Government has vowed to step up enforcement in an effort to recoup millions of dollars in unpaid pension contributions from non-compliant companies.
Ministry officials said more than 2,100 companies are currently delinquent on pension payments, with an estimated $14 million in unpaid contributions outstanding.
Employment Minister Michael Myles warned that a significant portion of that sum may never be recovered because around half of the companies in question have not renewed their trade and business licences.
“Many of these companies may have gone out of business,” he said.
Myles, speaking on Radio Cayman’s For the Record show, acknowledged that enforcement has been hampered by limited resources.
“We are stretched and doing certainly the best job we possibly can,” he said, suggesting that more staff were needed to ensure compliance issues were investigated.
Deputy Director of Pensions Amy Wolliston also acknowledged enforcement was a challenge at current staffing levels but said she believed support was on the way.
“With the minister’s very active support, the Department of Labour and Pensions will be moving forward in more enforcement actions and making sure these things are done.”
Myles added that employees should keep an eye on their pension statements and raise the alarm if they were not being paid.
“They are really the first line of defence … the employee’s responsibility is to be very vigilant in what’s going into their pension fund.”
Under Cayman law, employers are required to contribute to a pension plan for eligible employees, with a mandatory total contribution rate of 10% of salary. Employers may deduct 5% from an employee’s earnings and contribute 5% themselves, though some employers pay more than half or even the full amount.
Wolliston said the issues range from employers who simply do not understand their obligations to those who are deliberately avoiding them. Myles added that private pension administrators, who are required to report delinquency to the Department of Labour and Pensions monthly are pushing for stronger enforcement action.
Gaps in contributions translate into gaps in retirement savings. Cayman already has significant challenges with people not having enough money to retire.
Both Wolliston and Myles indicated the system is in need of broader structural reform.
Government has commissioned an actuarial study of the private pension sector, the results of which are expected to drive changes to the contribution framework.
“The contribution rate is likely to go up,” Wolliston said. She added that contributions are currently only required up to age 65, while people are living on average to 89. Myles indicated that government ultimately carries the cost in healthcare and welfare stipends for people who have inadequate savings in old age.
Wolliston added, “We’re likely to increase the amount that you have to pay pension on. We’re likely to increase how long you have to pay it for.”
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This has been going on for many years with Gov’t being well aware of it. How many companies have been prosecuted for this very serious offence?.
One prominent company owes 2 or 3 million of that 14, likely the largest pension scandle in many years. Unpaid contributions since covid. The government needs to address serial offenders and fraudsters like them. Think of all the people they hurt and continue to hurt and they get away with it.
Somehow the Gov’t is aware of 2100+ companies being delinquent. Presumably this is because they were reported either by the Pension Administers or employees who are not seeing contributions in their statements. The next question is why was it allowed to get to this point? Who has benefited and who will be held accountable? Given there have basically been no consequences we have ended up with more of this unscrupulous behaviour.
Many of these companies are actually individuals “Trading As” in certain cases people have many “companies” but these are just Trade & Business licenses. Some of these people are running side businesses while working for Government. I would suggest if someone who has a side business and works for Government or a Statutory Authority etc. is found to not be in compliance with their obligations to pay pension, they should be terminated with cause and lose benefits.
This cycle of Pensions delinguency has been going on for years. The genesis of the problem is the lack of resources provided to the Regulator (Dept. of Labour & Pensions) for the enforcement of the Pensions legislation – which came into force in 1998.
It is a long story. When I was Director of Labour & Pensions (2012-2015) we fought this battle too. A long story. We chased delinquents hard, but the prosecutors and Courts did not have the carrying capacity. We did the “Name and Shame” and tried to institute an inter-agency “Culture of Compliance”. However, sadly, some of these efforts were seen as anti-business.
Now we see the true cost of appeasement. Sad.