Agency didn’t have enough money to do its job
Officials on Cayman’s National
Pensions Board and a former Pensions superintendent have confirmed that
Cayman’s private sector pensions’ regulator was simply not given enough funding
or staff each year to review all the delinquency reports it received.
The issue involves a somewhat
complex government budgeting process but it essentially boils down to this: the
National Pensions Office received far more reports on companies that weren’t
paying workers’ pensions than it budgeted to review each year.
For example, in last year’s
government budget, the National Pensions Office stated it intended to process
15 to 17 monthly reports on private sector companies that were delinquent on
their pension payments.
The Pensions office typically
receives delinquency reports each month from the six private sector pension
plan providers in the Cayman Islands. Six reports per month for 12 months out
of the year would mean the pensions office needed to process 72 delinquency
reports – not 15 to 17 as was budgeted.
One National Pensions Board member
has publicly referred to this under funding as “budgeting to break the law”.
Former Pensions Superintendent
Cyril Theriault – who ran the National Pensions Office from 2004 to August 2009
when he left the Cayman Islands – confirmed last week that there were never
enough pension inspectors to complete all the work the office had to do and
reviewing delinquency reports was one area that was problematic.
However, he said the issue was not
as simple as government or the Pensions office “breaking the law”.
“I think even the best of (pension)
plans never submitted 12 delinquency reports during a year,” Mr. Theriault
said, speaking from his home in New Brunswick
province in Canada.
“Besides, we just didn’t have the staff to do each and every report.”
Mr. Theriault said that during his
tenure the Pensions office enjoyed a total of three inspectors at most and, at
one point, had just one inspector.
Also, the former pensions’
superintendent said that no delinquency reports were processed at all in
government’s 2007/08 financial year because the Pensions office changed the
process of how it processed those reports.
He said one Pensions board member
in particular did not like that change.
However, Mr. Theriault insisted
that the Pensions office never ignored complaints from pension plan
beneficiaries, whether they filed a report or came into the office personally
to stake a claim.
“How does it matter how we got the
information, as long as we dealt with it?” he said. “The pensions’ inspectors
spent 90 per cent of their time dealing with delinquent employers.”
There were numerous problems
keeping track of what delinquent companies did with their pension payments,
usually because those companies didn’t keep current records, Mr. Theriault
“Some of these people ran their
companies out of pick-up trucks,” he said.
The Pensions office also struggled
with collecting data from certain plan providers, for instance, if those
providers operated outside the Cayman Islands and didn’t have adequate data
maintenance systems to provide information in the other jurisdictions.
“(One company) had information
systems based in Trinidad
and Tobago and it was difficult to get data
out of them,” Mr. Theriault said, adding that the Pensions office would have to
submit additional requests for information to pension plan providers that
didn’t report properly.
Mr. Theriault said it was “very
clear” that there were other requirements under Cayman’s National Pensions law
that the pensions board hadn’t dealt with prior to his arrival.
“The law states the National
Pensions Office will do an annual report,” he said. “The law went into effect
in 1998, and I think I did the first one in 2006 (for the 2004-2005 government
In a joint statement released last
week, members of the National Pensions Board said they were glad that the
myriad problems faced by Cayman’s pensions’ regulator were finally garnering
“The magnitude of the problem is
astounding and amounts to millions of dollars being lost by individuals,” the
statement read. “One group of companies alone represents approximately $750,000
in pensions’ money owed to their workers’ pension funds.”
Islands complaints commissioner recently announced that her office
would be undertaking a review of the entire private pension system, including
whether the National Pensions Office could be effective in identifying,
charging and convicting companies who violate the law.
Education Minister Rolston Anglin –
who has responsibility for national pensions – has suggested that regulatory
responsibilities for pensions could be moved to the Cayman Islands Monetary Authority.