Public purse picks up tab for meagre pensions

| 05/07/2018 | 28 Comments

Cayman News Service(CNS): Premier Alden McLaughlin has said the number of elderly people who need support from government is growing every year because of the inadequacy of private sector pensions. He said the public purse will be topping up the income of pensioners “just to keep the wolf from the door” because the meagre provisions of private plans are nowhere near enough for people to live on. The premier raised the pending economic crisis as he responded to a private member’s motion presented to the Legislative Assembly last week by MLA Kenneth Bryan seeking a change to the law that allows people to take money from their pension to pay off mortgages.

Bryan had requested that government increases the amount that private sector pension scheme members can access before they are 65 from $35,000 to $100,000, in order to cover home loans. The premier said at first that it “would be grossly irresponsible” for the government to accept Bryan’s motion because of the risk of wiping out the already insufficient funds people have in their plans if it did. But as the debate progressed, the government had a change of heart, which was delivered to members by Commerce Minister Joey Hew.

He said that if Bryan, the member for George Town Central, would consider dropping the amount from $100,000 to $50,000, the government would be prepared to accept the motion and give some consideration to amending the legislation.

During his presentation of the motion Bryan said the main objective was to try to prevent people from losing their homes, but responding to Hew, he said he was willing to compromise and agreed to the change. He had argued that the need to increase the amount that people can access was due to the increase in the cost of living, pension plan losses after the recession, other economic challenges local people are experiencing and the pressing need to avoid more seizures of homes from Caymanians.

It’s not a magic bullet to address foreclosures but it might stop some people reaching that point,” Bryan said.

During the debate on the issue MLAs raised concerns about the problems with the mandatory private pensions regime for non-government workers. Comparing the public sector pension scheme to those in the private sector, the premier described the difference as “night and day”. But even the comparatively generous public sector scheme had seen several former civil servants needing assistance in their retirement because some were receiving a smaller pension than the amount government gives to those on poor relief.

He warned that having people take money out of their already inadequate pension pots would lead to further increases in the amount of financial assistance government will be expected to pay to support our aging population in years to come.

Opposition Leader Ezzard Miller said he did not support tampering with people’s pensions. He said the reason why they are so meagre was because the pension providers are capitalizing and “profiteering from the poor people”, which was due to the pressure applied in the 1990’s by those in the pension business to prevent the then government’s goal of a national pension plan. 

Instead, he said, “bad legislation” was enacted, giving the private sector total and complete control of people’s pensions. He said the public was being conned by pension providers.

Miller said that using pensions to help people in danger of losing their homes was the wrong way to solve a problem that the government needed “to get busy fixing”. He said that he and Arden McLean, the member for East End, had already presented a motion in 2014 calling for proper mortgage legislation, but they “were ridiculed” and government had done nothing about the mounting problem.

He said the solution was not tampering with inadequate pension legislation but a specific mortgage law. He also urged government to bring the pensions back into a national scheme that could be invested in local banks, as he suggested merging mortgages, pension and health insurance into some form of national pool.

“These are serious problems,” the opposition leader said. “Let’s put our heads together to solve these three problems that are destroying people’s lives.”

Miller pointed out that to solve one they would need to solve them all, given how interrelated they are.

“I don’t care who gets the credit. Let’s work together, seriously, on these problems,” he said, adding that government needed to stop the private sector profiting from and fuelling local poverty.

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Category: Local News, Politics

Comments (28)

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  1. Anonymous says:

    It’s really getting hard to live in these Islands, as stated in a previous comment consumers in Cayman do not have any rights. We have to pay the banks to withdraw our money, now we are paying CI$2/3 dollars for maintenance fee on a monthly basis and there Is no one to talk up for us.
    We should have seen this coming back in the late 90’s when we were told that we all have to open bank accounts so our salaries/wages can go directly to it, now we are paying the price as this is only benefiting the banks and their shareholders. I believe that we should all stop putting our monies in these banks as they do not have any consideration when implementing their fees. CUC killing us, the supermarkets are no different every week you go shopping they add .50 to everything in the stores. I am not sure what the government thinks about the people but I’m sure we don’t have a people government for we as a people are left up to these unreasonable merchants and bankers.




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  2. Anonymous says:

    That Mac tax sure looks like the best option so far.
    Time to talk to Trump and see how to get small hands and some big balls.
    As a local Employer I would like to know that my contributions will go or can go towards the betterment of the senior citizens. So if that means we raise the population to 100k then so be it. In the end I can also benefit from a good retirement fund that I would have contributed to in the past. This foolishness of forcing Employers to create a savings funds for an Expat future is a joke. Time for everyone to contribute towards the Mac tax.




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  3. West Bay Premier says:

    I think that the whole government including McLaughlin and Bryan don’t understand how hard and complicated it is to do a pension funds scheme with the size population of Cayman Islands . Then there’s some that are not contributing into the plan . I believe that if the working population of the Islands were about 200 thousand people minimum and everyone paying in the plan, that it would work . Then they will have to figure out how to keep the double dipping and crookedness out of plan , and just have it as a retirement plan for people who are retiring .




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  4. Anonymous says:

    Interest rates have been steadily increasing over the last three years. The profitable loan sold to me by the bank is even now more profitable to them. I am now paying $300+ per month more on the loan than I was 3 years ago, which is a months worth of groceries for me and my family. Meanwhile my salary has not changed in the last 10 years, and last month I received 0.01cents on my bank balances (four figure balance) and this month it is 0.03 cents. Is the government going to place a cap on how much the banks are fleecing us? If this continues, very soon I am not going to afford the mortgage.




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    • Anonymous says:

      I’m afraid you are looking at about 4 more rate rises over the next year or so, it would be wise to try and get ahead of this if you are struggling. Rates have gone up 1.75%, if they go up another 1% then you will be looking at around $175/month on top of the $300 extra. Consider moving to a fixed rate (at least 2 banks advertising one), or look to reduce spending, shop around for insurance, phone companies, internet, TV etc. but do something now, not next year when you cant afford it.




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  5. Say it like it is says:

    CNS I am puzzled by your spelling of “meager”, the version you have used is archaic and certainly not used in the UK. Is this yet another American corruption of the Queen’s English?.

    CNS: “Meagre” is certainly the spelling I was taught in school in England and I hope I am not archaic! Here is a random online reference. We’ll continue with that unless someone convinces me that the accepted spelling has changed in Britain.




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    • Anonymous says:

      To my understanding, both are acceptable and interchangeable, much like theatre/theater or centre/center.




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      • Anonymous says:

        I think you are interchanging US and everywhere else spelling, ‘er’ is usually an Americanism of the world, ‘re’ is used in most other English spelling countries. It’s understandable that there is no ‘correct’ version of spelling here due to UK standards in schools, US standards in FL colleges, businesses using both and the Compass reverting to US spelling in the paper.




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  6. Anonymous says:

    Our pension fund investment managers need hedging options to protect and properly grow our investments. They’re fighting against waves they cannot hold back. Please consider allowing them to invest in options and other derivatives. Thanks.




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  7. Anonymous says:

    I have two employees, and have always paid their and my benefits. Both are Caymanian (one native and one Status Holder, not that it matters.) At one time there were six.

    What I hear from those in the industry is that it would be ever so much more equitable to pay their employees’ pensions if the pension scheme wasn’t such a poor investment. I have lost several thousand dollars from my own pension. In fact, if I had put the money aside and not invested it anywhere, I would be several thousand dollars ahead.

    This is the elephant in the room that nobody seems to be talking about. Have the pension investment companies be paid on commission such that they lose when we lose. I hate the thought of our hard-earned dollars being invested in risky stocks. Invest it in local businesses……. I mean…….. CUC seems to be doing okay, Water Authority, etc. etc. Those will be the last things to go if everything goes downhill.




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  8. Anonymous says:

    They need to be teaching this in schools!! WORLDWIDE! And you should be teaching your own children that they must start saving the day they get their first job!! $100 per month when you begin in your teens (when everyone should have their first job!) will accrue a decent amount. But do not touch it!!! You cannot depend on your government to support you in your old age.
    A pension is never going to be enough to retire on and especially not here in Cayman. The pension scheme didn’t start early enough for anyone to be able to retire.




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    • Anonymous says:

      Saving alone isn’t the answer. Spending less is also important. Many people here (as in other countries) who are facing foreclosures are in houses larger than they need with expenses to match. Is it worth it? Please consider what is written in books like “Financial Peace” by Dave Ramsay. That stuff should be taught in schools.




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    • Anonymous says:

      Cayman has only had mandatory pension regulations since the late 90’s, the problem will be around until you see people retiring with 35/40 years of contributions…so year 2038 is about right. Until then there will be a shortfall for many people. Agreed on everything you said, $200/month when you are 20 will see a pension pot of around $60k by the time you are 40, and around $225k by 60, starting early, keeping up with contributions and NOT taking out money is the key to a decent retirement pot.




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  9. nauticalone says:

    Not only the Private retirement pensions…but many in the Public pensions are wholly inadequate also! As the premier said “many of those are retiring with less pension than poor relief” payments.




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  10. Tim says:

    Pension contributions in cayman is far too small. It should be between 20 to 30% from your salary toward pension plan.




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    • Cheese Face says:

      You will get thumbs down for this but you are correct. I put what little I can away in another fund and have a small % going in AVC’s. The trouble is a lot of people do not realise that they will not have nearly enough to retire here.




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    • Anonymous says:

      yeah, if you make enough to do so!




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  11. Anonymous says:

    Really, National Pool to manage pensions and insurance, my health and future………..YOU CANNOT FIGURE OUT HOW TO PICK UP THE GARBAGE!!!!!




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  12. Anonymous says:

    And yet the paper is full of companies who are not paying the pensions and getting away with it for years. Come on Unity team, these rogue companies must be closed down and the principals barred from doing business again. The construction industry is rampant with these type of operations and always kept hush-hush as the elite want things done cheaper. It is time to clean up the situation once & for all.




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    • Anonymous says:

      But where I can understand a pension scheme for Caymanians, why do the employers have to put their money into a work permit holders pension? Also, why does an employer have to match the employee’s pension. This isn’t the employer’s responsibility to provide the employee a retired fund. I am sorry they are getting paid a salary, to add more than 5% to an employer is unfair, for then they have to raise their rates, etc and it does get past onto the consumer…..




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      • Anonymous says:

        1:32pm – Huh? Run that by us one more time.




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        • Anonymous says:

          To: 2:33pm Why as an employer have to put more than the mandatory 5% into the employee’s pension. This isn’t the responsibility of the employer. Furthermore why should the employer pay work permit holder’s pension? Furthermore even when a person has pension its not the “meger” contribution, its also the way the money is being invested. You put in example 1000 every year for 10 years 10000 but yet its only 4000, maybe not exactly but i believe you will get the drift!




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      • Anonymous says:

        rubbish




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      • Anonymous says:

        1.32pm – wow, you are advocating employers don’t contribute at all and especially not for expats? So, how does that make the problem better? As far as I can see, it makes it worse. Perhaps you have ulterior motive? You are an employer (although with your command of English I sincerely hope not) who doesn’t want to contribute? Or has not contributed, got caught and is waiting a court case?




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        • Anonymous says:

          4:12pm no I have no court case, but why is it the employer’s responsibility to provide employees a retirement. People live above their means, not the employer’s fault. So the article was “English perfect”, didn’t know it had to be perfect. This is just a blog. And yes, the work permit holders go home their money isn’t staying here and they rather put their money away then putting it into the pension, they don’t get back what they and their employer contribute. So tell me how that makes sense???? Just like the increase in the minimum wage? Cayman will soon become to expensive for anyone to live!




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          • Anonymous says:

            oh dear…did you really write that? Suggest an Economics 101 lesson for you…possibly in your case it would be better to start with economics 001.




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      • Anonymous says:

        The employer contribution is just a part of the wage paid into another pot. It’s merely a government enforced method of ensuring people are better prepared for retirement (although woefully inadequate still).
        A properly regulated and managed pension law is a no-brainer, as it reduces old age poverty, and therefore the drain on the public purse from poor assistance.

        As far as WP holders go, why shouldn’t they have a pension too? Should they come here for many years, then get unceremoniously dumped off the island with up to a decade long hole in their pension plan?

        The issue not mentioned here is the huge rise in cost of living, compared to a decade of poor investment returns. This has begun to culminate into the current crisis, where even well planned pensions started 30-40 years ago have become inadequate.

        This is symptomatic of a flawed economy, and is common to a number of other countries following similar models (the UK being a prime example). It comes from basing the apparent success of an economy on it’s rate of growth, and worth in abstract. This can be easily skewed by allowing the small number of entities at the top to amass vast wealth, and act as outliers that bring the average up.
        A more rational way to measure the health of an economy should compare wage growth to cost of living increase, and acknowledge value of services as opposed to profitability.

        A country is it’s people, their happiness and success are what matters, not this nebulous, abstract thing we call the economy.




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