The board and management of the Unit Trust Corporation (UTC) have a fiduciary responsibility to act in the best interest of its unitholders, the organisation said in a media release on Thursday.
“(We) are committed to the highest standards of professional conduct… As a key player in the financial services sector, the safety and security of our unitholders is our primary obligation and greatest responsibility. We will not compromise your trust.”
The UTC’s statement comes after statements made by UNC political leader Kamla Persad-Bissessar on a campaign platform last Thursday, July 23. Persad-Bissessar proposed an infrastructure fund that would use cash reserves from the UTC and the National Insurance Board (NIB).
“We would not be borrowing, we would not be taxing. But we have another capitalising mechanism – the cash balances of state-controlled institutional investors like the NIB and the UTC. We can use their cash balances to mobilise an initial $4 billion in capital for the national infrastructure fund. We will leverage these cash balances to get about $4 billion initially. In addition to using the cash balances, we will ask private institutional investors like life insurance companies and pension funds to become shareholders or investors,” she said then.
The Prime Minister responded Monday, also on a campaign platform, criticising her position.
“The money at UTC are your private savings. I don’t know what role the Government has for any access or what plan (the UNC) have so they could tap into and utilise cash reserves. The only way the UTC reserves could be made available to Government is if the Government is trying to raise a bond and UTC decides to buy some of those bonds… you can’t tell the country that the way you will treat with the country’s financial situation is to tap into the cash reserves at UTC. And NIB is your pension that you contributed to,” Dr Rowley said.
On Thursday, July 30, at another rally, Persad-Bissessar amended her message, notably excluding her previous propositions that included the UTC and the NIB, and instead focussed on private investors.
“Our plan for the national infrastructure fund will fund infrastructure projects that will generate revenue. They will target institutional investors like life insurance companies, private pension funds and others looking for long term low risk investments with stable predictable returns. So, don’t be distracted by attempts at twisting the facts,” she said.
In a tweet Thursday evening, Finance Minster Colm Imbert said the Opposition’s plan to access and leverage the funds held by the UTC was “grossly irresponsible” and was creating great anxiety among unitholders. The NIB did not respond to calls to its office.
Imbert, who is line minister responsible for the NIB, added in a tweet that the Opposition's plan to use the "so-called 'idle' resources of the NIB" was equally ridiculous. "What 'idle funds'??? Everyone knows that NIS payments exceed contributions at this time. The NIS Fund will NOT be touched under the PNM," he said.
The UTC and the NIB are systemically important financial institutions, meaning that they are highly regulated and any changes to their operations could have significant ripple effects on the financial and economic stability of the country. They are also both statutory bodies, regulated by acts of Parliament, in addition to the regulation processes for financial institutions, including monitoring by the Central Bank. Any attempt to amend the organisational process, including access to funds, will require an act of Parliament.
The UTC has over 600,000 unit holders and total assets of $22.8 billion as of 2019, including $3 billion in cash. As of June 2018, the NIB’s total asset was $28 billion, although the organisation has been under strain as the population ages and the labour force falls.