Pension warning signs reported

A former chairman of the Cayman
Islands National Pensions Board said Wednesday that there were clear signs the
country’s private sector pension contribution system was in serious disarray as
early as 2004.

Carlyle McLaughlin said the former
board stated concerns about the situation in its annual reports issued in
2004/05 and again in 2005/06.

“This may be a new issue to the
public,” Mr. McLaughlin said. “But government knew about it.”

Cayman Islands Complaints
Commissioner Nicola Williams announced last week that her office would review
what led to the apparent failure of the country’s chief regulatory body, the
National Pensions Office, to police the delinquent contributions of some 670 employers.

Education Minister Rolston Anglin
also indicated last week that the government would at least consider dissolving
the National Pensions Office and its appointed board, shifting its
responsibilities to other authorities and government departments in hopes of
achieving better compliance.

However, Mr. McLaughlin said that
during his six to seven year term on the pensions board, the pensions office
warned government officials numerous times about non-compliance with the National
Pensions Law on the part of employers and even plan providers.

“Everybody’s aghast at this 670
people (referring to Cayman Islands employers) delinquent…back when I was on
the board there were 400-something people delinquent,” he said, adding that
during his tenure the pensions office had, at one point, just one inspector and
later added a second to look into claims of non-payment.

“How do we expect two inspectors to
evaluate 600-plus companies?” Mr. McLaughlin said.

According to the National Pensions
Board 2004/05 annual report, then-pensions Superintendent Cyril Theriault informed
board members that there were individual companies “owning sums of up to
$840,000 in overdue pension contributions”.

“The magnitude of this growing
problem to government cannot be overlooked any longer,” the board’s report
stated.

A year later, the pensions board’s
2005/06 annual report revealed more problems with unregulated private sector
pension providers.

“The board is concerned that there
are still unregistered, and thus unregulated, pension providers who have been
allowed to operate, accepting pension monies and that the National Pensions
Office is still unable to determine if such funds are being managed within the
safeguards of the established law,” the report read.

“Some eight years after the
enactment of the (National Pensions) Law, there can no longer be any reasonable
excuse for allowing employers to ignore it.”

That report was made public
following the 2005/06 budget year which drew to a close on 30 June, 2006. It
was apparently the last such annual assessment done by the National Pensions
Board that was publicly released.

According to board members who
spoke on condition of anonymity, the 2006/07 and 2007/08 annual reports from
the pensions board have been presented to the government ministry responsible
for national pensions. Those reports were not available on the National
Pensions Office website, and board members indicated they have never been
tabled in the Legislative Assembly.

Section 85 of the National Pensions Law (2000 Revision)
states: “The Superintendent and the board shall report annually to the minister
on the business of the Superintendent and the board. The minister shall submit
the annual report to the governor and shall then lay the report before the
Legislative Assembly at the meeting of the Legislative Assembly immediately
following the submission of the report.”