees the opportunity to choose whether they remained under the GOJ Pension Arrangement or became members of the Executive Agency Pension Scheme;
(ii) Ensuring the staging of pension sessions aimed at providing information to assist affected employees with the decision. Sessions were scheduled for each Executive Agency and representatives from this ministry, the Office of the Services Commission and the National Commercial Bank Insurance Company were in attendance to inform employees of the features of the GOJ pension arrangement as well as of the EA Pension Scheme; the variations in both arrangements, the respective benefits that each scheme would provide and how the transition would occur;
Giving persons the opportunity to elect which pension arrangement they wanted to be a part of, following dissemination of the information. Given the importance and implications of the decision, affected employees were afforded a twelve-month period to consider the options and make a choice. This time frame was given to allow persons to seek clarification and get additional information as necessary.
It should be noted that the election to either remain on the GOJ pension arrangement or to join the EA pension scheme is irrevocable and that awards in respect of pension benefits are calculated and granted in keeping with legislative provisions or Trust Deed and plan rules. Therefore, for persons who had served with the Central Government for 10 years or more and who opted to join the EA Pension Scheme, their retiring benefits related to the period of Central Government service must be calculated using the emoluments they received prior to the transition.
Also, please note that the proposal to award the affected employees a lump sum cannot be accommodated as this would be a breach of the pension policy.
In view of the aforementioned, the appropriate steps were taken to educate employees of your Executive Agency on the features of the GOJ pension arrangement as well as on those of the EA pension scheme to enable them to make informed decisions. “
You have informed us that your CEO has received the MOF letter.
We wish you all the best.
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