OPINION || PSWT at a Crossroads: Projects, Pensions, and the Push for Dissolution

Dr. Philip Castillo

The genesis of the Public Sector Workers Trust is four Government of Belize Circulars (#8, 9, 10 & 11 of 1996) authored by the then Financial Secretary, Mr. Jaime Alpuche, and the Deputy Financial Secretary, Mr. Joseph Waight, outlining GOB’s course of action for rectifying the salary and increment freeze affecting public officers.https://drive.google.com/file/d/1mdvx5iODO5Zyj7khk_1cFPZ7aNBSjPbN/view

A trust operates basically as follows: Person A – the Settlor or owner – provides resources to Person B – the Trustees – who have strict instructions to use those resources to provide benefits to Persons C – the Beneficiaries. The resources are not owned by either the Trustees or the beneficiaries. Trustees have no choice but to follow the specific instructions of the Settlor, and beneficiaries have no input into Trustee decisions.

The circulars actually did three things: announced the restoration of increments, announced tax-free salary increases to compensate for lost increments, and informed that BTL shares currently owned by GOB would be made available to the Unions to form a Trust to “fund various projects for the benefit (of) all Government employees.” Announced in 1996 and actually formed seventeen years later in 2013. Why? Blame could be cast all around, but in retrospect, the trust was not accorded the priority and urgency it deserved.

PSWT was formed in late 2013, opened its doors a few months later (2014), and was first sued less than one year later (2015). Beneficiaries who sued claimed that the purpose of the trust was to reimburse their increments, and others also wanted the PSWT to pay any pension shortcomings from frozen salaries. The claimants also wanted trustees to reimburse any monies spent so that such monies would be available for distribution.

Lawsuit #1: Challenging to summarize a 42-page judgment, but basically, while the judge accepted that there was indeed a trust, he declared the existing trust deed to be null and void because the deed recognized the Unions as Settlors. All parties were instructed to engage in consultations/mediation to develop a new trust document that recognized GOB as Settlor and reiterated that the purpose of the trust was for projects.

Mediations failed. PSWT was sued again. This time, the Claimants sought fifty percent distribution and the remaining fifty percent for projects.

Lawsuit #2: New judge. New judgment. PSWT was to develop a new trust deed, and no consent was required from the Claimants. PSWT was to develop projects and report back to the Court on its projects in twelve months. This second judgment is being appealed by the Claimants.

Given that there was no stay on the judgment, the PSWT immediately set about doing projects. And what are these projects?

Aware that our beneficiaries are an older cohort (average age estimated at 64 years old), and also aware that only 15% of the Belizean population has private insurance, the first project provided a comprehensive, gender-specific medical check-up at the country’s best private medical facilities. Based on these check-ups, some beneficiaries discovered that they had life-altering ailments that they were totally unaware of. Optical and dental components were subsequently provided as options. A final option was a payment of $200 to defray costs for beneficiaries already under the care of their private physician.

Acknowledging the increasing cost of a typical food basket, the second project focused on providing $150 worth of food and groceries to beneficiaries. One year later, the amount provided increased to $200, and last year, the amount reverted back to $150. In total, therefore, over a three-year period, PSWT provided groceries worth $500 to its individual beneficiaries.

A defining characteristic of the PSWT projects thus far is that they provide benefits to passive beneficiaries. However, with the ongoing projects and those being planned, the aim is to shift our beneficiaries from being passive recipients of benefits to active participants in projects deemed more sustainable by providing income generation potentials.

So then, our third and ongoing project, named the Livelihood Sustainability Project, involves providing baby chicks and chicken feed to beneficiaries, who then raise the chickens and either sell or consume the meat. Another component of this project is partnering with the Ministry of Agriculture to provide seedlings for at least six vegetables, soil, and home gardening paraphernalia for beneficiaries to grow and harvest their vegetables. Our fourth project, though still being formalized, is the Sustainable Skills Development Project. This involves partnering with individual trainers or training institutions countrywide to provide a range of immediately marketable skills to beneficiaries.

All PSWT projects represent an outflow of funds. Quite apart from the dividends from the BTL shares, a major source of trust revenues was a loan scheme initiated by the Trustees. The Supreme Court noted that the loan scheme increased Trust funds by an average of nearly 20% in the years it was operational. Resulting from the first court case, the Claimants sought an injunction against the PSWT loan scheme.

The Claimants are only one of at least three distinct groups of beneficiaries. Another group has turned to the political directorate and public sympathy to seek to achieve what the Courts have so far categorically denied. This group has held press conferences, demonstrated regularly, and formed chat groups. Their leaders have been everywhere except in a witness stand in a court of law. Despite not having been to any court, this group has drafted a document they regard as a termination agreement.

But why the need to terminate and dissolve PSWT when tangible benefits are being provided to a substantially larger group of beneficiaries, who, from their social media postings, are extremely grateful? I hypothesize that beneficiaries, other pensioners, the elderly, and virtually all Belizeans on fixed incomes are experiencing unprecedented financial challenges amidst shrinking fiscal space. For the beneficiaries in particular, most have only two sources of income: a GOB pension and a pension from the Belize Social Security Board.

Focus first on the GOB pension. The average pension hovers around $1,200 per month. No surprise that some pensioners have taken to social media to lament that pension increases have not been made in decades. But don’t expect any in the near future. Belize is one of the very few countries in the Western Hemisphere that does not have a contributory pension for its public officers. This obviously means that pension payments constitute a recurrent commitment on the public purse and are being challenged by larger outlays occasioned by larger salaries and longer lifespans. In his most recent budget address, the Prime Minister noted that 7 cents out of every dollar goes towards pension payments.

Social Security may be in an even more dire predicament. Its average monthly pension in 2024 was marginally less than $500. However, as early as 2028/2029, as noted by its Actuary, “...income from contributions and investments (will) equal benefits and administrative expenditure... Without an adjustment to the contribution rate, assets will need to be liquidated to pay current expenditure, and reserves will begin to decrease.”https://www.socialsecurity.org.bz/wp-content/uploads/2024/01/2022-Actuarial-Valuation-SSB-Belize.pdf

Summing the average GOB pension of $1,200 to the average Social Security pension of $500, most beneficiaries are only grossing a monthly total of around $1,700. This amount marginally exceeds the average countrywide monthly income of $1,530, as per SIB’s most recent labour force findings.https://sib.org.bz/wp-content/uploads/LabourForce_2024-09.pdf

These negative developments are occurring at a time when SIB data show food increases are the highest category in the inflation basket. Being older, beneficiaries are more prone to chronic ailments. Some beneficiaries are in what is regarded as the “sandwich generation” – simultaneously caring for children and at least one elderly parent. Many instances were also encountered of beneficiaries assuming primary care for grandchildren.

Money is needed.

Paradoxically, the answer to all the above is a TRUST that provides regular benefits to its constituent members, including soft loans for projects deemed viable after proper appraisals. Payment of these loans would serve as a revolving fund to finance trust operations. At its onset, the PSWT provided loans at 5 percent. Simple interest, no hidden fees, no extra charges. The borrowers, which extended beyond beneficiaries, were the financially neglected segment of Belizean society. But they repaid. Belize’s banking oligarchy thrives on lending not to retirees, but to existing workers, where the monthly payments can be deducted from the salary being assigned to their bank. Hidden charges exist, and those now openly extend to withdrawing your own money.

PSWT finances are audited annually using Belize’s best auditing firms and adhering to audit best practices, where a new audit firm is hired every three years. The Trust always receives the best possible audit rating, and all audit reports are published on the website.https://pswt.org.bz/pswt-financial-audits/

Audited data show PSWT loan loss at 4 percent.

For context, this is less than the 5 percent prudentially recommended by the Central Bank of Belize. And it bears noting that the loan scheme and, indeed, all PSWT projects are administered by its three-member full-time staff. All of Belize’s financial institutions, especially their loans departments, have far more than three employees. To modify a famous saying by former British Prime Minister Winston Churchill… never before... (in Belize’s Public Service history)... has so much been done by so few.

The beneficiaries do have excellent project ideas but are being overly cautious in their golden years. They refuse to borrow from commercial sources where interest rates can be increased unilaterally. Why do you think our financial system has nearly a billion dollars in loanable assets?

Picture these possibilities: a beneficiary growing backyard products provided by the PSWT needs a loan to purchase a heavy-duty blender to start a home-based fresh fruit juice operation. Another beneficiary wants to add a room as an Airbnb. Other beneficiaries want larger kitchen appliances and funds for electrical modifications to commence food sales. Another wants a modern industrial grill to operate a weekend barbecue stall. With small loans and free technical advice from PSWT staff, beneficiaries can be empowered as entrepreneurs.

Picture these other possibilities: the beneficiary organizations of the PSWT are unions such as the Public Service Union, the Belize National Teachers Union, the Belize Police Association, the Nurses Association of Belize, the Belize Defense Force, and the Belize Coast Guard. How many of their members have homes that they own? Suppose the Trust provided soft loans of $500,000 to each association, which then liaises with the local Mennonite community to build at least ten houses worth $50,000 each.

These new owners now have every incentive to remain in their public service employment and repay their housing loan, which can then be used as a revolving fund to repay the PSWT and contribute to building an additional ten more houses in another three to four-year time frame. Aren’t these tangible benefits of an empowered trust?

At the PSWT, my position over the more than a decade of its existence has remained unchanged: the beneficiaries are entitled to every single cent of PSWT funds, if those funds were theirs. But they are not. Two court judgments, in addition to sworn affidavits from Belize’s Financial Secretary and its Solicitor General, have affirmed that the monies are not for repayment of lost increments. Those increments were repaid in full and then some. Trustees have absolutely no legal authority to distribute PSWT funds to beneficiaries.

The Public Sector Workers Trust, if allowed to function unencumbered by legal battles, which began shortly after its formation and still continue, can strive and thrive as it offers its beneficiaries occasional benefits, a more secure financial lifeline in their golden years, and soft financing for a second career that many will likely find to be fulfilling—or even more so—than their years in the Public Service, since they will be self-employed.

But what will happen? I don’t know. The Appeals Court is yet to deliver its judgment. The political directorate has indicated a willingness to bend to a vocal minority and dissolve the Trust. Elon Musk’s Starlink is now a reality in Belize, offering rates substantially below existing providers. This may have implications for the value of the BTL shares that constitute a foundational bedrock of PSWT finances.

I am Philip Castillo, the Mutually Agreed Trustee on the four-member Board of Trustees of the Public Sector Workers Trust. I am also a beneficiary of the Public Sector Workers Trust. I entered the Public Service from the Belize Technical College in 1983 and exited in 1998. The views I express herein are my personal views only and not necessarily those of the PSWT.