Pension boss justifies withdrawal fees
(CNS): Varying fees being charged by private sector pension funds to people accessing their cash to help them weather the COVID-19 economic collapse, in line with the recent change to the law, were defended by government’s pensions boss on Wednesday. Concerns have been raised that some pension administrators are taking advantage of members by charging as much as $150 for them to withdraw from their accounts at a time when some people are truly desperate.
When she appeared as a witness before the Public Accounts Committee on Wednesday, Amy Wolliston, the deputy director for pensions at the Department of Labour and Pensions, justified some of the fees, despite being the sector’s regulator.
She said that if the pension companies did not charge the fees, the cost of calculating and administering tens of thousands of withdrawals would fall on the members in the plan that have opted not to take cash from their funds.
However, Wolliston said that not all of the pension companies were charging a fee and the ones that were ranged from $25 to $100. After MLA Chris Saunders (BTW) indicated that some of his constituents were being charged as much as $150, the pension director asked for the details of which company was charging so much.
PAC Chair Ezzard Miller asked why the pension companies were allowed to charge fees at all, since the law does not provide for this. However, Wolliston said there was nothing to prohibit the fees in the new 2020 amendment to the Pensions Law, as she went on to defend the charges.
She said the original law allows pension providers to charge “reasonable” fees for work like this.
“If the administrator does not charge the people who are taking the withdrawal, what will end up happening is the people who have chosen not to take a withdrawal will end up paying the cost for everyone,” she said.
Wolliston said that there would be costs, such as hiring extra staff and cashing in securities, that the pension companies must either absorb, as some are doing, or charge someone the fees and it was not fair to charge those not taking out cash.
Miller pointed out that the pension companies already charge a significant amount of annual administration fees to included all activities and the withdrawals are just another part of administering a fund.
Wolliston argued that this was a new element to the law and the volume of more than 20,000 applications was never anticipated. “In fairness to the administrators, it is a lot of work on their part,” she said.
But Miller pointed out that for the year before and the years before that, the pension administrators got their fees for doing nothing.
Government amended the law in April to enable all private sector workers with a pension account to withdraw up to $10,000 in a lump sum and then in addition 25% of any remaining balance.
Applications are now being dealt with but there are reports that there is considerable inequity among companies regarding how they are handing the payout. While one leading firm is already making payments, others have not even acknowledged applications.
See the PAC session on CIGTV below:
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Category: Politics, Private Sector Oversight
How concerning is it that the pension administrators have not come out stating that are not cherry picking and using lower nav’s from date prior to redemption requests? As concerning as no word regarding investigation from our still paid government who made us bail ourselves out with our own money? Something really stinks here.
Considering all the comments in here regarding potentially irregularities in this process, shouldn’t CIG put out something like “Chill Homes, you got nothing to worry about, the Higgins is on the case”
It seems no one realizes that complaining and blaming for a slow pay out is a smoke screen. The very real, unavoidable consequence is- Many People Have Been Given The Option Of Spending Their Future- And Spent It. NOW WHAT?
Its called free will and we will figure it out
The government didn’t want to waste their work permit drive surpluses on the unemployed.
According to Britcay’s website they are set to reopen on Monday 22 June 2020. We should all go there and demand to know what is going on. Enough is enough! They dont want to give us our money and at the same time not give the correct amounts really? DLP doesnt give a damn and obviously no enforcement is happening as they are clearly in breach of the law. We were supposed to get ours on 18 June and not an email or call. And of course you cant get through via email or phone.
#brettisright
Has anyone actually received any money????
Yes.
Yes, from chamber on the 17th
I know a few ppl whose gotten paid from Silver Thatch.
Yeah we got payout from siver thatch in about 3 weeks. No complaints here. Good nav too.
Yes silver thatch this past Friday. They were very responsive I was grateful for that. I hope the other funds respond to the people it’s not right for them to stall, not right!
Yes indeed on June 10th from Silver Thatch
I know someone who got paid by ST after 22 days.
Yes. Silver Thatch. Good service.
Amy Wolliston needs to take some time to reflect on her role in what has become a pensions crisis in the Cayman Islands. She should seriously consider if she has what it take to provide the required oversight of the funds that exist in the Cayman Islands.
She is only one person. The issue is about the department as a whole and the resources that have been provided to do the job. Her testimony says she needs more.
I must say Silver Thatch is the best provider on island and they have made good on their promise to deliver through their bank, RBC and through the ACH system as well as arranging to cash cheques for their members. People need to choose wisely on who to invest with and who can give the after care and customer service that is so needed.
I just received a most unprofessional notice from Britcay regarding my withdrawal. It does not give my member number or a breakdown from where the funds come from and yes they have a new email as to where to send complaints/questions. I have also checked my bank account and not one red cent in there..Is this way to calm everyone’s complaining because they have broken the law by not paying on time..Not working for me..
To top off everything and I am fuming right now..I have had to go back and do the calculations and they have made the deductions from the April NAV.
I am so sick of this.
I hope the DLP will step up now and do their job!!
DLP do their job please! They done making excuses for Britcay and Fideltiy. Please please stay calm they are working as fast as they can its a lot of applications to pay out you know. Whatever excuses for laziness and disorganization.
DLP do their job? That is a useless department.
I just received my notice too from someone in Bermuda no less, saying funds will be in my account within the next few days. It was supposed to be in my account today! To add further insult to injury, they paid me the amount based on April NAV when I applied in May. Why did government implement all of these rules surrounding this process when the pension provider does what they want without ramifications. Absolutely absurd, blatant thievery Britcay!
Same experience for me. There using the much lower April NAV. I do hope someone with regulatory oversight looks into this sooner rather than later.
If what you say is true, perhaps the police should investigate – particularly given the increase in NAV of most funds between April and May, and the delay in payment to you.
You received information from Bermuda because that is where your fund is managed.
So? Doesn’t the administrator deal with member queries?
How about this for theft. My April statement says Britcay/Colonial withdrew US$46k from my pension account yet the email notification I received last night says they will be depositing US$35k into my account. WTAF!!!!! I’m waiting to see the 35k in my account before reporting this to the police, pension people (for all bloody good it will do) for theft.
Me either… was due in my account today. Don’t they get fined for non compliance? Please CNS bring up at next press briefing! This needs to be addressed.
Auditor General needs to get involved here if administrators are cherry picking navs or in anyway changing NAV process…including portfolio pricing.
Whilst I can see the commercial logic in saying that the work generated by the huge volume of withdrawals, well beyond normal, Is hard on the pension companies that doesn’t make it legal. If there is no provision in the scheme terms to charge an admin fee, and the fund doesn’t warn you in advance that there will be a fee and obtain your consent ( and how could they impose a fee given that your right to withdraw early has been imposed in law), then they have no contractual or legal basis for charging it. The funds should be seeking compensation from the government not imposing fees based on some determination they have made as to what the extra cost is and without their clients agreement. They are counting on the fact that because the fee is relatively small no one customer is going to sure for its recovery.
That’s exactly the kind of thing a regulator should be intervening in – protecting the retail customer when the individual charge is small but the systemic application of it is outside the rules. Otherwise what’s the difference between this and next month, when the funds decide to charge extra admin fees because of the reduced amount they have under management- also without contractual right to do so but because they feel it’s unfair?
All that however pales in comparison with the comments here that some people are being redeemed at April or even March NAV! If that’s true that’s outrageous – tantamount to sterling and recovery in NAV between those dates and May. How the hell do you justify using an April NAV for a redemption application made ( by law) after 1 May? The regulator should surely look at that allegation and either refute it or correct it, because that’s more than just imposing a cost recovery exercise – that’s basically stealing the difference between what they realize your slice of the assets for and what they give you ( less the admin fee!).
Anything over a few grand and the withdrawl fees are totally irrelevant compared to the NAV they cash you out at. Everyone moaning about being nickel and dimed and not noticing them helping themselves to the 50 bill.
If providers are using April NAV’s for a May request this is illegal.
Take all you can and give nothing back Pensions plans. What else did you expect?
Does anyone know what is going on with Britcay? Has anybody been paid? No responses to emails. 3 days past when they should have paid out…I’m getting worried now. Hope we don’t hear they are bankrupt now.
Same with chamber!!
Chamber of Commerce Pension Plan is administered by a separate company and they have started making payments
Chamber started paying over 10 days ago
Fidelity have not paid out yet was due on the 15th but nothing now not replying to emails.
Same with Fidelity – now 4 days late and will be nothing over the weekend either.
And Britcay isn’t any better. They haven’t paid out a red cent either!!!
I’m on day 48 and still no payout from Britcay. I have fought with them over paying me on the April NAV rather than the correct NAV of May to no avail..Now they are going to charge me a fee to take it out and at their own time..
What does the Law say about these delays and violations of the rules of the Pension Amendment Law 2020. Are there any repercussions for them or are we just to suck it up as usual?
Why are some of the some of the companies using April and in some cases the March Nav? I contacted Britcay and was told because they didn’t have May’s number as yet that because I applied on May 2 that they would have to use the April NAV? Is this correct? Is this considered reasonable by the DLP as well? The DLP and specifically Ms. Wolliston said that at the bare minimum it would be the MAy NAV or the month that you applied in.
CNS, Can you get some accurate information on this at today’s press conference?
Your redemption request goes to the next month end…if they gave you April it is Fraud.
I think the lack of understanding of how this works and lack of explanation by the media and the government is leading to a lot of unnecessary demonization of the pension providers.
Yes, they have been for the most part terrible at managing money. That may be partly from bad management and also partly from the law which imposes restrictions on how they may invest.
Administration of the pensions is a different matter. Most of the pension providers contract with a fund administrator, say, Saxon or MUFG in the case of Silver Thatch and Chamber.
The pensions have a contract with their administrator to process new subscriptions and redemptions from the pension plans. The amounts paid pursuant to these contracts and how much work there is based on the usual volume of new members and retiring members. All of a sudden, these providers need to process 1000x their normal transaction volume. That takes resources, and the pension, like any other fund, has to pay for that.
To translate to a more relatable example, let’s say you ran a lawn service for the government and they paid you $1,000 per month to cut the grass at 10 government buildings, and then one month they called you up and said, as part of your contract, you know have to cut the grass of a thousand buildings. Would you not charge the government more for that?
So to summarise, these fees are going to administrators who need to allocate a ton of person-power to make sure everyone is paid within the time-frame that government has set out. The money is not going to employees of the plans themselves or to the asset managers.
It’s irresponsible for members of the government to try and score political points from this. It may be that administration fees are already high under the existing system, and there are many arguments for pension reform. But to suggest that it’s not appropriate for the pension providers to charge a reasonable redemption fee for all this unanticipated work is off-base.
$50 to $150 on a withdrawal seems fair enough. For comparison, go to the bank and send a wire transfer. You’re not getting that for less than $80.
crystal clear – thanks 9.34am
Maybe so, but I don’t see where any employee has entered a bargain or contract with the fund administrators whereby the employee has agreed to pay a withdrawal fee. If it is in the law or regulations, then totally fine. But is it set out in the regs?
My bank charges $25 for a wire…and the trouble with a flat fee is that generally once the systems have been configured for a bulk withdrawal, ie sorting out the format of a file to upload to the banks etc the work is done, the costs are the same if they pay 500 or 5000 people, and the costs don’t recur, so going forward they can use that work effort over and over again at very little additional expense.
Except we did not ask them to cut a thousand lawns, the government put into law and as far as I can see there is nothing in the law that says that the pension providers can charge me anything..Work that payment out with the Government but don’t tell me that you can charge me nilly-willy. I didn’t put it into law the government di so abide by the law like we have had to do every paycheck that we have had deducted over the years. Didn’t cost anything to take it from us, did it?
So are the fees going back into the fund to benefit remaining participants ? Or the service provider as extra management fees? Please clarify.
And these are the same providers who the government has enriched and enabled to unreasonably withhold expatriates money and keep it poorly invested. At first it was for 2 years even though 6 months was break of residency…then it was until retirement unless rolled into an approved retirement plan. Ultimately I have no doubt the government and pensions providers will just split all or at least the non-claimed expat pension amounts.
The pension fund or CI Govt should be paying any admin fees, not the contributor. It wasn’t contributors who’ve put themselves on the street for an undetermined length of time having to resort to withdrawing pension funds to support themselves, if anything they’re doing CI Govt a huge financial favour.
I have no transparency on what (if any) fees were charged…just the May 29 NAV.
I applied for my regular pension in February. I am told because there are so many pandemic withdrawals, I will have to wait further. Why does it take four months?
Thought they only had 45 days?
The piggy bank is now empty.
Guess at the conversation:
Top man: Hey guys I think I screwed up the
Economy?
Cronies: How? By the way great haircut….
Top man: I made a promise to eradicate coronavirus to save old people and I accidentally shut down the economy for an extra 8 weeks….
Cronies: Honest mistake but at least we have financial services to keep the money coming in…
Top Man: Oops, I kind of forgot to pass legislation by 3 days and we may be on the EU black list
Cronies: Okay, not great but at least it is sunny and hurricane season isn’t right around the corner. Don’t worry the tourists will come back…
Top Man: Shoot we just lost a lot of the service staff and I really can’t say when we can open the airport….
Cronies: Okay, we have an idea,,,let’s make the pension providers do mass payouts to the detriment of our people’s future.
Top Man: Great idea! Just a bit worried that pensions aren’t designed for mass payouts, but who cares everyone will be mad at them and not us…
Cronies: And…for a little extra sauce let’s grill the pension guys a bit to win favor with the people…
Top Man: Solid session…
Lol. You should write for rundown.
The amount of media coverage with regards to a $50 transactional charge is laughable.
The government is the only guilty party here. They deflected the economic mess on to the pension providers who by design are not in a position to deal with 1,000’s of withdrawals in the space of 6 weeks.
If you want to talk fees start taking a look at the ones you already pay:
Vehicle licensing
Stamp duties
Bank charges for compliance fees…
MLA’s making $20,000/month
Ok. Let me get this straight. You get to take our money, lose it and there are no repercussions. You also get to charge a fee to administer it, then a fee to withdraw it. I’m not sure I understand what benefits the people here. This is our money, our future and our livelihood you are taking from. And we dont get a choice in the matter. How wrong is this?
Why would anyone want to invest their pensions in a system that is burden with debt, where money is printed out of thin air, and debt is backed by the full faith of the government.
How can a financial system swamped in debt solve its problems with more debts, and now the US Banks are not required to keep reserves, guess the Fed is trying to avoid a debt crisis!
If the CI government doesn’t see the writing on the wall now that pensioners have to be givien the opotion to diversified in less risky financial products, then we get what we deserve next time the system tanks and resets for the fat cats.
Only in Cayman..
Banks can charge whatever fees the feel and now so can Pension Providers..If this didn’t hurt so bad I would laugh. I am so sick of getting scammed by the financial organizations on this island.
Corruptness at its finest with the approval of the CIG.
Why are some charging and some not?.I’ll bet it is the larger greedy ones that are doing this..
They should be ashamed of themselves, kicking people when we are down..In my mind they are just trying a last ditch effort to fleece us some more.
She is supposed to be the regulator and looking out for our interests insteads she spent an inordinate amount of time defending the Pension Providers and the hideous fees they charged. The only reason this is taking so long is that these Pension Providers did not have their houses in order and simply making these calculations from their May statements should have been easily enough to do. You ask them for a statement and it sounds like something foreign to them. Why couldn’t they just update the members accounts with the correct NAV online..Truth is we shouldn’t even have to be begging them for a statement if they would keep their websites up to date.
She told us that the Pension Providers should pay from the May NAV but there a lot of people that have gotten paid from March and April NAV. Why isn’t she looking into this and what is the penalty for breaking the law, charging us more fees to correct the problem??
This makes me sick!!!
Alden, try so step in here and straighten this out.
Cherry picking the nav….that’s fraud!!
Please explain NAV?
Net Asset Value. Each month-end the administrator values the portfolio, accrues expenses of the Fund and then divides everything by the number of units held by account holders. This is your NAV per share or unit.
If you redeem in the Hedge Fund world AFTER month-end you will NEVER get the previous month-end NAV. You will have to wait until the next opening fo redemptions, whether monthly or quarterly etc. with no idea what the NAV will end up being since you ask to redeem in the middle of an investment cycle which isn’t finished yet.
If administrators are redeeming out at the March or April NAV I am at a loss as to how that could be permissible.
My silver thatch looked alright but one of my two others looked way to small for May month end redemption. They seemed to have used conveniently low portfolio pricing which of course benefits members that don’t withdraw….or as you have indicated picked a low NAV.
Considering these administrators and their plans are approved by CIG can the Auditor General get in there and audit?
justifies, highway robbery, more like it..
She has no clue how we that are not civil servants are suffering. It is always easy to give away money if it is not yours..
She has not lost a dime during this pandemic and she is part of the more lucrative and successful Government Public Pension Program..That should put things into perspective for everyone..she could care less and this relationship with the Pension Providers is just to friend, friend for me…
“Wolliston said that there was nothing in the 2020 Amendment that said the Pensions Providers couldn’t charge a fee”
Ms. Wolliston, my question to you is there anything in the 2020 Amendment that says they “can” charge arbitrary fees..
This is nothing but a continued shake down by these Pension Providers.
In my opinion, Alden should have just allowed us to take all of our funds and told us we had to put the remainder on a fix deposit in one of the banks for a set amount of years or until retirement age. We at least one guaranteed a very small return on our investment. Mind you the banks here charge fees for so many things that I believe they make up names for the fees just to charge more..
So by law we’ve been forced to pay into a limited choice of funds whose performance has been questionable and now that we’ve been given access to those payments we are forced to pay an additional fee for the privilege of applying for them.
Just wondering, once a pension matures at retirement, should I expect further admin charges then every month as payments are distributed ?
Because they don’t make enough money already? It is absolutely criminal how these companies conduct themselves. They can loose all the money they want and still collect fees.
Given the fee I’ve been charged you’d be forgiven for thinking that they developed that web form for the withdrawal request specifically for me and then developed a specific one for every one of the other 20,000 applicants as opposed to doing it once for everyone. And you’d be forgiven for thinking they lined up personally at CNB in camana bay to pay my funds into my personal account and then did that for the other 20,000 people too as opposed to just raising a bulk electronic transfer using the account number that I’d typed into the webform.
Exactly what “admin” have they done to process the request? Surely not $150 worth per person?
Pastor Alfredo
Those applications have to be compliant with CIMA regulations. 20,000 applications requires staff to review and ensure compliance with those regulations.
If you want to point fingers start aiming them at the government.
Wow so if these people are administering these funds for nothing…yes they should be paid…but if they have been doing nothing for a big easy fat fee…well maybe they should suck it up.
I think I read 20000 people made withdrawals, I could be mistaken. $150 a pop. 3 million in additional fees on top of what they already charge. Great work if you can get it.
Inept heads of department, Cayman all over. Just put an expat pension specialist to run this department
It is glaringly obvious that the leadership of this department is inept, incapable and have no clue on what empathy is. Every person that has run this department in the past 10 years should be held accountable for such gross disregard for the Law.
So many expat pension specialists on island but no, CIG does not want to use them.
What a friggin waste of talent and know how.
Silver Thatch charged me $300 in fees. And Chamber hasn’t provided me with a confirmation of my withdrawal so I’m in the dark as to their fees. While I understand that there is a cost involved, I would have expected the funds to have disclosed the fee structure in advance.
Silver Thatch publicly stated there was a $25 charge to process a withdrawal. How do you get to $300?
Chamber of Commerce has stated their fee is $50
Chamber charges $50
It’s $50
Fake!!!
What are you people talking about, the fees for withdrawal are known figures. Even if you withdrew millions(which I doubt) your fee wouldn’t equate to $300….
STP charged a $25 fee so that is a lie… nice try lie bot!
Try Interactive Brokers. Take Cayman people and exempts no probs.
Beware of the estate duty tax implications if you are not a US citizen. I was going to use IB but used my local bank instead.
Sort of. With residency restrictions on all kinds of investments and money market funds.
Amy is doing a great job, Cut her some slack.
Her job is to protect our retirement funds.
Yes – she said that charging was fair to both the person taking the amount AND those that are not taking their money.
If no fee, then the person NOT taking would be paying for everything. Is that fair to them?
Great job at doing nothing but let the pensioners get fleeced. They don’t care because they have there own pension and sweet pay so screw the rest. Civil service all the way – largest voting block in Cayman.
Come on, what does anyone really think this woman would say? MLA Saunders has pointed out how close the head people at DLP are with the pension administrators so of course she will stick up for them. The problem is that these civil servants all like a do nothing job and get nice pay plus benefits.What is going on with this WOC department and this new web site that does not work? What is going on with the 10 week extension to workers permits that the Premier said was part of his governments plan to help businesses through these tough times? As usual the department that is supposed to handle it knows nothing. But they still are getting paid. It’s a f?><king joke at our expense!
This was a rush law that was written more with clip and paste.
This is how the private sector works. Only the civil service provides service at reduced cost.
Amy is right.
I’d like to have that list of which companies charge how much.
I have managed to claw back 20k. I am goobok (happy).
There is nothing justified about sucking the money out of people.
You must be new here.
They get paid for constant underperformance. Now that they have to work, they need to get additional fees? Nice gig.
I am fine with a fee because I know how much work it takes to tackle this onslaught of withdrawal requests.
“the pension administrators got their fees for doing nothing”…who do they think they are Civil Service?
These are not “reasonable fees”. Maybe the Pension board can do their job and demand how the figure of $100 per transaction is “reasonable”.
Pension Board? Is there one?? There should be one yes. But listening to the 2 civil servants from DLP yesterday made me realize, nothing about Labour and pensions will get better or improve under them. Took my son, some almost 11 weeks to get a simple vacation matter resolved about 2.5 or 3 years ago. He was given a mountain of excuses, none of which had merit.
its funny. i made an application to withdraw and didn’t even know there was a admin fee for this. no, not even one in “the fine print” . The public were simply not informed of these fees and the government needs to address this else it allows its constituents be robbed right in front of their eyes.
I asked for the fine print and the administrator refused to disclose the fees they would be charging.
Wow, that’s not right! Surely you(we) have a right to know that… They’ve forgotten it’s our money they are using.
So then where’s the contract? I certainly was not made aware that there were fees attached to my “emergency pension relief”. This is 101 law … Will His Excellency the Governor strike this or is there a contract somewhere, or some legal framework that the people have not been made aware of?
Class action law suit would have large numbers of similar-facts parties in this case!
If you complain about a fee watch them slow walk your withdrawal request.
Pension funds are not designed for mass withdrawals. If you don’t want to pay a small fee then don’t withdraw.
By that logic, if I offered you a banana and you took it and then I punched you in the stomach, I could say that I am not an banana dispenser so you shouldn’t have taken the banana.
Ah now you’re talking extortion….of course…it’s like pay to get your money or pay to have it mismanaged.