A newly-announced review of Cayman Islands private sector pensions that is looking
into governance and non-compliance issues surrounding the country’s regulatory
system may be treading over some worn ground.
Complaints Commissioner Nicola
Williams said last week that part of her investigation into the National
Pensions Office would consider whether Cayman’s National Pensions Law (2000
Revision) needed to be updated – partly to enact stricter and more timely punitive
measures for businesses that don’t pay workers’ pensions.
To those who were on the National
Pensions Board in 2007, these issues will sound familiar.
“We recommend increasing the fines
available in the legislation and providing the NPO (National Pensions Office)
the ability to levy fines directly (subject to appeal to courts) for offences
that are more minor in nature,” stated a consultant’s report completed by
Mercer Human Resource Consulting in March 2007.
The Mercer report also recommended
a number of changes to the country’s pension legislation to “generally make the
National Pensions Law more workable and consistent”.
According to former pensions board
chairman Carlyle McLaughlin, a draft of the pensions law was meticulously
revised over the course of 18 to 24 months while he served on the National
“For the better part of two years
we went through that law with a fine-toothed comb,” Mr. McLaughlin said earlier
this week, adding that recommendations were sent to then-pensions Superintendent
Cyril Theriault and the government ministry responsible for national pensions.
A draft of that proposal was never
released, but Mr. McLaughlin said the board also recommended giving the superintendent
more authority to enforce compliance regarding pension payments.
“We could see that, for the future,
there were going to be problems,” he said.
The 2007 Mercer report did caution
government that fines and sanctions against private sector non-compliers would
only be effective “to the extent there is sufficient political, judicial and
regulatory will to impose them.”
Ms Williams’ review will mainly
focus on the National Pensions Office ability to effectively investigate,
charge, and convict companies that are non-compliant with pension contributions
under the law. She said the OCC would further review the role the solicitor general’s
office plays in the prosecution of alleged offenders.
According to the Mercer report,
“compliance and enforcement of the NPL (National Pensions Law) is the largest
challenge facing the Cayman Islands pension
Moreover, the report noted that the
private sector pension system might not provide adequate resources in
retirement for plan participants, who in some cases would be left with one-fourth
of their pre-retirement earnings.
“Based on current economic
expectations, the minimum (defined) contribution rate of 10 per cent (5 per
cent from employees, and 5 per cent from their company) is not projected to
provide adequate retirement income security,” the 2007 report read.
It was unclear what recommended
changes, if any, were made in the private sector pension system between 2007
The current United Democratic Party
government, which was not in power when the Mercer report was released, has
proposed suspending private sector pension contributions made by businesses as
a way to offset increased fees charged for foreign employees’ work permits.
Education Minister Rolston Anglin
has also suggested the possibility of disbanding the National Pensions Office
and devolving its responsibilities to other areas of government.
A meeting was held with National
Pensions Board members about the issue on Wednesday, but it was not clear by
press time what had been discussed.