Union boss claims UBP mismanaged pension fund in 1980s
Bermuda Industrial Union president Chris Furbert yesterday claimed that mismanagement of the civil servants pension fund under the United Bermuda Party Government is the reason why it is underfunded now.
The Public Service Superannuation Fund was supposed to be left alone for its first 20 years when it was set up in 1981, Mr Furbert said.
But he claims the UBP started paying pensions out of it within a few years and, in 1987, raided it to purchase Global House.
Sir John Swan, who was Premier of Bermuda in the 1980s, issued a statement denying that claim.
“The fund was supposed to sit for 20 years, meaning no money should have been paid out of that plan until 2000 or 2001,” Mr Furbert said.
“Between 1984 and 1986 they started paying out to retirees. Then in 1987 they actually took $10,750,000 out of there to buy Global House. They took that out of pension contributions. And this is all in the time frame where the fund is not supposed to be touched. So the fund is underfunded right now because of the UBP's mismanagement of the fund.”
He added that a total of $38 million was withdrawn, but he was not aware of how $28 million was spent.
“And if you look at that $38 million they took out, make no mistake about it, that money was never put back in by the UBP. They had the better part of 11 years to put that money back, they never put those funds back in there. So the question needs to be asked: why did you take it out because you were told not to touch it by the actuaries. And why was it not put back in the fund?”
Sir John's statement said that the money to buy Global House came from Government's surplus cash and the superannuation fund was never used for anything but pensions during his tenure.
Mr Furbert's comments came during a wide-ranging discussion with The Royal Gazette yesterday.
He defended the one-year deal with the Government to freeze pensions contributions and cut pay by a matching amount as a win-win situation, saying one alternative open to Government was to save $40 to $80 million by cutting the work week by half a day or a full day.
“It's not like the benefit is going to be a lost benefit. So we're not giving up anything. What we've done is put a freeze on it for one year to assist the Government and assist the country. If we were going to give the contributions up totally then that would be taking the contributions backwards,” Mr Furbert explained.
“The Government has said they would put theirs back and the members have also got to put their contributions back. So everybody's going to be made whole. So nobody's going to lose any benefits. It's just a matter of making sure there's a time frame of putting those benefits back.”
While the unions representing public sector workers have agreed in principle to the proposal, the Police Association has said it cannot legally do so. This, according to Mr Furbert, has stalled progress as the Government is doing its own research.
He agreed that he was sympathetic to the PLP's position.
“But I'm more sympathetic to the people who are due to get a benefit from that plan. Whether it's the UBP Government or the PLP Government. Whichever Government mismanaged those funds needs to be held accountable for it. And I think the UBP needs to be held accountable for it.”
Mr Furbert was asked whether the BIU was any closer to becoming a member of the Trade Union Congress, given their work together in the negotiations with Government.
He said the BIU had enjoyed working with the TUC over the last few weeks and looked forward to working with the organisation again.
“Whether the BIU becomes a member of the TUC, they have to send a letter to us officially inviting us again, and we will take that letter to our general council and we'll give some consideration to it,” he added.
“But it's not a fait accompli that just because we were working together that we are automatically going to become a member, but we've laid our cards on the table we've got some challenges and I think we've got to put aside whatever differences we've had in the past and try to move forward collectively for the workers of the country.”
He declined to go into the differences with the TUC, but asked whether the BIU was any closer to joining the TUC, he said: “I would say that based on, and this is only the president's opinion, I think that we are a little bit closer but that's still the decision for the general council and the executive board of the BIU to make.”
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