The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Telecommunications Company’s (BTC) unions yesterday slammed the “negligence” of previous administrations for creating a near-$160m pension hole that taxpayers must now plug.

Ricardo Thompson, pictured, the Bahamas Communications and Public Managers Union’s (BCPMU) president, told Tribune Business the deficit in the carrier’s original defined benefit employee pension plan “definitely should not have been allowed to balloon” to the scale it has now reached by the last Ingraham and Christie administrations.

He spoke out after the government’s Fiscal Strategy Report, tabled in the House of Assembly yesterday, committed Bahamian taxpayers to paying $20m per year over the next eight Budget periods to close the gap created after its two immediate predecessors failed to live up to legally-binding commitments made when BTC was privatised in 2011.

As part of selling the majority stake in the government-owned operator to Cable & Wireless Communications (CWC), the then-Ingraham administration agreed to both close-off the defined benefit plan to new BTC employees and cover the deficit by injecting $39m into a so-called Feeder Trust.

The agreement also required the government to make annual “top-ups” to the plan as required to cover any future payments, but neither these injections nor the original $39m payment were ever made.

Former prime minister, Perry Christie, complained several times while in office about the liability the Ingraham administration had left him, at one point revealing that the deficit had reached $99m. Yet he, too, appears to have done nothing about it, and Bahamian taxpayers are now being asked to pick up another inflated bill caused by prior governments kicking the can down the road.

“As disclosed in the 2019-2020 budget communication,pursuant to the April 2011 shareholders’ agreement (SA) between the government and C&W, when the Bahamas Telecommunications Company (BTC) was sold to Cable & Wireless Communications (C&W) for $210m, the government was required to inject an initial $39m into a Feeder Trust and annual top-ups, as required, to fund future pension obligations relating to BTC’s defined benefit plan,” the Fiscal Strategy Report revealed yesterday.

“According to the recent actuarial assessment, the deficit in the plan is pegged at nearly $160m. To satisfy this legal obligation, the Government is proposing to do so over eight years, making annual contributions of $20m commencing in fiscal year 2020-2021.”

Dino Rolle, the Bahamas Communications and Public Officers Union’s (BCPOU) president, yesterday told Tribune Business he had been unaware that the Government was going to make such a move but welcomed it nevertheless as a means to “stop the bleeding”.

Arguing that the pension fund deficit has “mushroomed since the sale”, he said of the Government’s payment plan: “It’s a long time coming and I’m happy to hear that. I’m sure many of my members and those persons employed at BTC who have now retired will be happy to hear that the Government has done what it ought to have done some time back and shored up the ever-depleting pension plan.

“I hope that the Government will continue to live up to that.... There’s no question that the Government didn’t do what was required back then. I’m not really sure myself whether the initial $39m was paid and, if it was, nothing was paid after that. It speaks to the negligence of previous governments and their obligations to that fund.”

Mr Thompson, meanwhile, added: “I knew there was a shortfall and there was talk of addressing it, because when the sale of BTC took place in 2011, one of the things the Government agreed was to undergird the pension fund; I forget to the tune of how many millions of dollars.

“We have more people who have retired and accepted voluntary separation packages in recent years. This is absolutely necessary. I haven’t heard this bit of news but am thankful for it, and happy to hear that something is going on in that direction because it was concerning for us.

“Retirees are living longer, in some cases for 15 to 20 years, so it’s really a weighty thing,” the managers’ union chief continued. “This is definitely a move in a good direction if the Government has decided to plug it. The numbers were just ballooning annually.

“The concern wasn’t at a high level yet because folks were consistently being paid their retirement monies on time. There was never a glitch, a delay. We had concerns but no complaints because people were being paid on time every month. It hadn’t reached an alarming state but we knew it was something that had to happen with all these people in this fund and these voluntary separations going on.”

Both union leaders said the frequent voluntary separations that BTC has used to downsize its workforce since the 2011 privatisation have placed extra pressure on the original fund as departing workers sought early access to their retirement savings, either through lump sum payouts or a payment schedule agreed with the plan’s administrators.

“The plan was really designed for employees who worked until they reached the age of 60, and as a result of the continuous downsizings with the voluntary separation packages (VSEPs) we are seeing people who leave early without reaching retirement age,” Mr Rolle told Tribune Business. “The pension wasn’t designed for that.”

He said he had received a communication indicating that 53 BTC line staff members of his union had left the carrier in its latest VSEP exercise, along with 10 to 13 management union members, although Mr Thompson said the number he had heard was closer to 100.

The original BTC pension plan, which was a defined benefit offering where the company paid 100 percent of contributions and the employees nothing, was closed to new entrants at the time of privatisation. All new staff must now enter a defined contribution plan, where employer and employee make matching contributions.