D&G pension plan wind-up fair
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.
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.