New pension bill aims for ‘culture of compliance’
(CNS): With hundreds of local employers failing to comply with their pension obligations, the employment minister hopes a newly drafted proposed pension bill will foster a greater culture of compliance and improve the prospects of retirement for Cayman’s pensioners. Among the numerous changes, including raising the retirement age to 65 and increasing the amount of pensionable earnings, the new law also introduces administrative fines and letters of compliance.
Launching the public consultation period on the new bill, which successive governments have wrestled with, Tara Rivers pointed to the goals of compliance by bosses and an increase in the amount being invested in pension funds as the motivating factors behind the new legislation.
With the Department of Labour and Pensions being given the power to administer fines and the introduction of a letter of compliance, which will be a mandatory requirement before a Trade and Business licence is issued or renewed, government hopes that delinquent employers will take the steps to pay what they owe to pension plans on behalf of their employees. An increase in fines from $5,000 to $20,000 or imprisonment for a term of 2 years is expected to see employers being more vigilant when ensuring pension contributions for their employees are made every month.
Although a summary document (see below) has been released outlining the key changes in the proposed new law, the draft bill itself has not been published, though officials said it is expected to be available later this week.
The public consultation on the proposed new pension regime has, however, already started and will last until the end of August, in tandem with the public consultation of the new draft labour law. Stakeholder meetings on both pieces of legislation are expected during July and public meetings on the pension bill in August.
The bill, according to Employment Minister Tara Rivers, has a number of important changes and proposes to remove anyone working 15 hours per week or less from the mandatory obligation to pay into a pension and continues to exclude domestic workers.
It also equalizes the period of employment before employers and employees must start to contribute to a company pension. Currently bosses should begin the pension payments for local workers immediately while they are given a nine month grace period for work permit holders. The new bill gives a six month wait period for all new employees, regardless of their status. Rivers said that the current inequity makes employing a local worker less attractive and by creating a level playing field she hopes that yet another barrier to Caymanian job-seekers will be removed.
The maximum amount of money that a person earns per year that is subject to mandatory contributions will increase from $60,000 to $87,000, which, combined with the increase in retirement age, will see the amounts paid into funds overall increase, the minister said. She explained that a decision had been made not to increase the mandatory contribution of 10%, despite the need to boost pension savings. Rivers added that it was about “walking before running” with the latest legislative proposals, to sort out what has been described as a dysfunctional regime.
Another clause in the bill which the minister believes will boost pension contributions is a provision to allow people to access the extra cash they contribute over and above the mandatory 10% contribution from earnings. The law also retains the right of locals to withdraw cash to buy or build a home.
However, one element of the law that is likely to cause controversy among expat workers is the extension of the time period before people can access contributions after they leave the islands. The draft law will prevent people from cashing in their pension for three years – up from two in the current legislation — once they move overseas. The director of labour said this was to prevent those who leave the island withdrawing their pension contributions and then returning and starting again. If they are already Caymanian or if they become Caymanian the depletion of their pension puts them at risk of becoming dependent on the state when they retire.
During the launch of the proposed bill, Rivers pointed to the requirement for more transparency and oversight of fund managers as well as the increased frequency in publication of pension performance.
The original National Pensions Law was passed in 1998 and, following several amendments to the NPL on specific areas, a proposed amendment to the entire legislation was produced by the former employment minister in the UDP administration, Rolston Anglin, but it was withdrawn following its presentation to the LA before any debate.
Rivers stated that this latest proposed bill aims to align the National Pensions Law with the re-organisation of local labour and pensions services and to create greater equity, improved compliance and better information resources to the benefit of employees and employers.
With some $1.2 billion in pensions, the minister said the country needed to regulate and manage what she described as a national asset. The minister said she was committed to tackling the real issues surrounding the pension regime and improving retirement for people so they can live out their lives with dignity and self-reliance.
Labour Minister Tara Rivers (centre) with Acting Deputy Chief Officer Tammy Ebanks-Bishop (L) and Director Labour Pensions Mario Ebanks
CNS will publish more on the proposed legislation once the draft bill is released.
Pensions (Amendment) Bill 2015 – Summary Notes- 29 June 2015
Cayman is bankrupt
a sad pice of legislation….is all i can say.
Okay. So let me get this straight. I had to leave the country after nine years because I couldn’t get a mortgage because the banks don’t gamble on people the government might not give PR to and I couldn’t come up with the massive down payment needed because the banks are betting that I will have to leave. Mortgage needed to get PR points yet to get mortgage the banks want to see stability on the island (ie. PR). So I left. Now I could really use MY pension to start life anew outside of the Cayman Islands, you know.. get established once again after having to leave the life I was trying to build there. I make a plan based on being able to pull my pension and reinvest it as I see fit for my retirement, which clearly isn’t going to be taking place in the Cayman Islands. I’m halfway to being able to gain access to MY money when the CI government decides to change the rules again (just like they changed the PR rules RIGHT before I was ready to apply).
I learn this by reading a story where the pensions are described as a “national asset”. I’m sorry… but MY pension should not be treated as a CI “national asset”. It’s MY asset. I earned it through 9 years of hard work.
Answer me this: how is anyone supposed to feel confident with investing in the Cayman Islands when the rules change on a such important matters in such random ways. The reason given for making the wait period three years is that it is to discourage expats from leaving, withdrawing their pension and then returning, maybe eventually retiring, and maybe becoming a burden to the social services. So where is the evidence that this is an existing problem? How many times has this happened? I don’t buy it. The real reason is that the pension enforcement has been mismanaged and they want to keep our money for payouts. Screw that. I have no rights, no representation, no access to these social services that for nine years I have helped fund through my duties, permit fees etc etc.
Why on earth would I ever want to move back there? Third highest cost of living in the world. Laws that change to suit the mood of those in charge. I’m at the mercy and whim of ever changing rules. I have no political power, say or representation yet am directly impacted by these changes to the laws. At this point I plan to withdraw my pension the moment I am allowed. I simply do not trust my money to be invested there in a pension fund that the government refers to as their national asset. All I want to do is use my money to invest as I see fit to build my life for myself and I now I have to wait another year because the Cayman government is worried that I might become some burden on them. Show me anyone who is a burden on the social services because they withdrew their pension then returned to the islands.
I am saddened by this news. The Cayman Islands has the potential to be so much and yet falls short every time.
Pension for Caymanians I can understand that, but why pay pension for work permit holders, the money isn’t going back into the country. This was suppose to have been changed only Caymanians to get pension, what happened to that? Why should employers put pension towards work permit holders??? They take their money and go, nothing left in Cayman. Its getting harder and harder to own and run a business in the Cayman Islands, where you can see many companies closing their doors!!! Only the ones that are up CIG a…s will still be standing!
Idiot. You want to make it more expensive to employ Caymanians over expatriates and then deny every expatriate the right to marry a Caymanian and live here or get PR because they will have no pension when they are retire? If there is to be a system, applying it to everyone who stands some prospect of retiring here is the only way to go.
What a selfish person you are.
I think the retirement age should not be mandatory, it should be up to the individual. 55 we should be able to collect our pension if needed. Its my money and I can’t even get it in one lump sum, bits and pieces!!!
I think that is a question a lot of people want to know the answer to here are some thoughts:
1. It would give ex-pats an unfair cost advantage over local workers. Especially in entry level or unskilled roles where work permit fees are low. If there was no pension payable to ex-pats then they would effectively become 5% cheaper then local workers.
2. Ex-pats don’t all stay ex-pats. Many of the people living here are working towards becoming Caymanian – it is a long process – 9 years to PR and 15 years till naturalization (all going well). It is important that these people are creating a retirement fund for themselves so that if they do end up qualifying to remain here after retirement that they have enough funds to sustain themselves and don’t become a burden on the state.
3. The pension pool in cayman is aprox $1.2billion aprox 1/3 of that is owned by ex-pats (either currently here or who have left but left their fund invested). There are significant economies of scale when funds get larger which benefits Caymanians greatly by reducing pension costs and thereby increasing retirement savings.
4. ‘Cause its the right thing to do. Across the world there is a crisis coming in pensions – medicine is keeping us alive much longer and in developed countries we are having fewer children (in the past younger workers funded pensions payments for the retired). The old model no longer works – people have to save throughout their working life to support themselves in a retirement which could last for 40 years if they are going to avoid living in abject elder poverty. It is right for our legislation to make people take financial responsibility for their elder years.
What a mean spirited post!
because most of the work permit holders are jamaican and they will usually stay until they get status and this might ease the future burden, as seen from status grants in 2003, was mainly Jamaicans and many are now getting financial assistance from any department or church……. go and check social services needs assessment Tue Thurs and most days
Muppet, if we pay into it we have an equal right to the benefits. Are you really that stupid? If employers don’t pay into it also on our behalf, we don’t come. Kiss goodbye to at least 60% of CIG income and all your benefits that we are not entitled to. That’s how wutless we are to you. Mind you, they could save the education money, clearly didn’t work in your case.
Fool.
It all failed when you allowed a pension holiday at the bottom of the market Now another bubble is coming and you want to pump more money in at the top
Stealing is one thing and that is what the employers do
But at least when the money is lost you can blame it on a market correction instead of a crooked employer.
That said your leaders know nothing nada zip about markets and that is why even though they have big homes they are worthless
Well it begs if you are a right you do not have to pay and you can keep what you deduct from the employee. Everyone is a “sub-contractor” so don’t worry about it. Quick fix; make the main contractor for any job be liable for all the workers on there respective job; then you will see it change because it would hit the big boys pockets. The place is full of scum bags
Hope DLP not called on to do prosecutions, cause that will be lost cases. Just a few months ago, a judge threw out a very large case as it wasn’t properly investigated. Talk about incompetence. I applaud Tara for this bold and much needed step but she needs to look at an alternative for enforcement……cause the DLP aint making the grade.
This department is riddled with incompetence!!!! Someone always sick, in a meeting, on the phone. Or is it that they just plain damn lazy to get off their carcasses and earn their money.
All well and good…cery good but just tey enfircing the law.
2.48 we would, but we’re velly drinked
So Caymanians can take their pension out but expats cannot for 3 years, discrimination or what?
I think you misunderstood… what they are saying is that if you leave the island before you have reached retirement age – then under the current law you can take 100% of the fund in cash once you have gone for 2 years – they are going to raise this to 3 years. Regardless of whether you are ex-pat or Caymanian if you have reached retirement age you are entitled to the same level of benefits, just not a 100% cash payment.
3.32 so what, it still discrimination. Your point only recognizes what you can no longer see. Cayman discriminates…bring on the court case.
Apologies but maybe I wasn’t clear in my post. The article doesn’t mention any difference in the treatment of expat vs caymanian under the new law. However, my understanding is that this new bill will actually prevent Caymanian’s (spouses of and also anyone with PR) from cashing out their pension (prior to retirement) if they become non-resident. So if anyone is being “discriminated” against than it is Caymanians. Bear in mind that everyone is free to transfer their local pension to an overseas pension plan once you leave the island.
This is not about giving one group an advantage over the other it is about ensuring that the law does not make it easy for people who may retire here to raid their pension throughout their working life and end up with nothing for retirement and a dependency on the state (who would have to raise fees to pay for it). Thankfully this law recognizes that it is less likely that an ex-pat will gain the right to retire here and so they provide a mechanism for ex-pats to completely cash out their pension after 3 years.
In countries with a direct taxation system a portion of taxes paid would go to providing social welfare and pensions for others – it is unlikely that an ex-pat in such jurisdictions would ever receive these services and they certainly wouldn’t get a refund of what they had paid (plus investment income) once they left. I think the system is more then fair to ex-pat workers in this regard.
Nonsense, Caymanians on island can take it out anytime. We should be able to get ours back the day we leave island. Not wait two years.
A ‘newly drafted proposed pension bill’? Talk about too many ifs and buts! As for a ‘culture of compliance’ that’s simply unadulterated BS.
By the time this gets through the LA (assuming it ever does) you are going to end up with the same limp-wristed nonsense you have now. There are too many well connected people who will lose out if these measures go through for it to ever happen.
Doesn’t the Cayman Islands have any existing legislation relating to fraud, false accounting or theft that could be used to reign in delinquent employers? I know in the UK the authorities very successfully use false accounting (Section 17, Theft Act 1968) as a catch all to deal with things like this.
Yes. It is also theft under Cayman law when an employer deducts pension monies and does not submit them. For some reason the police do not arrest, and the crown does not prosecute it. It is as if there is some unknown force exists to protect the guilty and harm the innocent…
As 2:37 said it always sounds like most of the worst offenders are too well connected to be touched.
“With hundreds of local employers failing to comply with their pension obligations…”
“… there is some unknown force exists to protect the guilty and harm the innocent.”
The unknown force is called corruption. Oops, I just said the name that must never be named or Alden will scream “TREASON! Off with their advertising revenue!”.
Treason!
Come nah, how unnah expec dem shop dem ‘pon Eastern Avenue ‘an ting fi remain in business if de Babalonian dem raid all de time? Who goin tek out permit fi I an I bredren den? Cha!
Nah, bunn dat. we should let Caymanians withdraw it all whenever they want. It’s their money after all.
If you think you will ever get back 100% of your pension they you are deluded, more like 70%, if that…..
SSM345: why is it you think expats will only get back 70%?