Delay in government pension payouts

The entity that oversees pension funds for Cayman’s civil servants has proposed delaying legally required pay outs to non-Caymanian government employees as a way to get the fund into compliance with the law.

All government employees get 10 per cent on top of their monthly salaries deposited into a defined contribution account which they can collect upon reaching retirement age.

However, according to the Public Service Pensions Law (2004 Revision), any government workers who pay into the Public Service Pension Fund who are not Caymanian status holders and who have stopped residing in the Islands are entitled to a lump sum payment from the fund within a month after their residency here ceases.

A review completed over a period of several years by former Complaints Commissioner John Epp found that, in almost every single case, those lump sum payouts are not being made within the required 30 days.

‘The PSPB (Public Service Pension Board) has conceded…that this compliance was not and might never be achieved,’ Mr. Epp’s report stated. ‘Even the Cabinet appears to have accepted this failure to comply.’

According to Immigration Department records there were just more than 1,400 non-Caymanian civil servants on the government’s payroll as of 30 June.

The complaints commissioner’s report states that the board had wished to amend the target for pay out dates, perhaps up to a year after non-Caymanian civil servants stop living in the Islands.

Mr. Epp stated that, while ‘there may be merit’ to that, current law does not allow for it.

‘The directors/trustees should have formulated a plan to allow for relatively liquid short-term investments to be made available to satisfy anticipated payout obligations,’ he wrote. ‘Until legislative action is taken, non-compliance with section 26 (of the Public Service Pension Law) is maladministration and it is an injustice to those who have sought timely payment.’

Mr. Epp said he did sympathise to a certain extent with the pension board after noting that attempts to make timely payments in the past have been frustrated by non-payment of pension contributions within some government entities.

‘In the course of the investigation, it became clear that the (pension board) was not receiving funds into the plan in a timely manner,’ Mr. Epp stated in the report.

For example, during the government’s 2004/05 budget year, the Health Services Authority collected employees’ contributions but did not forward them into the pension plan. At one point, Mr. Epp states the HSA owed $1.7 million

That debt has since been resolved, and Mr. Epp noted that action on the issue by the pension board did significantly lessen problems with government agencies’ non-payment.

The complaints commissioner recommended that the pension board directors and trustees must come up with an effective compliance system to ensure pension pay outs are made in a timely manner according to the law.

In a general response to the complaints commissioner’s report, which covered many other topics, the pension board questioned whether the commissioner was pursuing this investigation with proper justification.

The board’s statement pointed out that many of the problems raised in the report had long since been addressed by the board acting on its own initiative.

‘The PSPB (Public Service Pension Board) therefore sees no value to the OCC’s (complaints commissioner’s) report,’ the board statement read.

Mr. Epp noted the delayed pay outs issue had not been addressed at the time his former office filed the report in February.

‘The [Public Service Pension Board] has conceded…that this compliance was not and might never be achieved. Even the Cabinet appears to have accepted this failure to comply.’

John Epp. Former Complaints Commissioner

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