D&G pen­sion plan wind-up fair

Jamaica Gleaner - - IN FOCUS - Derek Jones is chair­man of Des­noes & Ged­des Lim­ited and D&G Wines Pen­sion Plan. Email feed­back to col­umns@glean­erjm.com.

IREAD with in­ter­est the ar­ti­cle in your pa­per dated Wed­nes­day, Septem­ber 21, 2016, ti­tled ‘Pen­sion plan re­volt’, about the Des­noes & Ged­des Lim­ited and D&G Wines pen­sion plan. I am priv­i­leged to be the chair­man of the board of trus­tees for the plan, and I write in that ca­pac­ity. I be­lieve it is im­por­tant to clar­ify a num­ber of mat­ters in the ar­ti­cle.

Key roles of the board of trus­tees are to man­age the af­fairs of the pen­sion fund and safe­guard the as­sets. We are charged to act in the best in­ter­est of all stake­hold­ers, all plan mem­bers and the com­pany, in ac­cor­dance with the Trust Deed, Plan Rules and Reg­u­la­tions. The use of any sur­plus or the pay­ment of any ben­e­fits that are not set out in the plan rules re­quires the ap­proval of the com­pany.

In keep­ing with our role, the board of trus­tees was en­gaged by the com­pany who shared the pro­posed pen­sion plan re­struc­tur­ing with us. There was then a pe­riod of con­sid­er­a­tion, where we sought ad­di­tional in­for­ma­tion, and clar­i­fi­ca­tion of cer­tain as­pects of the pro­posal. We had the ben­e­fit of our own in­de­pen­dent and ex­pert le­gal and ac­tu­ar­ial ad­vice to as­sist in our de­lib­er­a­tions and di­a­logue with the com­pany.

Af­ter our de­lib­er­a­tions and ne­go­ti­a­tions with the com­pany, the board of trus­tees unan­i­mously agreed that the pro­posal was fair and at­trac­tive to all stake­hold­ers, namely ac­tives (cur­rent em­ploy­ees), pen­sion­ers, ter­mi­nated mem­bers and the com­pany.

MEM­BERS’ DE­CI­SION

As a con­se­quence, the board of trus­tees agreed that the pro­posal should go for­ward to the mem­bers for their de­ci­sion, sup­ported by a rec­om­men­da­tion from the board of trus­tees.

A de­ci­sion on the changes pro­posed is not the prov­ince of the trus­tees. A de­ci­sion on the changes pro­posed is not the prov­ince of the com­pany. A de­ci­sion on the changes pro­posed is the ex­clu­sive prov­ince of the mem­bers, who must come to­gether in a demo­cratic frame­work to vote yes or no. That process is now in mo­tion, with con­sul­ta­tive meet­ings be­ing held with all groups.

It is sad that de­lib­er­ate mis­rep­re­sen­ta­tions are be­ing al­lowed to be a ba­sis to at­tack the trus­tees and to in­flu­ence peo­ple to vote in a par­tic­u­lar way. I pause to praise the eight trus­tees, whom it is my priv­i­lege to lead. They are ded­i­cated, hard-work­ing, highly in­tel­li­gent, and have made ev­ery ef­fort to do what, in their col­lec­tive judge­ment, is the fair thing.

It is sad that de­lib­er­ate mis­rep­re­sen­ta­tions are be­ing al­lowed to be a ba­sis to at­tack the trus­tees and to in­flu­ence peo­ple to vote in a par­tic­u­lar way.

The sub­ject mat­ter is com­pli­cated and has re­quired many hours of work and re­flec­tion and anal­y­sis. One is free to dis­agree, but it is ut­terly un­called for to at­tack them in a per­sonal and dis­parag­ing way. The facts are as fol­lows: . The plan has a sur­plus of ap­prox­i­mately $3.6 bil­lion. . That sur­plus is the re­sult of a com­bi­na­tion of fac­tors over sev­eral years. . The le­gal and ac­tu­ar­ial ad­vice to the board of trus­tees is that no one stake­holder owns the sur­plus, and if it is to be used, there needs to be a bal­anc­ing of the in­ter­ests of all stake­hold­ers. The com­pany is a stake­holder. . The pro­posal is to split the sur­plus 50-50. Ad­vice, re­search and prece­dent show that a 50-50 split of the sur­plus is a com­mon and eq­ui­table ap­proach. . From its por­tion (J$1.8 bil­lion), the com­pany will leave $900 mil­lion in the plan un­der the con­trol of the trus­tees. The trus­tees will use those funds to pay the com­pany’s pen­sion con­tri­bu­tions for the next 20 years. This means that the pay­ments by the com­pany are 100 per cent guar­an­teed and there can be no risk of de­fault or non-pay­ment by the com­pany. . The com­pany will in­vest $900 mil­lion in its Ja­maican op­er­a­tions for the im­prove­ment of work­ing con­di­tions and in­creased pro­duc­tive ca­pac­ity. This amount rep­re­sents less than 10 per cent of what the com­pany has com­mit­ted to in­vest over the next four years as part of plans to boost growth, in­crease pro­duc­tiv­ity, be­come more com­pet­i­tive, and en­sure sus­tain­abil­ity. . The mem­bers will re­ceive their $1.8 bil­lion in a num­ber of ways: a. A top-up of 25 per cent of their past ser­vice pen­sion;

b. A past ser­vice pen­sion that will be linked 100 per cent to the change in the US dol­lar (US$ in­dex­a­tion) and pro­tected by the pur­chase of an­nu­ities from a suit­able provider;

c. A bonus con­tri­bu­tion from the com­pany for fu­ture ser­vice;

d. A top-up for all ter­mi­nated em­ploy­ees based on their years of ser­vice;

e. Pen­sion ben­e­fits ex­tended to a spouse in case of death of the mem­ber.

f. These var­i­ous ben­e­fits will col­lec­tively cost J$1.8 bil­lion. . The ex­ist­ing de­fined ben­e­fit plan is not be­ing wound up. . The pro­posed new de­fined con­tri­bu­tion sec­tion is only ap­pli­ca­ble to cur­rent and fu­ture em­ploy­ees and not to ter­mi­nated vested mem­bers and pen­sion­ers. . The trus­tees are of the view that the pro­posal will re­sult in a com­pet­i­tive pen­sion plan for cur­rent and fu­ture pen­sion­ers and em­ploy­ees, and on that ba­sis, it has been rec­om­mended to the mem­bers for their con­sid­er­a­tion.

Based on all the above points, the trus­tees have whole­heart­edly en­dorsed this pro­posal as we be­lieve it is fair to all stake­hold­ers. It is a pro­posal, fol­low­ing a demo­cratic process, where mem­bers have the op­por­tu­nity to make a choice whether to ac­cept or re­ject.

On be­half of all the trus­tees, I en­cour­age all mem­bers to at­tend their re­spec­tive meet­ings to seek any clar­i­fi­ca­tion you re­quire and then vote ac­cord­ing to what you think is in your best in­ter­est. It is not for the trus­tees (or any­one else for that mat­ter) to tell you how to vote. Our duty is to place the mat­ter be­fore you for the last say.

The re­main­ing pen­sion meet­ings are listed be­low:

Pen­sion­ers only (for­mer em­ploy­ees who have re­tired and are cur­rently re­ceiv­ing a monthly pen­sion)

Septem­ber 26: Mon­tego Bay, The Wex­ford Ho­tel, Glouces­ter Av­enue, Mon­tego Bay – 9:30 a.m.

De­ferred vested mem­bers only (for­mer em­ploy­ees who have a ben­e­fit re­main­ing in the Pen­sion Plan)

Septem­ber 26: Mon­tego Bay, The Wex­ford Ho­tel, Glouces­ter Ave, Mon­tego Bay - 2:30 p.m.

Septem­ber 27: Terra Nova All Suite Ho­tel, Span­ish Court, 17 Water­loo Road, Kingston 10 – 9:30 a.m.

Septem­ber 27: Terra Nova All Suite Ho­tel, Span­ish Court, 17 Water­loo Road, Kingston 10 – 4 p.m.

The only voice that mat­ters here is the voice of our mem­bers.

I

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