PENSIONS AT RISK

REPUBLIC Bank’s Trust Services Division has threatened to go to court next week to wind up Petrotrin’s employees' pension plan, should the company fail to address several issues which include a prediction that the fund would be “exhausted” in the next 23 years.

The bank said unfunded liabilities would be approximately $4 billion. The bank’s concerns were contained in a letter dated November 20, and addressed to Petrotrin chairman Wilfred Espinet.

Republic Bank, which is a trustee of the pension fund, said in its letter that the fund’s “solvency deficit” as of September 2016, stood at a "staggering" $2.73 billion, up from $501 million in 2013. The letter warned, “The current solvency position of the plan is likely to be impacted by the termination of all employees and granting of full pensions to all members above 50 years old without any actuarial reduction.

BANK CONCERNED

“The trustee is very concerned that due to Petrotrin's intention to cease all operations, if the plan is run as a closed scheme (based on the actuary’s most recent estimate as advised at the meeting on November 15, 2018 assuming the fund yields 4 per cent per annum), the fund will be exhausted in 23 years with unfunded liabilities of TT $4.0 billion.”

The letter said there would therefore be no remaining funds to pay any outstanding benefits from that time, and as a trustee the bank "considers this position to be alarming.” The bank asked Petrotrin to provide proposals or suggestions on a package of security measures to ensure all members received all the benefits contained in the fund.

“The trustee would, of course, be comfortable if Petrotrin were able to put an immediate lump sum into the plan equal to the plan’s ‘self-sufficiency’ funding deficit.”

The bank also asked for an independent actuary to be appointed to do “an independent verification of the plan’s actuary assessment of the plan’s funding position and advise on what funding should be put in place to ensure all members receive all of their benefits.”

It said it if does not see "good progress" on these matters this week, it will apply to the court next week "for the plan to be wound up under its inherent jurisdiction and also for the trustee to receive directions from the court on how it should best proceed in this situation.”

ROGET'S WARNING

Oilfields Workers' Trade Union (OWTU) president general Ancel Roget yesterday warned that the effect of winding up the pension plan would be “catastrophic” for both the employees and the nation.

“Nobody would be able to get anything – neither pensions, or lump-sum payments – when you retire. Those who had retired before would not be able to get anything, because all of those matters would be tied up in the court, and that should be prevented.”

Roget said instead of making the company viable, the decision to shut down Petrotrin had plunged the country into the “black hole” which government had predicted would be the case if the company had been allowed to continue in its present incarnation.

“They said the country is going into a black hole if they didn’t shut Petrotrin down, and they shut Petrotrin down. There can be no greater black hole...to plunge Petrotrin and the country than the consequences that will flow from shutting Petrotrin down and not treating with all of these issues.”