Axed Petrotrin Workers Face Uncertain Retirement

PORT OF SPAIN, Trinidad and Tobago, Thursday 22 November, 2018 – With the final closure of Petrotrin slated for month-end, thousands of pensionable employees still face questions about the security of their retirement funds.

The state-owned oil and gas company has over 5,000 employees and reports are that nearly 1,300 members of the Petrotrin Employees Pension Plan (PEPP) are expected to be pensionable from December 1, entitling them to lump-sum payments totaling TT $1 billion (US $ 148.5 million).

However, Republic Bank Ltd, the trustees of the PEPP, and Minister of Energy and Energy Industries Franklin Khan have expressed very diverging views as to whether the pension fund can continue its payouts to retirees for more than two or three decades.

In a recent letter to Petrotrin Chairman Wilfred Espinet, Republic Bank raised a red flag that none of the five scenarios outlined by Trinidad actuarial firm Bacon, Woodrow and de Souza to test the ongoing viability of the PEPP under a restructuring contemplated the impact of the huge lump sum payment that would be taken out from December 1. Moreover, the bank stated that in four out of the five scenarios the funds of the PEEP would be exhausted in 25 to 30 years.

“The only scenario where the PEPP would have estimated to have enough funds to meet all benefits payments is predicted on the PEPP continuing to invest in equities. And these equities performing in line with expectations,” the letter stated.

However, Minister Khan sought to assure the public during this Tuesday’s sitting of the Senate that it was not guaranteed that the pension fund would run out of money within three decades.

“The PEPP has comfortably enough assets to cover benefit payments well into the 2040’s according to the actuarial projections. Beyond that, there may be a deficit but it’s too early in the game to speak that type of language. As we speak, the workers are comfortable,” said Khan.

“The restructuring of PEPP and termination of all employees changes everything, in that benefit payments are accelerated significantly by the early retirement of all qualifying members. It isn’t possible to wind up the PEPP and secure benefits by buying annuities—as suggested by Republic Bank—because the insurance market has nowhere near sufficient capacity,” he added during the course of his contribution.

The Energy Minister assured his colleagues that discussions between Petrotrin and Republic Bank were ongoing to find a solution that would keep the plan earning enough funds to satisfy the demands that would be placed on it over the foreseeable future.