In other words, contributing 10 percent of your salary toward a pension plan will not yield a sufficient stream of income to carry you through your golden years without a significant divestment of assets (if you have any) or supplementing your retirement income from other sources (if you have any).
Simply stated, there is a pensions/retirement crisis in Cayman — and it’s your crisis. You can blame the government all you want, but it’s still your crisis.
Both Cayman’s private and public pension schemes are woefully inadequate. In their current state, they are unenforceable, unworkable and quite possibly unsalvageable.
Obviously, the government cannot be counted on to enforce its own laws and regulations requiring employers to contribute to their employees’ pensions.
According to records released last week by Acting Pensions Superintendent Mario Ebanks, only four cases of alleged pensions violations had been resolved before the courts since October 2013, when Complaints Commissioner Nicola Williams issued a report citing some 1,144 businesses as being in some stage of delinquency regarding private pension accounts.
Of the four cases that actually made it through the courts and were concluded, one resulted in employees receiving ZERO restitution for money owed; in two cases, the employers just paid the amounts they had owed; and in one case, the business owner was fined a whopping $350.
While the disparity between the numbers of delinquent businesses and the ones held accountable is shocking, this isn’t a new development or evidence of a spike in noncompliance — this is the firmly established status quo.
Four-and-a-half years ago, in February 2010, the Cayman Compass opined on the delayed publication of a 2008 pensions report declaring the same systemic flouting of the law later identified by Ms. Williams. We wrote: “The noncompliance of the law by employers with regard to pension and health insurance payments has become something of a punch line to an old joke. Despite just about everyone knowing what is happening, nothing really is being done to correct a situation which, in many cases, should amount to theft.”
What we face as a country is that multitudes of Caymanians, residents and expatriates will discover late in their lives that they have been defrauded by their employers, ignored by the justice system or otherwise left practically destitute as they enter their twilight years.
At the Cabinet and ministerial levels, a SWAT team of accountants and actuaries should be called in to re-examine Cayman’s entire pension paradigm with a view toward reconstructing the system from the ground up, possibly doing away with the idea of mandatory contributions entirely.
At a personal level, the best advice this Editorial Board can give to our readers is to embrace self-reliance and, above all, not to entrust your future to government officials and businesses who in these matters have demonstrated their unworthiness of that trust.
Here are a couple other observations from Ms. Orman’s presentation in May that bear repeating: “Debt is bondage. You will never have financial freedom when you are in bondage. If there was one thing that I could tell you, it would be stop spending money you don’t have to impress people you don’t know or even like.”
And: “When you pay for present day desires, your cost will be your future day needs.”
Sound advice. Any listeners?
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It is worth repeating what Ms. Orman said.. ‘Debt is bondage. You will never have financial freedom when you are in bondage. If there was one thing that I could tell you, it would be stop spending money you don’t have to impress people you don’t know or even like’.
People should be allowed to use their existing pension money to pay down or pay off debt. Only then will they have the financial freedom that Ms. Orman speaks about.
So let’s review. The pension being monitored by the government is a joke. Immigration is nearly impossible to deal with. Cayman Airways cost us millions of dollars. The Turtle Farm cost us millions. Pedro, Botanical Park and most other entities lose money. What exactly does the government do right and why are they involved in the private sector at all.
Sorry, I forgot to mention the Planning Department which is complete shambles!
Mack,
I am afraid that idea was that people should avoid getting into debt unless absolutely necessary. Not that they should be allowed to first make careless loan and then sacrifice their pension to get out of it… Based on behavioural rules it is much easier for people to get careless loan if they know that they can get out of it by using pension.
Why people don’t put enough importance on pension (unless forced by a power of reason)? Because most of people actually think about themselves old as about some different person. They do not relate to that person until they become one. This is recently discovered psychological effect, which gives insight into this strange carelessness about the future.
As I was the first Pensions Inspector with the National Pensions Office, I have come to realize that individuals have to work on securing thier own future! Meaning that in addition to anything that the government can provide, you must invest in your own future! I am now a financial planner and have written a book, entitled BECOME A MILLIONAIRE FOR WHAT IT MAKES OF YOU! as well I was writing a money column for a newspaper in my area. Where do you start? Education is the key and don’t rely any government schemes. You can go to financial planners, advisors and financial institutions for help, but you be well advised to read some books first or listen to some audio programs. This will enable you to make informed decisions.