OCC: Pension prosecutions should get priority

Cayman’s
government watchdog has called the regulation of the country’s private sector
pension system “one of the most pressing and obvious examples of a systemic
failure by a government entity” in a recent report.

The
nearly eight month long evaluation of Cayman’s National Pensions Law, and the
regulatory system it created, has determined that the general public has “lost
confidence” in the National Pensions Office and its ability to bring companies
who don’t pay employees’ pensions to justice.

In
her report, Complaints Commissioner Nicola Williams recommends that wholesale
change is needed to get the pensions system on the right track.

“Throwing
more resources at a broken system is not the solution,” Ms Williams notes in
the summary of the 76-page report, the first she has issued since taking over
the complaints commissioner’s office last year.

The
OCC identified in January some 670 companies that were delinquent in paying
pensions and said that it intended to look into the entire private sector pensions
system for the causes of enforcement failures.

Evidence
uncovered since then has revealed an understaffed and overworked National
Pensions Office, excruciatingly slow progress in court when charges were
brought against companies that failed to pay into their employees’ retirement
funds, and an apparent lack of support and communication between government
agencies that dealt with and assisted the country’s private sector pensions
system.

“Until
very recently, there was little political will both by the ministry responsible
to implement improvements, and generally…(to) force delinquent employers to
either comply with their pension obligations or to cease trading,” Ms Williams
wrote in her report’s findings section.

The
recommendations made in the OCC report include:  

*Harsher
penalties (both fines and sentences) for non-compliance in paying employee
pensions and the closure of certain loopholes for employers should be addressed
in amendments to the National Pensions Law. Pension funds should also not be
used to pay for legal fees in court cases.  

*One
Crown counsel (prosecutor) should be assigned to work solely on pension
enforcement cases, at least for the near term.

*Pensions
inspectors must be given the power to enter any and all businesses to conduct
reviews, even if those businesses are run from a private residence. 

*Those
who victimise whistle-blowers for reporting pension non-compliance should also
be punished under the law. There should be a ‘tip line’ set up for anonymous
reporting of pension violators.

*Better
public education about retirement savings systems by both the pensions office
and the plan providers is needed.

*The
National Pensions Office needs a clear mandate and must not be afraid to use
its powers under the law to the full extent. The office should also be given
more inspectors.

*The
pensions office should differentiate between employers who aren’t paying into
worker pension accounts because of simple negligence and those who are
willfully flouting the law by refusing to pay.

*There
must be better communication between the Immigration Department, the Trade and
Business Board and the National Pensions Office on pension-related matters.

*Private
sector companies should not be able to bid on government contracts unless their
pension, health care payments and other licensing requirements are up to date.

*Pensions
inspectors need better investigative training to help carry out their duties
more effectively.

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4 COMMENTS

  1. Once again another example of a government entity unable to perform their job. Cayman Airways losing millions, Turtle farm, losing millions, Schools, unable to complete construction, Pedro losing who knows how much. Port Authority incapable of simply collecting rent. The list goes on and on and on. As a businessman I feel like I am the only one abiding by the rules and we suffer the consequences.

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  2. It is quite a travesty….Caymanians at work running ‘their’ country. With the audacity to suggest "Caymanian Only" jobs. Why? So they can start sinking private business just as well as the government entities? With the UK cutting off loans it amusing watching this country try to function on ‘their’ own…

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  3. I feel sorry for the overworked department of the Cayman Pension Board…however, I filed a complaint some 18 months ago against a man that gave up his U.S. citizenship, obtained Caymanian status, who testified in a court room in the U.S. that he had "opted out" of the Cayman Pension plan…even though he worked for a very high profile company in the Cayman Island and U.S….but only lied in a court of law to avoid payment to his ex-wife and three children…I’ve been trying to get the Cayman Islands to hold him accountable to the laws of the island and his company, and tell the truth in a court of law in the U.S….but he’s a little busy "playing house" with his divorce attorney who orchestrated the chaos, and created the extra work for the Pension office…at the expense of the Cayman Island government and the people of the Cayman Islands…I would be outraged if I were a Caymanian or even worse, a Caymanian business owner, trying everything to follow all of the laws and knew someone has gotten away with not participating, obtained Caymanian status, and worked for a company that could easily afford to comply with the laws of the Cayman Island Pension Board!!! Please grant the necessary staffing and authority to the Cayman Island Pension Board to hold these people accountable to the government laws that apply to everyone…and stop allowing people to get away with such blatant disrespect and breaking the laws of the Cayman Islands…the Cayman Island people deserve so much better!!!

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  4. I’m impressed that it has taken the OCC eight months to come to the conclusions that I made after talking to Cyril Therialt for about an hour some 3 years ago.

    We compared my experience as a civil servant in the UK with the his frustrations at trying to run the NPO under laws which favour the defaulting employer. To those who are not familiar with the current system – it’s like trying to fight with both hands tied behind your back.

    About the only difference I can see between Mr Therialt’s own publicly-expressed concerns (they never made print due what might best be described as political interference) over the ineffectiveness of the NPO three years ago and this report is that the OCC makes no mention of problems caused by the pension funds failing to notify (or delaying notification to) the NPO that employers have defaulted.

    I do not believe that the OCC’s conclusion that this is a, "systematic failure by a government entity," is fair comment. The blame for any failure has to shared across a broad of spectrum of both public sector and private sector entities.

    As just two examples –

    How is the NPO expected to know that employers are defaulting when the statutory notification process is being ignored?

    What point is there in pursuing a defaulting employer when that same employer can just fire the employees concerned, throw them off the island and then recruit new staff knowing that no sanctions are going to be applied?

    The crucial piece of the report is the section recommending, "Pensions inspectors must be given the power to enter any and all businesses to conduct reviews, even if those businesses are run from a private residence." That power, if necessary backed up by a police presence, is the cornerstone to proper enforcement – without it the NPO is powerless.

    Cyril Therialt knew that, as did the officers who worked for him, but there were too many vested interests at work to ever let it happen.

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