Mark Capes has responded to the CSA’s 17 point demands on behalf of the interim government.
In addressing the issue of pension and gratuity, Mr. Capes said “Payments are now being processed for outstanding pensions and this he said, should
be achieved by Wednesday, 31 March 2011. However, he said it is important to understand that the NIB Ordinance Section 64 (2) prescribes that the
provisions of the Pensions Ordinance do not apply to a person who was not the holder of a pensionable office on 6 April 1992, the day appointed for
the coming into operation of the provisions of the Ordinance. “This means that any person employed by TCIG after that date is not legally entitled
to a pension or gratuity under the Pensions Ordinance. In effect the TCIG pension scheme, governed by the Pensions Ordinance, became a closed scheme
on the date of the introduction of the NIB Ordinance, restricted to those people already employed at that date,” Mr. Capes said.
With regards to payment of Gratuity to all retired Civil Servants who are eligible for such if so requested and the calculation of such according to
provisions in the Pension Ordinance and Regulations, Mr Capes said these payments are being processed for all outstanding gratuities to which
people are legally entitled; we aim to achieve this by 31 March 2011.
However, as explained that the provisions of the Pensions Ordinance do not apply to a person who was not the holder of a pensionable office on 6
April 1992, the day appointed for the coming into operation of the provisions of the Ordinance.
Turning his attention to the issue of Payment of pension and gratuity to all Civil Servants whose posts were abolished such as persons who were
transferred to the New Hospital, Mr. Capes said there is no legal provision for the payment of pension and gratuities to officers whose
employment is terminated. “We are considering urgently how we can introduce a mechanism for payment for loss of office as this is likely to
be an ingredient of the rightsizing exercise,” he noted.
The CSA in its list of demands/recommendations, rejects the proposal to amend the Pension Ordinance so as to remove the option for Civil Servants
to receive up to 25 percent of their pension as gratuity upon retirement from the service or upon abolition of their post.
In response, Mr. Capes said changes to the entitlement of gratuity will be essential to reduce the in-year expenditure given the current economic
conditions. “It is important to note that this proposal does not reduce the overall pension payable and most civil servants will be better off in
the longer term. However, the Interim Government has listened to staff concerns and is sympathetic to those persons retiring soon who might have
already made plans based on such a gratuity payment, Mr. Capes said.
He added that the government is prepared to postpone the implementation of these changes to allow time for further consultation. “One option we might
consider would be a transitional scheme under which the value of the conversion will be reduced from 25% to 10% of the pensionable amount
reducing by a further 2% each year until it is fully removed in 5 years.
It is worth reiterating that this will not reduce the overall pensions payable; as the average life expectancy is increasing over the longer term
pensioners would be financially better off to take the higher pension rather than convert part of it to a gratuity. I would welcome your views
on this,” the CEO noted.
The CSA in #6 of its demands/recommendations, requested that all Civil Servants employed in a pensionable post after April 5, 1992 and who have
been confirmed in such post, be paid a gratuity upon retirement from the service or on being made redundant as provided for in the Pension
Ordinance for persons employed before April 6, 1992.
To this, Mr. Capes noted that the introduction of the NIB Ordinance means that civil servants employed on or after 6 April 1992 are not entitled to
any benefits under the Pensions Ordinance and to provide these, he said, would be illegal. However, he said the Interim Administration has
identified a problem with the legislation. “When these officers retired at 55 they would potentially be left with no income until the age of 60 when
they would be entitled to their NIB pension. We therefore propose to change the law to allow us to pay an interim pension worth ¾ of the value
that they would have received under the Pensions Ordinance had they been entitled to it, without the option of a gratuity. This proposal seeks to
enforce the existing legislation but it addresses the historic anomaly and will be corrected once the retirement age has been increased,” Mr. Capes
added.
RTC News will share more of the CEO response to the Civil Service
Association’s demands and recommendations in a subsequent news cast.
