Pension suspension approved

Cayman’s private sector employers
and workers will soon have the option to suspend their pension payments for up
to two years if the employee is non-Caymanian and for one year if they are Caymanian.

Lawmakers unanimously approved the
National Pensions (Amendment) Bill Monday evening in the Legislative Assembly.
The bill must be signed by Cayman Islands Governor Duncan Taylor before it
becomes law.

Any suspension of pension payments
would have to be mutually agreed between the company and their employee,
according to the bill.

If a suspension period was agreed
upon, the employee could still pay their five per cent salary contribution into
the pension system. They might alternatively choose to receive that five per
cent contribution in their paycheque instead.  

Employers would be exempted from
paying their matching five per cent pension contribution for the suspension
period. 

Several changes were made to the
initial pension suspension proposal that was presented to the house last week.
The previous bill would have eliminated the requirement that pension payments
be made by companies on behalf of non-Caymanian workers.

That was changed by lawmakers to a
fixed 24-month suspension period for non-Caymanians.

Also, the bill had initially given
Cabinet ministers the option to continue the period of pension suspension for
both Caymanian and non-Caymanian employees without bringing a proposal before
the Legislative Assembly. Now, any proposed extension to the suspension period
must come before the house for approval.

Despite garnering “yes” votes from
all sides of the LA, some members’ support for the pension suspension seemed
reluctant.

“I have some concerns of how it is
going to be monitored, if it is voluntary,” North Side MLA Ezzard Miller said
during the LA’s debate on the bill Monday. “If it is a good thing, it should be
mandatory for one year and it should affect everyone.”

Mr. Miller said that “everyone”
should include the Cayman Islands civil service,
which operates under a separate pension system from the private sector investment
funds.  

“I always have great difficulty in
this parliament when we pass laws and the civil service is exempt,” he said. “I
can see no reason…this decision should not include the civil service.”

Both Mr. Miller, who is an
independent, and opposition party lawmakers were also concerned that taking
funds away from the private sector pension plans for any amount of time would
affect the investment returns of those funds.

“But I will give government the
benefit of the doubt at this time,” Mr. Miller said.

Opposition party MLA Alden
McLaughlin said that legislators on his side of the aisle had struggled with
making a distinction in the pension system between non-Caymanians and
Caymanians.

“In the beginning we included
non-Caymanians (in the pension system) because more than half of the working
population is non-Caymanian,” Mr. McLaughlin said. “Either the policy is that
everybody who works in the Cayman Islands is
part of the plan…or we take the decision that only Caymanians fall under the
law.”

Mr. McLaughlin said he saw no sense
in making the suspension period a year longer for expatriate workers, as it
would simply make it more attractive for employers to hire foreigners in the
short term.

Mr. McLaughlin was also concerned
about policing non-compliance and the fact that the “voluntary” nature of the
proposal left it wide open to abuse.  

“The more distinctions you make…the
more difficult it becomes to determine compliance with the law,” he said. “I
hope it’s not going to be a nightmare, but it’s going to be an administrative
burden.”

“I worry about the employees who
are most vulnerable, who have the least bargaining power. (Their employers
could say) ‘Sorry guys, the government has told us we don’t have to pay pension
anymore. If you don’t agree, you can go find another job.’”

Employment Minister Rolston Anglin,
who first proposed the pension suspension – or “holiday” as it is called in the
law – agreed that opposition members and Mr. Miller’s concerns were very real.
However, he said the government felt it needed to do something to offset the
rising costs of work permits to assist businesses in difficult times.

He said he hoped private sector
companies would not use an opportunity to take advantage of their most
vulnerable workers.

“We have all heard the travesty
that occurs in the private sector at the lower end,” Mr. Anglin said. “But we
cannot back off on what we believe will be a positive change for our economy.”

Mr. Anglin said an overall change
was needed regarding the current structure of Cayman’s regulatory regime. He
has previously proposed doing away with the current regulatory agency – the
National Pensions Office – and shifting their responsibilities partly to Cayman
Islands Monetary Authority and partly to the Department of Employment
Relations.

The employment minister also said
he would propose regulation changes to the private sector pension scheme that
would allow for some “flexibility” in the country’s investment rules; rules that
govern what percentage of funds from a particular pension plan can be invested.
 

He also said the
issue of whether government should continue to pay the entirety of civil
service employees’ pension contributions was one that was “worthy of
consideration”.

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