HR group pans idea
If all goes forward as planned, legislation that will significantly change Cayman’s current private sector retirement savings laws could come before the Legislative Assembly in November.
Education Minister Rolston Anglin, who has oversight responsibility for national pensions and labour issues, said last week that government was still working through some amendments to the National Pensions Law following public consultation that needed to be drafted.
However, Mr. Anglin said he did expect the bill would be voted on by the assembly before the end of this government’s term.
That’s not likely to please the 40 or so companies that participated in a recent survey done by the Cayman Islands Society of Human Resources Professionals.
Question No. 1 asked “Do you support the proposed change that will make it optional for employers to contribute pension for expat employees?”
Twelve of the responding companies said yes, 27 said no; two companies indicated they weren’t sure.
When asked if their “organisation” supported such a move, rather than the survey takers themselves; the response was 10 “yes”, 15 “no” and 16 “not sure”.
“All employees should be entitled to the same benefits,” one survey taker commented.
Another said: “I think it’s short-sighted and will cause division between expat and Caymanian workers and may impact attracting talent to the Island.” Some who supported the “optional” pension plans for expats said that significant amounts of money leave Caymanian shores if an expat paying into a pension system leaves the territory.
“It should be up to the employer and employee if they wish to participate in a pension plan if they have no chance of obtaining residency here on a permanent basis,” one survey taker said.
A key question, whether expatriate employees who opt out of the pension plan should be allowed to remove contributions to the retirement fund, brought some interesting responses.
Twenty of the companies that responded said “yes”, but 19 said they weren’t sure. Only one company responded “no”.
“If the business stops contributing I don’t see any other choice, to ensure equity,” said one survey respondent. “I hope so,” answered another.
Minister Anglin said Thursday that he believed contributions should remain in the fund unless the employee was leaving in the Cayman Islands. In that case, the normal rules for reclaiming pension contributions within a two-year time frame should be followed.
“[Early withdrawals] is certainly not a policy that I would support,” Mr. Anglin said. Private sector pension plan providers have already expressed concerns about the expat workers’ “optional” measure. In August, the Cayman Islands’ two largest nonprofit private sector employee pension plans said that the potential elimination of work permit holders’ contributions to those funds could have wide-ranging impacts that will affect the retirement savings of Caymanians for both the short and long term.
“Immediately most, if not all plans, would regress from growing through contributions, to shrinking, as monthly contributions suffer a substantial reductions due to the shut off of expatriate contributions,” according to a statement issued on behalf of Silver Thatch Pensions board deputy chairman Charles Farrington. Moreover, the uncertainty of whether work permit holders’ contributions could be withdrawn from the investment funds, if they are no longer required to participate, is causing the pension plans some consternation.
“Clearly, our members’ assets and the plans assets’ would drop [if that occurred],” read a statement from the Chamber of Commerce pension plan board of trustees.
Other survey responses
Additional questions asked in the human resources society survey included: “Do you think that the proposed changes to pensions for expat employees will have an affect on Caymanian employee pensions?” Thirty respondents said “yes”, 10 said “no” and one respondent was unsure.
Another question, “Will your organisation continue to provide pension contributions for expat employees?” revealed that 17 respondents said “yes”, five said “no” and 18 said “not sure”. The final survey question was “Will this impact recruitment of staff and management in your organisation? Can you please describe how?”
Nineteen respondents said “yes”, 20 said “no”.