Retirement age moves up for Caymanians
The new retirement age for Caymanian workers will move from 60 to 65, Hon Rolston Anglin, Minister of Labour announced on Monday, 28 May.
Speaking during the launch of the recently overhauled pensions law, Mr Anglin noted that the current regime of laws was not attracting compliance and said he hoped that The National Pensions Bill (2012) would change this.
The new law introduces effective deterrent measures for non-compliant employers.
Mr Anglin said that over the course of the next month, officials will review and discuss the Bill, which will later be brought to parliament for debate.
The Department of Pensions will have the authority to attach the properties of delinquent employers to recover the payments. This will be through a demand letter to the employer.
Employers will also be required to appear before the department to explain the delinquency and submit an acceptable payment plan, provided that the department is of the opinion that the delinquency can be rectified and that the employer is acting in good faith.
The new law also provides for greater pension benefits.
“Nothing in this Law shall be construed to prevent the registration under this Law of any pension plan that provides pension benefits and ancillary benefits, which are more advantageous to its members than those specified under this Law,” the bill reads.
In determining the fitness of employers, the new law will examine issues of honesty, integrity, reputation, competence, capability and financial soundness.
The matter of funding is also covered. “The defined benefit pension plan shall not be registered unless it provides for funding, sufficient to provide the benefits and rights under the pension plan in accordance with this Law and the Regulations,” the Bill reads.
The new law provides for inflation protection, such that pension benefits shall be adjusted in accordance with internationally accepted formulae respecting inflation increases as specified in the regulations.
Among the highlights of the new law is Clause 16, which prohibits the registration of a pension plan where, apart from voluntary contributions, the pension plan does not provide for the accrual of pension benefits in a gradual and uniform manner or the formula for computation of the employer’s contribution to the pension plan.
“In the case of a defined benefit pension plan, the benefits provided under the pension plan are variable at the discretion of the employer. By virtue of clause 16(2), the Authority is only allowed to register a defined contribution pension plan if the formula governing allocation of contributions to a pension fund and the investment yield of such accumulated contributions among members of the defined pension plan is variable, otherwise than at the discretion of a majority of the members of the defined pension plan,” the new bill reads.
Clause 17 provides for registration of an amendment to a pension plan. In the case of a standard pension plan or supplementary pension plan, approval in principle is required to be given by the Authority prior to an amendment being approved by the members and former members and registered by the Authority.
In the case of an international pension plan, the trustee of the international pension plan is required to inform the Authority of the amendment and the Authority is required upon review of the amendment to inform the trustee of the issues which could negatively impact the pension plan’s continued registration or
compliance with the legislation. Clause 17 also provides for the Authority to issue a notice to the Department of any change in the details of registration of a pension plan and for a pension plan that has been registered to be deemed to be amended so that it complies with the legislation and the regulations.
In other cases, the law has proscribed some of the existing grey areas such as contracting out of, or waiving a requirement imposed on an employer or a trustee of a pension plan in favour of a member or former member. This, according to the new law, is prohibited and the claimant cannot make any such contracting out or waiver void and of no effect.
The new law requires an employer to maintain records showing the name of the employee, starting date of the employment, rate of pay and salaried arrangements, gross and net amounts of pay, bonuses, resignations and terminations relating to the employee.
The employer is also required to keep a record of all deductions from earnings of the employee for pension contributions.
Unlike before where employees had to demand evidence from the employer about the evidence of payment, the new law requires employers to have a record of all the contributions made by the employer and employee and evidence of such payment to the pension plan.
The new pensions bill also has new obligations on immigration — an employee shall be deemed to be employed in the islands if he is normally resident in the Islands; where the office of his employer to which he is required to report to work is situated in the Islands or where the office from which the person’s salary, wage or other remuneration is paid is situated in the islands.