A newly-announced review of Cayman Islands private sector pensions that is looking into governance and non-compliance issues surrounding the country’s regulatory system may be treading over some worn ground.

Complaints Commissioner Nicola Williams said last week that part of her investigation into the National Pensions Office would consider whether Cayman’s National Pensions Law (2000 Revision) needed to be updated - partly to enact stricter and more timely punitive measures for businesses that don’t pay workers’ pensions.

To those who were on the National Pensions Board in 2007, these issues will sound familiar.

“We recommend increasing the fines available in the legislation and providing the NPO (National Pensions Office) the ability to levy fines directly (subject to appeal to courts) for offences that are more minor in nature," stated a consultant’s report completed by Mercer Human Resource Consulting in March 2007.

The Mercer report also recommended a number of changes to the country’s pension legislation to “generally make the National Pensions Law more workable and consistent”.

According to former pensions board chairman Carlyle McLaughlin, a draft of the pensions law was meticulously revised over the course of 18 to 24 months while he served on the National Pensions Board.

“For the better part of two years we went through that law with a fine-toothed comb,” Mr. McLaughlin said earlier this week, adding that recommendations were sent to then-pensions Superintendent Cyril Theriault and the government ministry responsible for national pensions.

A draft of that proposal was never released, but Mr. McLaughlin said the board also recommended giving the superintendent more authority to enforce compliance regarding pension payments.

“We could see that, for the future, there were going to be problems,” he said.

The 2007 Mercer report did caution government that fines and sanctions against private sector non-compliers would only be effective “to the extent there is sufficient political, judicial and regulatory will to impose them.”

Ms Williams’ review will mainly focus on the National Pensions Office ability to effectively investigate, charge, and convict companies that are non-compliant with pension contributions under the law. She said the OCC would further review the role the solicitor general’s office plays in the prosecution of alleged offenders.

According to the Mercer report, “compliance and enforcement of the NPL (National Pensions Law) is the largest challenge facing the Cayman Islands pension system”.

Moreover, the report noted that the private sector pension system might not provide adequate resources in retirement for plan participants, who in some cases would be left with one-fourth of their pre-retirement earnings.

“Based on current economic expectations, the minimum (defined) contribution rate of 10 per cent (5 per cent from employees, and 5 per cent from their company) is not projected to provide adequate retirement income security,” the 2007 report read.

It was unclear what recommended changes, if any, were made in the private sector pension system between 2007 and present.

The current United Democratic Party government, which was not in power when the Mercer report was released, has proposed suspending private sector pension contributions made by businesses as a way to offset increased fees charged for foreign employees’ work permits.

Education Minister Rolston Anglin has also suggested the possibility of disbanding the National Pensions Office and devolving its responsibilities to other areas of government.

A meeting was held with National Pensions Board members about the issue on Wednesday, but it was not clear by press time what had been discussed.