MIN. MYLES SOUNDS ALARM OVER PENSIONS

Hon. Minister for Caymanian Employment and Immigration, Michael Myles, has sounded an alarm over the state of pensions for workers in the Cayman Islands. Expressing concern about the current situation, Mr Myles said there are many examples, particularly of private sector workers whose pension deductions from their salaries are not paid in or were incorrectly registered. Another concern is about persons who have significantly dipped into - and depleted - their retirement funds.

This comes as the National Coalition For Caymanians(NCFC) administration plans a major study aimed at ultimately carrying out a wide-ranging review of the entire pension system in the Cayman Islands.

Appearing on Radio Cayman’s For The Record programme with Orrett ‘OC’ Connor, Min. Myles expressed alarm at what he referred to as “the high numbers of delinquent companies that are not paying workers’ pensions”. He said firm steps, including court action, are being taken by the government to address this longstanding problem.

Over 2,000 companies are said to be in default, putting at risk the pensions of hundreds of employees, both Caymanians and work permit holders.

RAMPANT PROBLEM

He referred to a “rampant” problem concerning how some companies report pension deductions, resulting in huge amounts of pension payments not being recorded resulting in pensions remaining employees denied their full pensions when they choose to retire.

“That is a staggering number of people that own companies or are working in companies that are not paying pensions. We have well over 2000 that are not paying pension and that are significantly delinquent. I met with two of the pension operators this week, only to be told that one of them has at least 1600 delinquent companies. Of that 1600, over approximately 260 were given payment plans. Of that 260, at least 234 have defaulted on payment plans.”

Noting a renewed push by the government to address the problem, Mr Myles also urged employees themselves to check to ensure that their pension deductions are being paid in.

“What I find disgusting about a lot of this is that you have companies taking monies out of their employees’ pensions and not actually paying the pension. And unfortunately, we at times as a country, don’t take it seriously enough that we keep up with our pension. So very few people actually check their pension to make sure that money is actually going into that pension. So I want to take this time to encourage our community, certainly our employees, to check your pension.

PERSONAL RESPONSIBILITY

In driving home that point about personal responsibility to ensure that pension contributions are up-to-date and registered, Mr Myles also advised: “I want to take this time to encourage our community, certainly our employees, to check your pension. Call your pension company. It is your responsibility. It’s not your employer’s. It’s your responsibility to ensure that you get a statement.”

One of the emerging concerns is over the implications this has for health insurance where, according to Minister Myles, some employers are taking on health insurance just to satisfy the immigration standards, and once they get the work permit, they basically just stop paying the health insurance.”

According to Min. Myles, this poses a severe challenge for both individuals and the government, which has to pick up the tab when people retire only to realise that their pensions and health insurance are not up-to-date. “We are having an ageing population, and the more people whose pensions aren’t being contributed to, that becomes a problem for the country overall in terms of cost. How do we support these folks?”

CLAMPDOWN

He reported that as a result of a more aggressive stance by the government, some improvement is being observed. In cases referred to the DPP(Director of Public Prosecutions) to date, 109 cases have been resolved, with over CI$384,000 in pension payments reclaimed. The Minister gave examples of companies being closed, with huge amounts of employees’ pension deductions not paid into their workers’ pension funds.

At the same time though, Min. Myles presses the point that employers should keep track of their pensions while the government intensifies enforcement.

“We are steadily enforcing the law with persons who have work permits who are not paying pension. The pension companies are seeing a steady improvement, with companies now catching up with their pension payments. We’re still not there, but I want to remind persons who are working for these organisations that you do have rights. You have the right to ensure that you know if your pension is being contributed to.”

PENSION REVIEW

Against this background, the NCFC government is setting up a study to review the pension scheme, including the rate of pensions, the age at which people can access their pension, and how pensions are invested. Mr Myles said the way pensions are invested has not changed in the past 25 years despite major shifts in the investment market.

He also said the law governing pensions itself has remained unchanged over the past 15 years.

Also highlighted is the risk to private sector workers who have dipped into their pension pots to pay off a mortgage, but whose pension pots are now depleted after leaving work and have to rely on government support.

In that vein, concern is also being raised over how both individuals and the overall pension fund have been affected by withdrawals made during the COVID pandemic - under a government-approved scheme at the time. Min. Myles said those deductions amounted to around half a billion Cayman dollars in total being taken out of the general pension fund.

“That is money that’s not there anymore,” he said.

Also highlighted is the risk to especially private sector workers who have dipped into their pension pots to pay off a mortgage but whose retirement funds are now depleted after leaving work and end up relying on government support.

An emerging question expected to be addressed during the planned pensions review study is whether the rate of pension deductions from workers’ salaries should be increased.

Min. Myles is stressing that wider public awareness is needed about the importance of pensions and saving towards retirement, starting with the youth.