Administrative fines for pension violators

Private sector companies who fail
to make legally required pension contributions to employees’ retirement plans
will soon no longer have to be hauled into court to face their punishment.

Under changes proposed to the
National Pensions Law (2000) and National Pensions General Regulations (1998),
Premier McKeeva Bush said the regulatory agency for Cayman
Islands pensions – now the National Pensions Office – will have
the ability to levy administrative fines without having to file criminal
charges against company owners who don’t pay.

Mr. Bush said certain infractions
under the pensions law are straightforward, such as employers who hire someone
and simply don’t pay their pension contributions, or who spend those
contributions elsewhere and can’t pay out benefits when a person’s employment
has ended.

“Currently, the only way to gain a
delinquent employer’s compliance with these legal requirements is to formally
charge that employer with an offence and bring them before the courts,” Mr.
Bush said last week.

That process can take years, and
does not always end with the worker being paid the full amount they were owed.

Specific details of the
administrative process were not immediately released. The Legislative Assembly
is expected to consider the issue later this year.

The recommendation to allow for
administrative fines for pension violators is not new. It was recommended in a
2006 consultant’s report on the Cayman Islands
pension system and successive pension boards have publicly advocated for
government to give them that ability.

Complaints Commissioner Nicola
Williams, whose office is currently investigating several problems with
Cayman’s pension system, has previously said that the current court process for
gaining compliance from companies who don’t follow the National Pensions Law is

Ms Williams has previously
estimated that some 670 companies in the Cayman Islands
were delinquent with pension payments.

Fees going up

In addition to giving pension
regulators greater power to punish companies for non-compliance, Premier Bush
said regulatory fees in Cayman’s private sector pension system would be

Pension plan providers must pay
fees for initially registering in the Cayman Islands,
and are also charged each time they amend their plans or file annual
information regarding their investment plans.

Those fees have not been changed in
a decade and Mr. Bush said they were just “not sufficient” to provide pension
regulators with the resources needed to police the system.

“In the absence of any other
revenue, it has fallen to government to bear the entire burden of the cost of
private sector pension regulation,” Mr. Bush said.

According to officials involved in
Cayman’s pension system, that burden has not been borne very well.

Former Cayman Islands Pensions Superintendent Cyril
Theriault said in an interview earlier this year that his organisation was
chronically under-funded and lacked the proper staff to look into complaints
made by workers or delinquency reports filed by plan providers during his time

Mr. Theriault added that during his tenure the Pensions
office enjoyed a total of three inspectors at most and, at one point, had just
one inspector.

Mr. Bush said government has often
had to eat the regulatory costs of the pensions system not funded by pension
plan providers and was only able to supply limited funds.

“It the cost of regulation is
$900,000 a year, government was only getting three (hundred thousand),” Mr.
Bush said.

New regulator

Mr. Bush confirmed earlier
statements by Education Minister Rolston Anglin that the current regulatory
scheme for private sector pensions will change.

The education minister has
responsibility for national pensions.

“The [Education] Ministry is
undergoing a massive reform of pensions and labour,” Mr. Bush said.

Former Maples attorney Theresa
Pitcairn-Lewis has been engaged to perform the technical work involved in that
reform, Mr. Bush said.

The idea, Mr. Bush said, is to
create a “human capital development agency” responsible for planning, training,
job placement, scholarships and implementation of a national qualification
framework for employers. The agency is expected to work closely with the Cayman
Islands Immigration Department in finding work for local residents.

Mr. Anglin has previously proposed
combining the enforcement-related work of the National Pensions Office and the
job-placement and assistance duties of the Department of Employment Relations under
one roof. Under this plan, the regulatory guidelines provided under the
National Pensions Law would be monitored by the Cayman Islands Monetary
Authority, but actual enforcement of non-compliance would fall to the labour

The National Pensions Office is
expected to be phased out under the plan.

Meanwhile, Mr. Anglin
has yet to state publicly what will become of suspended Employment Relations
Director Lonny Tibbetts, who was removed from that post earlier this year
following unspecified “allegations from staff”.