CLICO suspends annuity payments

For some local retirees whose pension funds were accrued through financially troubled CLICO International Life Insurance Ltd, things have taken a turn for the worse with the announcement that their annuity payments have been suspended “until further notice”.

Speaking on the New Times radio programme last Monday, Opposition Leader and president of the New Democratic Party Arnhim Eustace said that this most recent development could potentially affect hundreds of retirees.{{more}}

SEARCHLIGHT was able to contact a retired VINLEC employee who, last month, was one of many who received a letter from CLICO’s judicial manager informing him of the suspension of payment.

The letter, dated June 18, 2015, outlined that due to “continued deterioration of the financial situation” at CLICO, there has been a “drain on cash flows,” and as a consequence, further annuity payments have been suspended until further notice.

“I don’t know when is further notice,” he lamented. “I’m trying to gather other [former] workers this is affecting together to take to our former working place because they are the ones who send our money to them.”

The former worker also said that in addition to the mandatory pension contribution that he was making during his employment at VINLEC, he voluntarily paid an additional $200 per month for the last three years of his employment.

“I’m not working… the economy is so slow… This is a real tough time.”

The retiree said that occasionally he does odd jobs as a form of income, but in itself that is not enough to sustain him.

“I have my bills and my family to support, so how could I pay these bills?”

Additionally, he made mention of a previous letter that he had received from CLICO, dated July 22, 2013, which confirmed that he received monthly annuity payments that started in 2005. The letter, which was signed by Branch Administration manager Laureene Kirby, also stated that the payments are “guaranteed for ten (10) years and life thereafter.”

“Ten years is not up yet, and my life is still going on!” he asserted.

SEARCHLIGHT reached out to the human resources and operations managers at VINLEC, the Eastern Caribbean Group of Companies, the National Insurance Services and the St Vincent Brewery Ltd, which all previously used CLICO’s services for their employees’ pension benefit funds.

However, none of the managers were able to provide any further information on the matter for a variety of reasons – ranging from being legally unable to discuss the matter, to not having been brought up to speed on the matter by upper management.

SEARCHLIGHT also attempted to contact Patrick Toppin, of Deloitte Consulting Ltd, in his capacity as the judicial manager of CLICO, but was unable to make contact up to the time of going to press.

Other VINLEC retirees were fortunate enough not to have had their payments suspended, because they received 75 per cent of their accrued pension funds from the electricity company.

Two of said retirees, who retired within the past two years, explained that they received a 25 per cent lump sum and that the remaining 50 per cent is being disbursed in monthly installments over eight to 10 years.

One retiree lamented: “This has affected me adversely. I have my mortgage to pay. The main effect is that whatever I am getting from VINLEC… is just enough to pay my mortgage… just luckily balance out.”

He also expressed concern about what will become of him and others when the 75 per cent has been delivered.

“After that 8 – 10 years, then there is nothing – except if CLICO gives us the balance of what they have for us… but at this point in time, we are not certain when we are getting it.”

The CLICO fiasco also affects current workers who have been paying into VINCLEC’s group pension retirement benefit, which was stopped a few years ago when the insurance company went into financial difficulty.

A source explained: “Persons who recently started within the last five years with the company are more or less okay. People who have been here more than 10 years would lose out.”

According to the source, not only is CLICO still owing VINLEC approximately $20 million in pension benefits, but the electricity company is still looking for an insurance company to take over its pension fund.

The source also pointed out that many current employees are starting to look at independent pension funds because “nothing is secure.”

“The only thing I’m counting on right now is NIS, but NIS is only a small money.”

In a recent article in the Trinidad Guardian dated Monday, July 20, Prime Minister Dr Ralph Gonsalves was quoted as expressing concern and protest over a “Barbados-only” plan for CLICO policyholders.

The article stated that Gonsalves had written to Barbados Prime Minister Freundel Stuart voicing his displeasure at the proposed plan, which although it states will deal with Barbadian policyholders first, now appears to only be catering for them – and not the policyholders in the OECS.

“The judicial manager in Barbados put forward a plan and I don’t like the plan,” said Gonsalves.

“We are aware that in its December 2014 report, the judicial manager of Clico International Life Insurance Company (Clico) recommended to the Supreme Court of Barbados that there be a liquidation of the company. We are aware, too, that in the week of June 15, 2015, there were two meetings in respect to the above-mentioned matter in an effort to avoid liquidation and arrive at a consent order and another on Wednesday June 24, 2015. All concerned appreciate that liquidation is a last resort.

“However, we wish to place on record the vigorous objection of the Eastern Caribbean Currency Union to the proposed Barbados-first plan which is now emerging as a Barbados-only plan.”

Gonsalves also added that the Barbados Minister of Finance Christopher Sinckler has denied that this is the case, but he believes that an “independent assessment of the proposal” is necessary.

“This should, among other matters, examine the risks and costs of the proposal to policyholders in the currency union. Appropriate government arrangements, transparency and collaboration must be established with compensation as necessary so that the interest of the currency union policyholders are properly considered in real-time and before key events occur that may be irreparable.”