Editorial: Pension theft: The cruelest of crimes

With more than 1,000 local businesses identified as delinquent in paying their share of employee pensions (with many apparently pocketing their employees’ contributions as well), Labour and Pensions Office Director Mario Ebanks is now threatening to “name and shame” some of the miscreants.

Nice try, Mr. Ebanks, but rather than “name and shame,” might not a better approach be “arrest and prosecute”?

One of the first exhaustive investigations by Nicola Williams, our no-nonsense complaints commissioner, upon arriving in Grand Cayman, was to delve into pension abuse. At the time, her office documented 670 businesses which were out of compliance. Make no mistake about it: This was, and is, crime on a massive scale.

Three years later, we learn (again thanks to Ms Williams), that the number of outstanding cases has not diminished but nearly doubled – to 1,144 as of this summer.

Convenient phraseology, such as “being in arrears,” “misuse of funds” or “employer nonpayment” are, of course, nothing more than euphemisms, employed by pedants and public personages to masquerade the real issue which, as anyone on the street knows, is criminal theft.

Ms Williams put it correctly and succinctly: “This is a national crisis which should concern all of us, as many people about to retire will find that they have insufficient funds on which to live … Every week people who have worked all their lives and had pensions deductions made for decades are retiring into unexpected and unplanned poverty.”

Think of the cruelty inherent in Ms Williams’s words.

While errant employers may be visible villains in this miasma, the government deserves even more of the blame. Government created this mess by establishing a private sector pension obligation to go along with the health insurance obligation, and then purposely turned a blind eye to the hundreds of cases of noncompliance.

Just one example: At the Caymanian Compass, we are all too familiar with a competitor in the publishing business who a number of years ago was not paying his pensions, not making his health-care contributions, and, in many cases, not even paying his expatriate staff (several of whom found their way to our offices, looking for jobs, desperate, and thousands of miles from home). We know that the Department of Employee Relations knew about these transgressions, and yet this employer continued to get his trade and business licenses regularly renewed and his work permit applications routinely approved. For the record, elected ministers in the previous government also knew of what this publisher was up to and knowingly ignored it.

Last year, that same UDP announced legislation to revise the outdated National Pensions Law, but left office before that goal was achieved. Now, Employment Minister Tara Rivers has ordered another comprehensive review of the law, with a due date nearly three years hence.

We would suggest that 2016 is far too leisurely a timetable for a law in such obvious disrepair. While we sympathize with Ms Rivers, who inherited a national disaster and potential scandal not of her own making, we would advise her to “take ownership” of this issue, to use that fine legal mind we know she possesses, to get no-nonsense tough – and to fix it.

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7 COMMENTS

  1. There are two sides to this story – why are so many employers falling behind on pensions – maybe it is because their customers are not paying their invoices on time – the pension law states you must pay every month and yet customers are taking several months to pay their bills and so the employer has pay their employees every week out of the company or their own pocket.

    If the employer can prove that their customers have not paid on time and this is the reason for non payment then the customer is named and fined for the non payment crime as they are the cause instead of the employer. I am sure the number of non paying firms will drop.

    The cost of recovering debt is too expensive for employers due to the cost of legal services and the low ceiling limits for summary court so forcing employers to go to grand court for debts over CI 20 K. Customers know this and run up credit and then don’t pay on time and force service providers to run up debts.

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  2. Mr. Ebanks

    Nice approach if youre not going to try and solve the problem. Go see a Chiropractor to see if you have a backbone. This is a ridiculously approach. Deal with the problem for heavens sake.

    And Mr. Small, based on your comments, you don’t see the problem either. And theres only one side to the story and that is the people are being screwed.

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  3. Years back I had a friend who was paying his portion of pension and medical, as was the rest of his fellow staff only to find out a little less than 2 years later he had no pension and no medical. The owner was pocketing it all. The staff had a decision to make, make a complaint and be out of work, or say nothing and maybe the owner would pay them back. Long story short the place closed down and legally nothing was ever done and the owners opened another restaurant (which failed). i thought it was a one off but to hear that it is on such a large scale is scary.
    Pensions are a Ponzi scheme. You take Peters money today to pay Paul in the future. Money taken out today is from money put in today.. the less going in today will result in those at the end of the line holding their hands out… and it collapses.
    @ Mr Small… if you are going to run a company on large accounts receivable, you still have to an obligation to pay your bills.

    Lastly, we are missing something here. Companies are breaking the law and it seems pretty simple what to do but why the hang ups?

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  4. Please list these Businesses and put shame on them for breaking the law. With this list public many customers like me will never do business with them again.
    They are not just stealing from the employees they stealing from the whole country!!!

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  5. I am glad to see the attention this issue is getting. Long overdue.

    I am not well versed in legal matters but if an employer is deducting monies from an employee’s earnings and then not putting those funds into the employee’s pension plan, particularly the employee’s half, then if not theft it has to be pretty darn close.

    Naming and shaming absolutely. Prosecution and other enforcement measures- let’s look at those too.

    Long overdue to step it up a notch, bring all the skeletons out of the closet, and start making corrective measures.

    To give Mr. Mario’s list a head start and right at the top of the list, let’s have a thorough review of the Government’s own non-payments and in arrears into their own plan.

    With 175m of its own pension plan unpaid and zero paid down for the last four- six years, with another 10m unpaid by Govt non-core entities and subsidiaries, and with 665m future health care costs unreserved and unplanned for, we also need to see Govt setting an example by making good on ALL their own commitments.

    I trust the PPM will be coming out with such a plan and soon. That 850m commitment needs to be addressed before anything new is added to the expense side. And we would hope that plan includes forward thinking and an end to the last eight year supercycle of taxing and spending as if there is never ending tap.

    Private and Public need to make good on these commitments and be held accountable. It is the right thing to do and best for Cayman.

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  6. By all means name and shame, enforce against and prosecute the dirt bag employers stealing their employees money and condemning them to a retirement in poverty.

    But let us not leave out the largest employer on the Island and biggest offender in failing to make the proper contributions for its employees’ pensions, Government.

    Government’s theft masquerades under the phraseology, unfunded liability and amounts to some 166 million dollars for its defined benefits scheme, more than ten times the private sector crime.

    It was predicted that the defined benefits Government pension scheme will outstrip contributions with payments and fees this year and will be depleted by 2026. Contributions would have to go from the current 12% of wages and salaries to 44% to make the scheme viable.

    This editorial questions why Government seemly does little but kick the can down the road in the face of this private sector pension debacle.

    The answers are simple. It is the standard procedure Government has employed in dealing with its own pension time bomb and it is difficult establishing the moral high ground from a 166 million dollar hole.

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  7. Quick and simple

    Modify the law to enable the banks to collect it directly from the delinquent business’s accounts – like a garnishing order.

    Allow the banks to make a small charge for collection but ensure that that money is priority i.e. they can’t pay any other bill until the monthly pension backlog liability has been met.

    This would reduce the cost of collection.

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