Near­ly 1,300 mem­bers of the Petrotrin Em­ploy­ees Pen­sion Plan (PEPP) aged 50 and over are ex­pect­ed to re­tire on De­cem­ber 1 and be­come en­ti­tled to lump-sum pen­sion pay­ments to­talling $1 bil­lion—but that may be un­til the 2040s when the PEPP may run out of ben­e­fits.

“The key word is ‘may....’” En­er­gy Min­is­ter Franklin Khan ad­vised in the Sen­ate yes­ter­day.

“How­ev­er, 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.”

Khan gave the in­for­ma­tion in re­ply to Op­po­si­tion ques­tions on the pen­sion fund fol­low­ing con­cerns raised by the plan’s trustee, Re­pub­lic Bank, about a deficit re­gard­ing the plan—the lat­est con­cern in fall­out is­sues re­gard­ing the Petrotrin re­struc­tur­ing.

Khan said the ac­tu­ary’s longer-term analy­sis in­di­cat­ed that the PEPP may run out of funds to meet ben­e­fit pay­ments in the 2040s and thus ad­di­tion­al fund­ing may be re­quired if the PEPP is to meet all ben­e­fit en­ti­tle­ments in the 2040s.

“Petrotrin and the Trustee (Re­pub­lic Bank) are dis­cussing this. The spon­sor is com­mit­ted to en­sur­ing that the plan’s oblig­a­tions are met in the fu­ture,” he added.

Khan ex­plained that the PEPP be­ing ful­ly fund­ed would on­ly be the case if Petrotrin and PEPP were on­go­ing en­ti­ties.

“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,”

Khan added, “The 2.7 bil­lion deficit quot­ed by Re­pub­lic Bank was pred­i­cat­ed on an­nu­ity buy-out tak­ing place and this is ir­rel­e­vant. There is thus no al­ter­na­tive oth­er than the PEPP be­ing run off as a closed fund, meet­ing ben­e­fit pay­ments from its as­sets, as and when they fall due.”

Khan’s En­er­gy Min­istry has not­ed that the ac­tu­ary had ad­vised that whilst it is not cer­tain the PEPP’s funds will be ex­haust­ed be­fore all of the ben­e­fit pay­ments have been paid, there is a “sig­nif­i­cant pos­si­bil­i­ty that this will be the case un­less ad­di­tion­al funds are in­ject­ed in­to PEPP at some point.” Petrotrin and Re­pub­lic Bank are in dis­cus­sions on what needs to be put in­to place to pro­vide these ad­di­tion­al funds should they be need­ed, the min­istry al­so not­ed.

On steps be­ing tak­en by Gov­ern­ment to en­sure there will be no fu­ture deficit in the PEPP—hav­ing re­gard to the fact all em­ploy­ees have been ter­mi­nat­ed—Khan said, “The plan is well fund­ed, it can meet its oblig­a­tions ful­ly well in­to the 2040s, based on ac­tu­ary pro­jec­tions.

“The ac­tu­ary says that based on what se­cu­ri­ties you have, how they per­form over the long term, that those are grey ar­eas, so the cur­rent pro­jec­tion is that the fund will be able to fund all of its cur­rent oblig­a­tions well in­to the 2040s.”

Khan said he didn’t know of any moves to change the com­po­si­tion and func­tions of the cur­rent PEPP.

On an­oth­er query, Khan said three spot sales of Petrotrin’s crude oil have been award­ed to Trafig­ur—a ma­jor in­ter­na­tion­al trad­er—Exxon Mo­bil Sales and Shell. Ma­jor in­ter­na­tion­al traders, re­fin­ers and in­te­grat­ed oil com­pa­nies were in­vit­ed to par­tic­i­pate in pur­chase and the com­pa­ny with the most com­pet­i­tive bid would have been award­ed the car­go.

In­vi­ta­tion to bid went to 27 com­pa­nies. Bids were as­sessed by an eval­u­a­tion team com­pris­ing se­nior ex­ec­u­tives. Cri­te­ria for eval­u­a­tion of the bids in­clud­ed the buy­er’s abil­i­ty to lift the car­go, com­pet­i­tive com­mod­i­ty pric­ing, at­trac­tive com­mer­cial and pay­ment terms.

Khan said all three car­goes were shipped to the three awardees and bids were in­vit­ed for de­liv­ery of two car­goes next month.

“The price we got for the three bids was based on the West Texas In­ter­me­di­ate (oil price). It was WTI plus $2,” he added.

The pack­age size for the crude oil ship­ment was ap­prox­i­mate­ly 500,000 bar­rels of oil. Khan said he didn’t know who the ex­ec­u­tive mem­bers eval­u­at­ed the bids were.

“That’s Petrotrin’s busi­ness, they have a mar­ket­ing arm. They do that as mat­ter of course—not every­thing have cor­rup­tion in it, but un­der all yuh it used to be like that,” Khan told protest­ing UNC Sen­a­tors.

In a re­lease yes­ter­day, Petrotrin al­so as­sured the PEPP was sol­id, adding all of the con­cerns raised by Re­pub­lic Bank are be­ing or have been ad­dressed. The com­pa­ny said it had met with the Pen­sion Plan Man­age­ment Com­mit­tee and the trustees (Re­pub­lic Bank) to de­ter­mine the best way for­ward and it was agreed the plan would not be wound up, as to do so would be im­prac­ti­cal.

Petrotrin said it is com­mit­ted to en­sur­ing that the plan’s oblig­a­tions are met.