Private pensions: Time to retire Cayman's scheme?

The Cayman Islands’ system of private pensions is in crisis — and not just because so many local employers are flouting the law.

Five years ago, our then–Complaints Commissioner Nicola Williams revealed that 670 local businesses were delinquent in paying their employee pensions.

If that weren’t shocking enough, Ms. Williams revisited the topic three years later, finding that number had ballooned to 1,144 delinquent businesses, as of June 30, 2013, despite the issue having already been highlighted to the public and to the government.

We have not received any further updates to that tally since Ms. Williams left her post in Cayman in January this year, following her exemplary tenure as complaints commissioner, to become ombudsman for the United Kingdom’s Armed Forces.

Throughout all of this time period, Cayman’s Department of Labour and Pensions has made precious little progress on delinquent pensions, a serious problem with serious consequences.

A mere handful of cases have actually made it through the court system to conclusion, with no significant penalties being levied upon offending companies. Other cases have been handled “administratively” by the department, under the unambitious objective of trying to persuade the businesses to pay their employees what they owe.

Now, while discussing proposed changes to Cayman’s National Pensions Law during a public meeting in North Side to an audience of 12 (counting MLA Ezzard Miller and a Compass reporter), Minister Tara Rivers reiterated a warning we have all heard before — that owners who aren’t fulfilling their pensions obligations may not get their trade and business licenses renewed.

We might regard Minister Rivers’s threat as sharper-toothed except that adherence to the Pensions Law (among a litany of other routinely disregarded statutes) is, of course, already a condition of license renewal, under the Trade and Business Licensing Law.

If the government ever attempts to follow through on its bluff and deny a trade and business license to a company for alleged nonpayment of pensions, we imagine the legal consequences to the Public Treasury would be, in a word, depletive.

Here we shall pose a rhetorical question. The Cayman Compass’s former competitor newspaper, Cayman Net News and its now-deceased publisher Desmond Seales, were notorious for not paying employees’ pensions (and, oftentimes, their salaries). What practical consequences did Net News or Mr. Seales ever face for those easily established offenses?

To our knowledge, none. Trade and business licenses, not to mention work permits, just kept on a-comin‘.

Which leads to this truism: Dishonest companies that don’t bother to pay for pensions or healthcare have a competitive advantage over honest companies that do.

Yet, as we stated at the beginning of this editorial, the real problem with private pensions in Cayman is more fundamental than the issue of noncompliance. The unfortunate reality is that, even for those whose employers pay the full legally required amount into their pension plans, the 10 percent contribution rate is woefully inadequate.

According to actuarial arithmetic, very few — if any — people in Cayman can expect to retire comfortably relying solely on their private pensions.

Some might argue that having “something” saved up for retirement is better than “nothing,” but we would counter that the false illusion of security is worst of all.

Considering the government’s track record — in regard to both private and public sector pensions — at what point do we admit, albeit reluctantly, that Cayman’s public officials may simply not be capable of running something as complex as a countrywide pensions scheme, starting at the bottom with legislation, to execution and all the way up to enforcement?


  1. Many valid points but, whatever issues you may have had with Desmond Seales, you are still "flogging a dead horse"… There are now far more interesting corporate targets to identify, who CAN be prosecuted.

  2. About half these pension contributions are for people on work permits. These work permit holders almost by definition won’t still be living here when it is time to retire.

    And when they leave or are rolled over the pension fund justs sits on their money for several years. I have to wonder how many ex work permit holders ever collect what is owed to them.