Pensions must still be paid

| 21/01/2010

(CNS): Although employers were expecting not to have to pay pension contributions once government increased the work-permit fees, officials have confirmed that the legislation which will be required to remove that obligation has not yet been addressed. The National Pensions Office has confirmed that employers must still make contributions for all their staff.  Although the office has received a number of enquiries from local businesses, staff confirmed that the law has not changed.  A spokesperson for the premier has said, however, that plans to change the law which mandates pensions for foreign workers is still under discussion.

When McKeeva Bush first informed the public from the Legislative Assembly that his government would be increasing work permit fees, he said the blow would be softened by the removal of compulsory pension payments by employers for their foreign workers.

On 7 October 2009 in his statement on the new revenue measures introduced in the 2009/10 budget, the premier said that government was very sensitive to the cost of doing business in Cayman when compared to competitor jurisdictions.  “As such, the government felt that the increase work permit fees across the board is supportable only by the removal of an existing employer expense such as the pension obligation for work permit holders; hence the cost of conducting business in Cayman will not increase,”  Bush told the LA.

He said this would apply to non-Caymanian workers and in some cases the increase in the permits would be less than the employers’ saving in pension contributions. This would lead to a small surplus for some smaller businesses, the premier had said, as well as giving foreign workers a choice about where they put the 5% of their salary which is currently deducted from their earnings.

However, all work permit fees with only a few exceptions were increased on Monday 18 January and as yet there are no indications when the Pensions Law will be changed to make pensions for non-Caymanians at least voluntary. Fees have increased as much as three times in some cases and many around 50%.

At present all workers, including work permit holders, must pay a contribution equal to 10% of their salaries into a pension, 5% of which must be paid by the employer. The law has been in place since 1998 operating as a privately-run pension system with government oversight.

The pensions office said today that it is still battling on a daily basis with non-compliance by employers and in particular employers that remove the 5% contribution from their employees wages yet still fail to make that and their matching contribution into a fund.

Not surprisingly professionals from the pensions sector have also warned against removing the pension obligation or introducing any kind of pension holiday, despite the poor performance of many funds in the last few years. In a recent commentary on the Silver Thatch website, the firm noted that a one year break during the lifetime of a 20 year plan with average annual contributions of $3,000 could reduce a retirement fund by approximately $15,000.

On Monday CNS asked the Ministry of Education and Labour for any details regarding the proposed pension suspension,  but is still awaiting a response.

Details of the new work permit increase are available on the Immigration Department website

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  1. Anonymous says:

    As an expat I am not really too worried about losing out on a Cayman Islands pension. I have some arrangements elsewhere and to be honest if I had the choice I woudn’t be investing in a local fund anyway.

    It’s a bummer losing the employers contribution but to be fair the funds would only go into a Cayman fund and be mismanaged by under qualified incompetent Caymanians bought in to replace the qualified people that immigration got rid of. A big percentage of the pension funds have to be invested locally, which, with all the incometence, greed and corruption is like throwing your money on the fire.

    Even if you did have anything left in your pot, you can’t take it with you when you get rolled over, you have to wait a couple of years or whatever, whilst the admin fees and ‘Mac’ fees are eating away at it. By the time you get the few dollar remnants they will probably have come up with some new legislation to make sure that you could only ever spend the funds in Cayman anyway or have to donate it to pay for teenage mothers to have more kids or to lessen the burden on young caymanians by reducing tattoo costs.

    So probably better to invest in a decent diversified portfolio that can be flexible to your needs and subject to less red tape.

  2. Anonymous says:

    It is hard to even begin discussing the subject proposed disastrous UDP decree to suspend pensions with anyone so greedily short term sighted they are unable to see the long term exponentially increasing unnecessary burdensome costs to our Islands children with future taxes to pay politicians vote buying "Old Age Pay Out" schemes. 

    This will occur all because the UDP Government of 2010 stopped workers saving for their own old age retirement income!

    Whomever was the short term thinking myopic idiot that put this pension suspension idea into the Premier’s head please stand up so that we can collect donations to make a statue of you, for future tax burdened workers to tear down and spit on.

    Let us now see if our Colonial Lords and Masters in the FCO and UK Prime Minister will give assent to this long term Cayman Islands damaging disastrous decision to change the National Pension Law. 

    I hope the UK will use their Rule by Decree – “Order in Council” – powers wisely, this time to protect the Cayman Islands future financial wellbeing. 

    UK Prime Minister Gordon Brown, please refuse to give assent to this change of the National Pension Law.

    William H. Adam



    • Anonymous says:

      Mac vows to change rollover.  Mac vows to raise Work Permits and to stop pensions being paid out to expats.  The bill passed quickly about the increase in Work Permit Fees but nothing about Pension.  Mac stated that if the Work Permits increased that employers can rest assured they wouldn’t have to pay out pension and the increase….well no more needs to be said.  They thought there was an exodous of companies leaving before, watch what is going to happen now.  How can anyone pay the increase in permits, pension, cost of living, etc and keep a business operational???????

  3. Joe Average says:

    This guy is making my head spin!  First, we hear one thing.  Then he thinks about it and decides it isn’t a good idea. Then, he says there are some bad ideas.  And someone taps him on the shoulder and says they were his ideas. So he tries to make it look like a good idea. Then, he changes his mind because he knows it was a bad idea. By that time he’s got new bad ideas mixed up with the old bad ideas and just says whatever comes to mind hoping we’re not following it.  And he’s right for once.

    • Anonymous says:

      Pensions should be paid from the employees if they so want it.  With the ecomony in the shambles it is in now, pensions are losing everyday.  Let them keep their monies at least they know where it is going.  People have put in money for the past 5 years and when their time to leave comes, they go and check out their pension and realize they have lost more then they have put in.  So where is this pension any good.  They take the monies out of the country back to their country.  Cayman is not benefitting from it, we are losing from it.   Let the pension just be for Caymanians at least it will stay in the country. 

  4. Missey says:

    Cayman should follow the rest of the world, pension paid from inception and cannot be cash in until age 60 or 65 regardless if you are short term or Caymanian or non-Caymanian. Expats population make up approximately 79% of the pension pool.


    • But then . . . says:

       . . . but then we could not claim a huge tax break by making a massive pensions contribution once we return to the real world.

  5. Anonymous says:

    Thanks MacDinejad for the instability and confusion caused by your short-sighted decision making.


  6. Anonymous says:

    I see on the news that the Premier is supposed to speak at a conference for an hour today on the business outlook for Cayman over the next year. I am not sure why they gave him an hour. Surely even he can say "bleak" in less time than that – that assumes honesty of course. 

    • Anonymous says:

      Then the increase in Work Permits should have still been in discussion

  7. Anonymous says:

    A spokesperson for the premier has said, however, that plans to change the law which mandates pensions for foreign workers is still under discussion.

    "Still under discussion" = "Dam – Dem sposed to furgit bought dat long time – I did"

  8. Anonymous Accountant says:

    Trees that once "bore" fruit just in case the spelling and grammar police are on the job early this morning. (I was restructuring, rewording and changing tenses and made a "boo boo")

    Actually, having plucked all of the low-hanging fruit, and destroyed most of the foilage in pursuit of the higher fruit, I would not be surprised anytime the Cayman Fruit Tree decided to take a season off and not produce any blossoms.

  9. Anonymous says:

    Before any criticism is posted here I would like everyone to remind themselves that travelling the world first class at our expense testing casinos, restaurants and hotels is hard work and a completely reasonable excuse for not fulfilling commitments made to Cayman’s small businesses and other employers. People should also keep in mind that as those responsible for bringing forward any required revisions have trouble with walking while chewing gum, some delays are inevitable. Hopefully if changes to the pension law are delayed for long enough unna all forget.






  10. CSI says:

    It was a bad idea in July, still a bad idea in October, and still a bad idea today.  It’s extremely short-sighted, insular thinking, even by the standards of McKeeva Bush and the Cayman Islands Government.

  11. Anonymous Accountant says:

    Big Mac also said that garbage fees would be eliminated (most likely because the majority of non-payers form part of his support base) when the 2% duty increase came into effect, but has since decided that has to be paid for the first half of this year.

    If the revenue stream is running as far below projections as it is rumoured to be, then expect more promises to be broken when he recasts his jaundiced eye at the trees that once bared fruit.

  12. Anonymous says:

    Just like the garbage fees.  It was said that once the duty increase and other government fees took place the garbage fees would be dropped.  Well we’re still paying garbage fees.  Then it was said that once permit fees were increased, the pension would go away.  Not that I am for dropping the pension, but how many lies will this government tell?

    • Sadly, me too says:

      S’only juss begun, my friend, it’s only just begun.

      Hang on – this is a roller coaster to end all others…

      Juss hope unna got de stomach fi it…

  13. Anonymous says:

    The idea of changing the law is wrong on two levels.

    First of all it is divisive between Caymanian and non-Caymanian workers. If you think this is a good idea then consider all the examples in history and today where one group of people are treated less favorably then another. Inevitably it leads to frustrations and often violence. An example currently is in Nigeria where two groups people, the Christians and the Muslems, have deep rooted disputes.

    Secondly it is not suprising the professionals in the pensions industry have warned against this because their figures are correct. A one year break of contributions can have a massive detrimental effect on the overall fund available at retirement. After all with pensions like any other long term savings it is the amount you put in and how early you put it in that is the key factor. Things like investment returns have a minor effect on the outcome compared to how much is put in.

    Therefore I believe it is good that the law has not changed. However I leave the rights and wrongs of Mr Bush stating that the increases in fees would be mitigatted by reduced costs elsewhere and then not delivering the savings to others to comment upon. However (sorry I cannot help myself but make this point) it seems mad to me that a politician is able to do this with impunity. Where are the challenges from the opposition, from his own party and from the Governor? The only bodies in this country who seem willing to challenge anything said by Mr Bush is the media (CNS and the two newspapers).

    • Anonymous says:

      You are absolutely correct about divisions and negative repercussions. Unfortunately, divisions now seem to be the norm. One is either Expat or Caymanian. A Caymanian is either "True" or "Paper" ** and a "True" is either PPM or UDP. 

      ** Please read the Cayman Primary Social Studies, Book 6, page 65"Sometimes people who are not Caymanian citizens wish to become Caymanian, or acquire Caymanian status. We call them ‘paper Caymanians’.

      "A house divided against itself cannot stand."

      CNS: As has been pointed out before, you are quoting from the old curriculum. Instead of constantly posting this, take the time to look at National Curriculum 2008, which contains no such thing and can be found on the Ministry of Education website. Pay particular attention to "The Educated Caymanian" on page 5, and "Aims and Outcomes" on page 9.

  14. Anonymous says:

    of course they got to be paid….. stupid elio and mckeeva….. resign now! they obviously don’t undrestand the basic principles of economic mangement

    duncan, bring in direct rule!

  15. Joe Bananas says:

    What the "Premeir" really meant when he said "As such, the government felt that the increase work permit fees across the board is supportable only by the removal of an existing employer expense such as the pension obligation for work permitholders; hence the cost of conducting business in Cayman will not increase,”  Bush told the LA."  will  be called in to Cayman as soon as he figures out an excuse(someone to blame).  As always He is working diligently on a response and will get back to you yesterday.

      P.S. this is a joke.  I hope.


  16. Anonymous says:

    I dont know where the Premier got this advice from, but I will bet that this will be the end of employment for caymanians. Every employer will now want to employ foreign workers because they will not be obligated to pay a pension contribution. If the Premier thinks that this is a wise idea then he better think twice. We could end up with a situation where Caymanians become charges upon the Government.

    Removing the pension payments for foreigners is the most unproductive idea that Mac has come up with to date. What will he think of next?

    I think it is time Caymanians wake up and realize that this is an anti caymanian move by the Government.

  17. Listen Up says:

    Discriminating against the foreign worker on pension payments will be likely to expose the UK government (and then the CIG) to a massive compensation claim for breach of human rights.

    • Anonymous says:

      Really???? – Which Cayman Islands statute, section of the Constitution, or provision in any international obligation which has been extended to the Cayman Islands are you referring to. Maybe such a course of action should have this consequence but in the real world there is no such possibility.

      • Tree Hugging Hippy says:

        Workers would be residents.  The different treatment on pensions would be discrimination of residents on the basis of national origin under the ECHR which applies in Cayman.  There is no justification for such discrimination which would sustainable under rights law.  Therefore by the Governor signing the law or the FCO not blocking it the UK government would be in breach of its obligations to Cayman residents under the Human Rights Act (the UK government is liable under that Act for its actions outside of the territory of the UK covered by the Act).  Wronged residents would then have a damages against the UK government (which would now doubt be imposed as a costs on the CIG).  It would be a simple group litigation claim (ie a class action). 5% of the pay of all the affected works is a mucho dinero. 

        Hey presto! (There might be a way out if the change was truly voluntary but it would probably still constitute a breach).

        • Anonymous says:

          Wrong – the human rights provisions do not extend to economic rights in Cayman – unfortunately.

          • Nope! says:

            Sorry, but you just don’t get the point that was being made.  The claims for compensation would be under English law for breachs of rights obligations under the Human Rights Act.  A claim in London, under English law, which would ultimately lead to an amendment of the Order InCouncil which brought in the Constitution. 

            And further, the exclusion for economic rights expressed in the Constitution are subordinated to the broader rights appicable in the Cayman Islands by reason of the extension of the ECHR to Cayman which do nto contain any economic or business carve out.  Local law cannot trump the higher rights if someone wanted to take it to Strasbourg.

            It is a question of when not if. 

            I would get your legal myopia checked out if I were you!

          • Rum Point-Pole of the Bailey says:

            The domestic rights in the local Constitution try to fetter rights but the Constitution cannot limit the rights of residents afforded by the ECHR.  Indeed you make a good point – if a resident suffers a loss because the UK signed off on the Constitution which failed to transcribe the rights obligations owed under the HRA then there would be a claim against the UK for that failure.  The High Court has the power to require the Constitution be amended to be rights compliant.