Interminable delays at the attorney general’s office and the Cayman Islands court system are blamed, in part, for the country’s failure to adequately enforce the National Pensions Law, according to two reports from the National Pensions Board. 

Both reports, one from 2006/07, which had its release delayed for about two years, indicate the National Pensions Board members were “extremely disappointed” at the progress of prosecutions against companies that failed to meet pension obligations. 

Those reports only concern pension plan providers for private sector companies in the Cayman Islands. The government employees’ retirement funds, managed under the Public Service Pensions Board, are overseen in a separate system.

Also of concern, the pension board report for the government’s 2007/08 fiscal year indicates that one of the pension plans was in a vulnerable financial position. But details of that weren’t made public right away, partly because the 2007/08 pension board report wasn’t released until eight months after it was completed.

In the 2006/07, two multi-employer pension plans were threatened to have their registrations revoked if they did not meet legal requirements.

“While some progress toward gaining their compliance has been made, the advice sought by the (pensions) office and the board – from the legal department – has not been provided,” the 2006/07 report stated.

By June 2009, the pensions board report stated that the legal department (in the attorney general’s office) had not signed off on documentation from the pension plans that was submitted in attempts to show they were complying with the law.

Both reports by the pensions board said the progress of criminal cases involving alleged pension violations were “excruciatingly slow”.

In the 2006/07 financial year, there were 672 cases of alleged non-payment or non-compliance that required follow up investigations by the pensions office.  In all, 338 of those were resolved by year’s end, but an additional 276 new cases were reported.

The board said that only three companies were charged with violating the National Pensions Law. In two cases, charges were stayed pending payment of the full amount owed. In the other case, the employer pleaded guilty and fines were assessed.

The pensions board questioned whether the court process was actually encouraging any employers to pay their pensions.

“Workers have not received any benefit of the successful prosecution of cases in the courts by way of pension monies being credited to their accounts,” the board’s 2006/07 report read. “Funds being held for over a year from employers charged with offences under the (law)…have not yet gone to the accounts of the workers.

“The judiciary has, however, authorised payment from these funds to pay legal defence costs and other personal expenses of the defendants of approximately…CI $100,000.”

During 2006/07, the pensions board could not calculate a total amount of pension arrears owed by delinquent companies. However, it was estimated in the report that at least $2 million was owed in “top priority cases” alone.

The National Pensions Board recommended that more punitive measures be taken to ensure employers complied with legally required pension payments.

For instance, it was suggested that work permits required to employ foreign nationals, or trade and business licences, could be withheld if companies did not meet their pension obligations.

A quasi-judicial body, similar to the Labour Appeals Tribunal or Immigration Appeals Tribunal, was also suggested for the pensions system to monitor and police non-compliance.

In 2007/08, the situation worsened with the decline of the world investment markets, particularly equities, which the board members state the Cayman Islands pension plans were heavily invested in.

At the end of the fiscal year - 30 June, 2008 - some 481 cases brought to the pensions office remained open for investigation.

The board raised legal department resources and court processing issues again in 2007/08.

In July 2007, a part-time Crown counsel was assigned to assist with pension prosecutions. During the year, the board managed to advance nine cases to the court. Charges were filed in just three of those cases.

“The joint efforts of the National Pensions Office and the legal department became derailed in late 2007,” the pensions board report read. “There was no satisfactory resolution to the frustration the board is experiencing…in achieving compliance with the law (pension plan) administrators and employers.”

The 2007/08 report noted that it wasn’t just employers who were violating the pensions law.

Only 60 per cent of the required monthly delinquency reports – progress reports on companies that had not paid pensions – were submitted to the board. Two plan administrators did not submit any delinquency reports at all in 2007/08.

Eventually, the National Pensions Office was forced to suspend the normal processing of delinquency reports.

“The suspension (of reports) and not issuing the required National Pensions Law arrears directives to all employers in arrears was in violation of the law,” the board’s report stated.

Education Minister Rolston Anglin, who made the two pension board reports public on Wednesday, said he would be making an announcement regarding the national pensions system and the Department of Employment Relations shortly.

He said legislative reform was needed to deal with cases more efficiently.

“We need to put in place a pension regime that will suit this jurisdiction,” Mr. Anglin told the house.

Previously, the minister has discussed disbanding the National Pension Office and shifting its duties partly to the Cayman Islands Monetary Authority and party to the Department of Employment Relations. However, he stressed that no final decisions on this matter had been made.