A heated war is brewing between Caroni Staff Pension-ers Association and the Staff Associations over the $79 million in surplus pension funds. The trustees of the fund is Republic Bank. The Caroni Staff Pensioners Association is considering taking legal action to ensure that there is equitable distribution of the pension surplus. Actuarial consultant, KR Consulting headed by Kyle Rudden, hired by the Pension Management Committee, in a letter to Sham Ramroop, Manager, Administrative Services, Caroni on May 28, 2003, warned that in the event Caroni was wound up, “it is likely that the distribution of surplus will not follow the suggested benefit improvements.” Sources say that at a meeting in July 23, the Caroni Board sought clarfication on the warnings put forward by KR Consulting. It seems quite likely that the surplus has grown by at least $20 million. KR Consulting said. The surplus was arrived at subtracting the plan’s assets ($240 million) from the liabilities ($161 million.).

Another actuarial firm, Bacon, Woodrow & de Souza, hired by the Caroni board on the instructions of the Government, said the staff proposals would have produced a pension plan “considerably more generous” and hence “expensive” — than is typical in the market. Those increased benefits, said the firm’s partner, TP Kimpton, would have “absorbed most if not all of the surplus disclosed by the actuarial valuation.” The trustees of the fund is Republic Bank. In a letter to Harracksingh on July 10, 2003, pensioners charge that the Management Committee members and active associations are in a consort arrangement of “harvesting the surplus.” “Active employees are members of the fund. Retired employees are members of the fund,” said Pension Association member, Harry Dookran. “Why should not there be equity of the surplus when one takes into account that existing pensioners have not had an increase over the last 21 years. The active unions are apparently positioning themselves for absolute control of the Management Committee, he said, noting that any replacement or formation of a new management committee, the Staff Pensioners Association had to be included. “The Staff Pensioners Association has the advice from more than one attorney-at-law and they have advised that the current officers of the management committee are in conflict of interest and any recommendation will be ruled null and void by Court of Law,” the letter said.

The Pension’s association also warned that unless there is equity and fairness in relation to existing pensioners, legal action will be taken. The letter was copied to Dr Lenny Saith, Agriculture Minister John Rahael, Board Members, Company Secretary and the Supervisor of Insurance. Enclosed in the Pension Association’s letter to the Chairman was a copy of the management committee recommendations for improvements for members and pensioners. Under the heading, “Improving benefits to members by removing early retirement actuarial reduction for persons retiring at age 50 and above to be extended from July 1, 2006, to December 31, 2013, actuaries put the estimated cost of the plan at $14.2 million. Under “Improving benefits to members by a maximum of 15 percent for all active members at as June 30, 2003, the estimated cost of the plan was put at $17.2 million. On “Improving benefits to members by applying a salary of record which is an adjustment of 10 percent as at July 1, 2003 for members with 33 and third years and more service as at June 30, 2003, the estimated cost of the plan was put at $2.8 million.

The Pensions Association have criticised these allocations, noting that they were “unacceptable,” since the active members stand to gain an additional $34.2 million. They have compared this figure to the “Improving benefits to all existing pensioners by 10 percent in payment at June 30, 2003 and which is going to cost the company $11.5 million. The total recommnded estimated cost of the plan is $45.7 million. The Pensions Association though feel that they are going to be shortchanged., noting that the improved benefit to members is to the tune of 75 percent, while the benefit to existing pensioners is a mere 25 percent. “The active members pension will be calculated on a ‘Non discounted method’. This in itself would generate an increase of 0 — 100 percent,” said the letter. On March 6. 2003, in a note to the board with the heading, “Use of surplus in the Staff Pension Plan, Kenneth Dalip, Caroni board member, noted that the surplus has been developed on two premises: that the surplus should be used exclusively for the enhancement of benefits for existing members of the plan, and that it is sole prerogative of the management committee of the plan to determine how the surplus should be used. “As a consequence, the proposals have promoted the interest of one stake holder (active members of the plan) while having completely disregarded the interest of the other stakeholders (retired members of the plan and company),” he said.

This letter was written on July 10, 2003 by Harry Dookran, Secretary of the Caroni Pensioners Association. In it he highlights the plight of the pensioners and their effort to get an equitable share of the $79 million in pension funds.

Dr H Harracksingh   The Chairman   Caroni (1975) Limited Brechin Castle Couva

Dear Sir,

I have been directed by the executive of my association to write to you once more on the matter of increasing pensioners in payment pensions as a result of the surplus in the fund. In our letter to you dated May 27, 2003 we have not had a response from you or your subordinate authority. We have returned to the negotiating table only on our challenge that pensioners are in fact legitimate members of the fund and our organisation has been “registered under the Trade Unions Act.” On Monday October 21, 2002 in our meeting with you at your office at the University of the West Indies, you gave us (Mr Lyle Donawa and Harry Dookran — president and secretary respectively) the assurance that existing pensioners matter is on the front burner, based on your request for an independent advice from Messrs Baker, Woodrow and De Souza, which to us was very heartening. In our subsequent meeting with you, you indicated that he Active Staff Unions informed you that the Fund belonged to them. How disappointing. At least we are comforted today by the fact that you have had an independent professional advice to guide you on the administration of pensions.

In our letter to you dated May 27, 2003 the proposals contained therein have been estimated to cost $37 million and this includes paying the exgratia element out of the fund.
At a meeting at the Human Resources Department on Thursday June 26, 2003 the active Associations advisor said that if the Fund is going to pay the exgratia element of pension to staff members with daily paid service they will file litigation to stop it. My association would like to know who is going to pay the exgratia pension in the future. Your senior Human Res-ources Personnel, Sham Ramsaroop could not provide an answer at the meeting on Wednesday July 9, 2003. The exgratia pension is a liability of the company and equally so is the Group Health Plan to its members. We would like to know whether or not there will be continuity after August 31, 2003. I am again referring to our letter to you dated May 27, 2003 and the proposals have been costed by KR Consulting at $37 million on the premise of the Retail Prices Index with the provision of annual increments in accordance with the changes in the Retail Prices Index. I have been informed by S Ramsaroop, Administrative Services Manager that it has been forwarded to the Ag Chief Executive Officer. It has not been raised at any of the meetings my association attended nor do I have any knowledge of its acceptance by the Management Commit-tee. The system of granting monthly pensions increases to existing pensioners and current staff members who will be pensioners in the next three weeks will undoubtedly guarantee fairness, equity and justice. I have enclosed a copy of the Management Committee recommendations for imp-rovements for members and pensioners. Items (1), (3) and (4) are directly related to active members at an estimated cost to the Plan of $34.2 million. Item (2) is related to existing pensioners at an estimated cost to the Plan of $11.5 million. This is unacceptable. The recommended estimated cost to the plan is $45.7 million.

Improvement benefits to members = 75 percent
Improvement benefit to existing pensioners = 25 percent
The active members pension will be calculated on a “Non Discounted” method. This in itself would generate an increase of “0 to 100 percent.” It is the Association incontrovertible view that the Management Committee members and the active associations are in a consort arrangement of harvesting the “surplus.” Come what may there has to be an equity. Active employees are members of the fund. Retired employees are members of the fund. Why there should not be equity of the surplus when one take into account that existing pensioners have not had an increase over the last 21 years. On August 3, 2003 more than 99.5 percent of the active employees will be retired members, the playing field will become level. It would be an opportune time for negotiating pensions for all and sundry. My association supports the process of dialogue from a Deposit Administration contract to a “self Administered Fund” of all stakeholders (ie active members representatives and retired member representatives) with Guardian Life for a smooth and harmonious transition without having to purchase annuities in the present situation.

The active unions are apparently positioning themselves for absolute control of the Management Committee. My association would like to advise that any replacement or formation of a New Manage-ment Committee, the existing “Caroni Staff Pensioners Association” has to be a component of that body. The Staff Pensioners Association has the advice from more than one attorney-at-law and they have advised that in the present circumstances of the fund, the current officers of the Management Committee are in conflict of interest, and its decisions and recommendation will be ruled “Null and Void” by Court of Law. My Association would like to advise you Mr Chairman, that should you pursue Board Approval without reviewing your position on equity and fairness in relation to existing pensioners litigation will be instituted to stop implementation. My association is appealing to all persons of authority copied, to assist us for a fair and equitable settlement of our proposals in our letter to the Chairman dated May 27, 2003.

Harry Dookran