A Bahamas-based insurance company was ordered Monday to stop soliciting and/or registering new pensions business in Cayman, according to a statement by the Cayman Islands labor and pensions enforcement agency.
BAF insurance company now serves as the administrator for the BAF Cayman Pension Plan. That pension plan is the successor to the retirement investment scheme formerly run by British-American Insurance Company Ltd., which went into receivership in September 2009.
British-American Insurance Ltd. was purchased by BAF shortly thereafter. The purchase included the sale of British-American’s health insurance, life insurance and pension businesses.
“Since it assumed the role of administrator, BAF Insurance Company and the [Cayman Islands] National Pensions Office … agreed on a host of remedial actions which needed to be undertaken to bring the former [British-American Insurance Company] Pension Plan, which BAF [Cayman] Pension Plan succeeded, into full compliance with the National Pensions Law and regulations,” Acting Pensions Superintendent Mario Ebanks said in a statement.
“A detailed action plan was agreed in October 2009. Regrettably, several of those important requirements have still not been achieved by BAF, despite various efforts which were intensified since early in 2013,” Mr. Ebanks said.
On Tuesday, BAF officials said the company was cooperating fully with the Department of Labour and Pensions on the matter.
“The assets of the plan are held in trust, with a Cayman Islands Monetary Authority-licensed trustee and, as such, existing pensions clients can be assured that their pensions are secure,” the BAF statement read.
“We wish to apologize for any inconvenience,” said BAF Chairman Harvey Stephenson. “We are working assiduously with the National Pensions Office [which now operates under the Department of Labour and Pensions] to address the issues.”
The BAF statement also indicated that the company is “confident” it would be operating at full capacity shortly.
The order by Mr. Ebanks, acting as the pensions superintendent, applies only to new business.
“Existing pensions clients can continue to expand their employees and conduct the other required transactions as normal,” Mr. Ebanks said.
That does not mean the National Pensions Office isn’t concerned about the situation, Mr. Ebanks said when contacted for comment Tuesday. As of January, BAF maintained about 3,600 member accounts, meaning individual retirement plans for employees. That makes it the second smallest of the six multi-employer pension plans registered in the Cayman Islands.
“[BAF] is one of the smaller multi-employer pension plans.” Mr. Ebanks said. “But it still represents quite a significant number of small businesses and self-employed people.”
The National Pensions Office would “carefully monitor and supervise” the BAF Cayman Pensions Plan, its statement indicated. As part of that supervision, the company would be required to produce monthly management accounts, monthly statements on the pension fund portfolio, audited financial statements, monitor compliance with investment regulations and monitor actuarial valuations.
In such cases, the National Pensions Law allows for noncompliance penalties ranging from $5,000 fines to the dismissal of the pension plan administrator.
Employers or employees with questions about the BAF Cayman Pension Plan or the cease and desist order issued Monday are asked to contact the National Pensions Office at 945-8960.