Governor signs pension holiday

Law takes effect Monday

Cayman Islands Governor Duncan
Taylor has signed legislation that allows private sector companies to suspend
statutorily required pension payments for both Caymanian and non-Caymanian employees.

The signing is the last major step
required to make the National Pensions (Amendment) Bill, 2010 the law.

The provision is expected to take
effect on Monday, 26 April.   

Lawmakers unanimously approved the pension change in March.

Under the law, any suspension of pension payments would
have to be mutually agreed between a company and its employee.

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.  

The government seemed amenable to that suggestion. However,
civil service leaders have since stated that government worker’s pensions would
not be suspended as part of budget cutting plans in the coming fiscal year.

Employment Minister Rolston Anglin 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”.

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.  

Mr. 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.


Mr. Taylor
Photo: File