Changes good for savers, say pensions funds

Cayman’s two largest private sector pension funds, Silver Thatch and the Chamber of Commerce Pension Fund, have suggested that changes to the Pensions Law, though a temporary inconvenience to businesses, will be good for Cayman savers in the long term.

Victoria Taylor of Silver Thatch said the trustees of the fund were “generally supportive” of the phased removal of the “two-year cash-out rule” – which has allowed expats to access their savings two years after they have left the Cayman Islands.

She said Silver Thatch believes the change will lead to lower fees for the pension membership as a result of larger participation in the scheme.

“On a personal level, we are very sympathetic to those who this change has affected,” she said, “especially members from Third World countries who were effectively using the pension plan as a short-term savings plan to achieve goals other than to use the funds as a retirement benefit.”

She also expressed empathy for tourism businesses facing the prospect of high staff turnover as a result.

She added, “However, from the point of view of pension savers, this change is almost certainly going to be of benefit. I suppose the question is how do we best balance the interests of everyone involved, and that is the difficult question for government.”

Randall Fisher, director of operations of the Chamber Pension Plan, said more money invested in the plan meant lower costs and potentially higher savings for members.

He said, “The trustees understand the frustration expressed by members that felt the ‘forced savings’ were monies that would be available to them to take when they leave the island.”

He said there are still viable options for some expats who want earlier access to their savings. He said anyone currently over the age of 48, under a transitional clause in the law, has the option to take early retirement at age 50 and apply for a retirement savings arrangement that could result in their getting access to their money when they left the island. One area of concern and possible controversy, highlighted by opponents of government’s pension reforms, is that the changes to the law impact existing contractual arrangements.

Venesha McLean, an associate with HSM Chambers, said the amendments to the Pensions Law could be regarded as retroactive because they affect employment contracts signed before the law was passed.

She said there is a general presumption that laws are not intended to have retroactive effect. However, she said, the pensions amendment law could arguably be regarded as an exception because the majority of the amendments merely change the legal procedures in the law.

Ms. McLean acknowledged that some might see this as the “goal posts being moved” but said it would be difficult and expensive to contest.

“The ability to make or amend laws is an essential power of a sovereign legislature and is subject principally to constitutional limitations and our constitution contains no limits on the retrospective operation of law.”

She said it was unlikely that many employers gave explicit contractual guarantees to employees regarding the handling of their pension on leaving the islands.

“An employee who had the means could bring a claim in court against the government arguing that the amendment law is contrary to the constitutional doctrine of legitimate expectation, meaning that an employee should be able to conduct his affairs with reasonable certainty of the legal consequences of his actions,” she said.

“It would be interesting to see how the court would rule as the government would need to demonstrate that they considered the general public interest and international standards including the European Convention for the Protection of Human Rights and Fundamental Freedoms.”


  1. “… our constitution contains no limits on the retrospective operation of law.”
    What about “Justice Williams also ruled that the charter of human rights, which was introduced in 2012, could not be applied retroactively”? (Compass May 7,2017)

    “…is almost certainly going to be of benefit.”
    Did they read “The Ticking Time Bomb That Will Wipe Out Virtually Every Pension Fund In America”?
    The 2008 Stock market turmoil has wiped out roughly $2 trillion of Americans’ retirement savings . Most people think IRAs and 401(k)s have pretty much recovered from deep losses in 2008. They haven’t.

    I don’t think it is for Venesha McLean or Tara Reid to decide which Law “could be regarded as retroactive”. Show us an Article of the Cayman Islands Constitution that conspicuously allows retroactive Legislations.

    ““An employee who had the means could bring a claim in court against the government..” I think it would be a “class action” lawsuit agains retroactive application of the Pension Law, not an individual employees lawsuits.

    And lastly, only very naive person would believe and trust that there would be anything left in his pension fund by the time he reaches 65. If he reaches 65. If CVD or cancer won’t claim one prematurely.

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