Chamber boss claims pension system a success

| 12/07/2021 | 36 Comments
Cayman News Service
Chamber of Commerce President Mike Gibbs

(CNS): Cayman’s national pension system has faced significant criticism from politicians of all stripes but Chamber of Commerce President Mike Gibbs defended it at the organisation’s Legislative Luncheon last week, despite evidence that, 23 years after the system was introduced, few people are retiring with anything like a viable income from their investment.

The former premier, Alden McLaughlin, has blamed the Chamber on a number of occasions for pressing the government of the day into a private system rather than a national scheme, which he and other politicians now believe the country should adopt. Nevertheless, Mike Gibbs said the mass withdrawal of some CI$500 million from pensions last year was a reflection of its success.

However, the leader of the business advocacy group did accept that the withdrawals have placed the Cayman Islands in the challenging position of “determining what measures to enact to replace the money that was withdrawn”. He said the Chamber’s Executive Committee recently met with a group of pension plan administrators to discuss this situation.

“They presented a series of recommendations that the Chamber plans to share with the minister for consideration. For many years, private pension reform has been necessary and advocated by the administrators. It is therefore hoped that the current situation will lead to some practical decisions to revise the National Pensions Law and Regulations, as well as the investment guidelines, so the pension system can be reshaped to achieve its intended purpose of providing meaningful retirement income when its most needed,” Gibbs said.

But the minister responsible for this area, Chris Saunders, has been one of the system’s harshest critics and while in opposition, he had advocated for a complete overhaul over what he has repeatedly described as a failing system.

In April last year, during the debate in Parliament about the amendment to the law to allow people to access their pension money to get through the economic hardships caused by lockdown, Saunders had urged everyone to take what they could, as it was “one of the first steps in dismantling the system” that isn’t working. He said having having nine pension providers for Cayman’s small workforce was “ridiculous”.

And during a Public Accounts Committee meeting in June, Saunders criticised the management of pensions and accused administrators of ripping people off. “They are hell bent on putting their hands in people’s pockets and nickel-and-diming them on every cent,” Saunders had said, adding that they were taking very high fees from their members even when they were losing their money.

With hints of the need for a national system, Saunders has said that pension reform will be on his agenda now he is the minister responsible and that the current regime will be changed.

Back in 2017 during a Finance Committee meeting, then premier Alden McLaughlin spelt out his belief that the system should be changed completely. He said he expected the Chamber of Commerce to “have a stroke” when they heard his comments but the Public Service Pensions scheme was far better than anything on offer in the private sector and government should have created a national plan from the start.

He said when it came to pensions and the health insurance firms, government had been sold a bag of goods that does not meet the needs of the community and the provisions are “grossly inadequate”. He had also accused the Chamber of putting pressure on the government of the day against a national scheme.

Gibbs claimed during the lunch event that the “pension withdrawal demonstrated the success of the system, with nearly half a billion dollars being readily accessible by the members of the various plans”. However, since both sides of the House appear increasingly likely to favour a national scheme, it seems unlikely that this will sway politicians into preserving the current private scheme with nine different providers.

Gibbs also called on government to address the problems of health insurance, where again he seemed to be veering in a different direction from public sentiment and the government’s leaning for a single-pay system to take the more than $50 million profit being made by the healthcare insurance companies annually out of the equation. Gibbs said the “limited choice of health insurance providers” as well as the escalating cost “is creating significant duress”.

With people unable to afford healthcare in retirement and workplace plans putting small businesses out of business, he said the situation was “obviously unsustainable”, but did not offer support for a single-pay system. He said the Chamber plans to meet with the minister responsible and the industry stakeholders so that “we can work together to hopefully develop some reasonable solutions”.

Most of the local pension providers and the health insurance companies are members of the Chamber, so politicians can expect the association to oppose any moves to create a system that will eliminate private sector competition in both areas, regardless of public support for some form of national regimes.

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Category: Business, Health Insurance, Insurance, Pensions

Comments (36)

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  1. Anonymous says:

    You all invested in a currency that devalues every day

    Imagine if your pension went into Bitcoin

  2. Anonymous says:

    How can anyone survive on 1000 a mt pension..come on guys..stop supporting…..

  3. Anonymous says:

    We tend to credit pension providers with some commitment to getting everyone a live-able pension upon retirement. But thats baloney. They are just in it for themselves, from the fees that they impose. With so many plans in operation, each pension plan never gets the critical mass to outweigh the various fixed and variable costs the fund must bear. Even though you put money in, very few see that pot grow further, from a prudent investment strategy. Therefore you put in X over a 30-year working life, and you’ll only get X back (if you are lucky). But by the time you start drawing on it, that X ain’t worth much.

    The solutions ? Fewer pension schemes. You can only have a company scheme if your business employs (say) 200+ staff. Other than that, you must join a sole Cayman-wide scheme, administered by a reputable business locally, and overseen by local trustees who don’t have a financial interest in the pension company. For further security against investment incompetence, force a rotation of pension provider and investment manager every 5 years. Set and define pension provider fees by law or regulation, so they don’t become excessive.

    Also, make employees and employers contribute more to the employee’s pension pot. A bigger pot means more chance of a pension you can live on.

    But I think the current providers have too many pals in govt to get this right.

    • Anonymous says:

      Your spot on 12:54., turn it over to the big boys in New York who will manage and administer the whole island at and 1/2 a percent capped and get rid of the complex structure only suitable for hiding management. You got 1 pension provide here with a BVI corporate trustee and hidden directorship behind that.. Wtf

  4. Anonymous says:

    pension needs an overhaul. I should be able to say who my money goes to. No way, should a man or woman remarry and their new spouse get all of the money and their children get nothing unless they are minors. This law is from the dark ages when men went to sea and women stayed home. The children were from that marriage. I know of two cases and I’m sure that there are more where the second spouse is not the father/mother of the child/ren and the money is held up.

  5. Anonymous says:

    The silver lining of the pensions withdrawal was that I was finally able to appoint a competent investment manager and self-direct the investment decisions – nearly doubling that liberated portion in a year in whipsaw markets. There’s nothing missing…quite the opposite. Let us self-direct our own retirements please. Many us are willing to sign a release which attests that is our desire. It’s our money. Not the employer’s. Not the Chamber’s. Not the Government’s. Ours. Shouldn’t the Chamber of Commerce want us to invest in Cayman real estate or local businesses if we want to do that?

    • Anonymous says:

      They will never trust you to use your money wisely. It’s not personal.

    • Anonymous says:

      Those already receiving 1000pm pension were not allowed to withdraw any further on the withdrawal. In fact they have received no assistance from Government, stipends received more even when some were also working .

    • Anon. says:

      You are one of few, who is informed enough to invest in your future.
      Last year when the mass pension withdrawal occurred, instead of re-investing, there were many staycations, purchasing of new vehicles, upgrades to homes and silly purchases like televisions. Customs and Border Control made massive revenues from all the Amazon orders.

      These are the same people who will stand in line at NAU at retirement and say they can’t afford to live on their pension.

  6. Reta Hhusb says:

    Hard to understand why Private Sector-run competitive pensions are not successful. In the UK they fairly recently completed enrolling all employees into compulsory personal pensions. Employee and Employer must contribute. Lots of choice of providers, and low costs. For example, a low-cost scheme could easily run at less than 0.5% p.a. of fund invested, and that covers all charges including fund manager fees. And they offer choice of investments, and sensible default investment processes for those who don’t care to choose.

    Just how much are the fees on the Chamber Plan and other plans? Are there any comparisons online?

    But limiting withdawals to £1,000 is mental. Limit them to a % of fund dependent on age maybe, but £1,000 p.m?

    Whatever, don’t think a Govt national scheme is going to be the answer. They’d just start directing how it gets invested loaclly (!) insisting the pension money be invested in real estate or “infrastructure” stuff that would never pay any dividend but would make their friends and family richer.

    • Anonymous says:

      It’s because they are all “local”. The big pension funds could set you up with fees less than 0.5%, daily balances, self directed accounts and all the usual mutual fund options. The locals don’t have enough volume to be competitive, but they somehow convinced the government that it would be better for the country to give it to them even though their performance is terrible.

      • Anonymous says:

        The good, large managers don’t make political contributions in Cayman. Therefore they will never be used.

    • Anonymous says:

      It does not even equate to £1000 plus cost of living is alot higher in Cayman, especially utilities, which is where most of it goes. Employers do not help when they will not employ people over a certain age who are capable and willing to work. They would prefer to keep the permit holders or put the additional workload on other employees. Whole workplace needs revamping.

  7. Anonymous says:

    The only folks that did okay with this scheme are those who were able to draw down their pension funds and reinvest them in the Credit Union.

    What a complete ripoff it has been for the most of us.

  8. Anonymous says:

    Always remember, the Chamber represents business owners — not the other 99 percent of Cayman’s population.

  9. Anonymous says:

    This guy is delusional or living in an alternate reality. The important thing to remember here is that the CoC is really just a special interest group and that their positions are just those in support of what is more profitable for the members of the group.

    I think that this is the same CoC that fought against universal healthcare when in reality what we have now is a system where the more profitable end of the health insurance business is taken by private companies while leaving the mostly unprofitable clients to be serviced by CINICO (i.e. the government).

    It is my opinion that these people should not be trusted.

  10. Anonymous says:

    time for mike to consider his position….
    totally out of touch…. his silence regarding cig lockdown has been staggering too. he is sitting on his hands when many of his members are going out of business.

  11. Anonymous says:

    Go to sleep Mr Gibbs, you obviously have not reached pension age with a local provider. They offer an Annuity, not a long lasting monthly paid pension plan.

  12. Anonymous says:

    Mike Gibbs, Wil Pineau and the Chamber of Commerce are in denial and looking out for their interests. They represent businesses not people and will never see anything wrong with the current system. They live in a different Cayman and have no idea how much ordinary people are struggling.

  13. Danny Roach says:

    What an a$$hat! It has never been viable for anyone.
    It’s not just the poor investment decisions some groups have made, it has a lot to do with the legislation as well.
    It definitely needs to be overhauled.

  14. Anonymous says:

    Our pension regime is a fantastic success for the pension providers. Not so much for the rest of us. The system does not encourage enough saving and the returns on what little is saved does not justify the fees IMHO.

  15. Anonymous says:

    The fact that the pensions law limits pensions to $1000 a month regardless if you have 10k or a million needs to be addressed.

    • Anonymous says:

      4.33pm Minister Tara Rivers changed that. You get a percentage annually. It’s something like 4.78% but most locals still can’t live on it as they don’t make millions.

  16. Anonymous says:

    A pension system that pays out a maximum of $1000 per month is a joke… best! Once a person hits retirement age, lump sum withdrawal of entire balance should be allowed if desired.

    • Lo-Cal says:

      And not all person were able to take money out when the pension withdrawal was happening. All of the government company (Authority) were barred from getting any money during the withdrawal and ate not entitled to the same pension scheme as other government workers. All we have to look forward to if the measly $1000.00 per month. This is why there are so many people begging NAU.

      • Anonymous says:

        1000 you are doing good. I have wasted 21 years of my life for a measly $500 a month.

        • Anonymous says:

          Just noting that you could have undertaken additional private savings and investment with your 21 years of income… Agree the pension plans available are pretty poor, but surely we can take on some personal responsibility for preparing for the costs in our retirement years?

    • Anonymous says:

      Raise the contributions, but only have pension for caymanians…the money will at least stay here in cayman. Work permit holders it all leaves…

      • Anonymous says:

        Contributions certainly aren’t the problem, on what amounts, on best case, to a piecemeal unlivable monthly annuity. You could have $2mln saved and it would still suck.

      • Anonymous says:


  17. Anonymous says:

    What’s he smokin’ ?

    • Anonymous says:

      All the money he’s making off our pensions while giving us pennies.

    • Must b our money he smoking!

    • Anonymous says:

      Old Caymanian joke, “hey Henry, what kind of cigarettes do you smoke”? OPCs,

      Reply:never heard of them.

      Henry: I left my pack, can you spare me a smoke?

      Reply: see here Henry

      Henry: thanks, this is my brand, OPCs, other peoples cigarettes.

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