EDITORIAL – The government’s callous approach to expats (and pensions)

The Progressives government’s attitude toward expatriates too often can be approximated in a half-dozen words: “If you don’t like it – Leave.”

Unfortunately, following changes to the Cayman Islands Pensions Law, that’s precisely what as many as 2,500 work permit holders – 6 percent of the country’s workforce – may choose to do.

The potential consequences are tremendous, to the country as a whole, to employers (particularly in the key tourism sector) and, most importantly, to the lives of the individual workers who arrived in Cayman with a certain set of financial expectations only to have the rules changed midway through the game.

It is wrong on every level.

Through the end of 2017, expatriates who leave Cayman retain the ability to “cash out” of their private pension plans once they’ve been off the island for two years or more. Under the revised Pensions Law, foreign workers who stay past Dec. 31, 2017, are “locked in” to those plans until they reach the age of retirement (50 to 65, depending on individual circumstances).

Taken alone, the revisions are significant (making Cayman a less attractive destination for foreign workers in the future) but not severe. However, when they changed the Pensions Law, the Progressives failed to insert a “grandfather clause” allowing workers already in Cayman to abide by the old rules that existed when they first entered the country.

Before the Progressives executed their “bait and switch,” workers were counting on that money to be available when they returned to their home countries so they could buy homes, invest in property or start their own businesses.

As reported on today’s front page, many expats consulted their calculators and determined it’s time to depart Cayman before their pensions are held hostage.

The negative impacts were easily foreseeable. But just like when they changed the Immigration Law (resulting in more than 900 permanent residence applicants being left in “legal limbo”), it seems the Progressives either didn’t think, didn’t care – or acted with intention.

Labour Minister Tara Rivers said, “Everybody that understands the principle of a pension understands that pensions are for retirement and retirement is wherever you are.” (Tell that to the hundreds of Caymanians who, since 2011, have “dipped into” their pensions savings to purchase land or homes … exactly what the expats had planned to do.)

Even more chilling is the “official” statement from Ms. Rivers’s ministry as to why existing work permit holders weren’t accommodated under the new law: “The ministry does not have a desire to apply pension legislation differently to non-Caymanians, nor does it have a desire to create an additional administrative burden to operate or monitor two separate systems depending on when a person was hired.”

Translation: Government can’t be bothered.

As for officials’ explanation that Cayman’s pensions policies should align with those of other countries, that’s the absolute worst reason for anything. Just think about how that motivation would alter our country’s approach to, for starters, marriage (i.e. gay marriage), abortion (i.e. abortion rights) and income taxation (i.e. bye-bye, financial services).

As if all that weren’t bad enough, apparently the government has no plans to manage the upcoming upsurge in new work permit applications to replace the departing expats. (All too typically, our queries to the Immigration Department on this issue have gone unanswered.)

Ms. Rivers’s ministry, along with politicians such as independent Bodden Town MLA Alva Suckoo, have offered the infantile suggestion that employers hire Caymanians instead. (Oh, if it were that easy – or mathematically possible – to fill 2,500 vacancies from the country’s pool of 1,400 unemployed Caymanians.)

Underlying the entire situation is the fundamental reality that Cayman’s private pensions scheme isn’t so much a retirement plan as a potentially harmful fiction. The bottom line is that 10 percent annual savings fall far short of what is needed for retirement.

The arithmetic is simple: Imagine that someone works for 40 years, accruing pension savings worth four years of their average salary. After retiring at age 65, their pension can sustain them, at their accustomed standard of living, until the age of 69.

So … What happens when they turn 70?

… Minister Rivers?

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1 COMMENT

  1. “.. Cayman’s pensions policies should align with those of other countries”…BUT…. the Cayman Islands is NOT like other countries, prosperity of which depends on foreign labour and professional expertise (56% of its work force is on work permits and 36% of total population are permit holders (2013 data)).

    The 2014 Immigration Law change is NOT being applied retroactively.
    The 2016 repeal of Health Services Authority Law that provided blanket immunity from medical malpractice suits is NOT applied retroactively.

    Then why changes to the Cayman Islands Pensions Law are being applied retroactively?

    Can they just arbitrarily decide which new Law or changes to an existing Law will be an ex post facto law and which won’t?
    Should not they be following a basic principle of jurisprudence that declares “laws and customs should be given an operation on future transactions and that they cannot be recalled to past facts unless it is stated expressly that they apply either to past time or to pending transactions”, which basically forces governments to abide by certain rules such as the prohibition against retroactive application of administrative acts.

    What Constitution of the Cayman Islands says about retroactive Legislation?

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