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You are here: Homepage > Press Room > Press Releases > Pensions Compliance Calls

Published 18th April 2008, 4:5pm

In an effort to obtain full compliance with the provisions of the National Pensions Law and its associated Regulations, which govern private sector pensions in the Cayman Islands, the National Pensions Office (NPO) in conjunction with the National Pensions Board (NPB) has been working with employers and pension administrators to ensure that they fully understand the extent of their legal obligations. One important outcome of this dialogue has been the need to remind employers that Pensions Regulations require them to submit all contributions to the chosen fund by the 15th day of the month immediately following the month in which they fell due. That means that April’s payments must be received by the 15th May. In law, late payments are subject to interest charges (of prime rate + five percent (5%)), so it is also useful for employers to understand that their fund administrators do not hold any authority to permit these deadlines to slide or waive interest charges due. At the most fundamental level of the law, all employers in the Cayman Islands are required to contribute to a registered pension plan on behalf of all their eligible employees. These contributions must total not less than ten percent (10%) of the employee’s earning, and will be comprised of a minimum contribution from the employer of 5%, and a maximum contribution from the employee of 5%. The National Pensions Board, which together with the National Pensions Office is responsible for administering the Law and Regulations, is established by the National Pensions Law (2000 Revision) and is appointed by the Governor. Bryan Bothwell, Chairman of the National Pensions Board explains, “The regular payment of pension contributions, as provided for in law, is a mandatory condition of employment in the Cayman Islands. We want to ensure that employers and employees fully understand that paying pension contributions is not a voluntarily measure they can opt out of, or choose not to do.” Mr. Cyril Theriault, Superintendent of Pensions at Cayman’s National Pensions Office (NPO) says, “Fund administrators have recently been reminded of their strict obligations to enforce these rules, so it is important that employers know where they stand in the law. Funds must actually be with the plan by the cut-off date. Cheques submitted on-time but stating a due date for payment beyond the 15th, are not in compliance with the law and will incur interest charges for the employer.” Mr. Bothwell says that, “Some employers are still not paying into their funds within the time provided for by law, even if they have made deductions from employees’ salaries. The interest fees charged to employers for late payment go towards compensating employees for any loss of investment earnings on their contributions due, which have not reached the fund. It is critical then that administrators and employers work together to ensure that contributions are received on time, and that interest charges are properly collected.” He added, “Employees themselves can also help protect themselves by cross-checking pension-plan statements with payslips to ensure that their earnings have been properly deducted and the correct contributions made to their fund.” Help is at hand for administrators, employers and employees, who feel that they are not sufficiently familiar with the provisions of Cayman’s National Pensions Law. The website of the National Pensions Office is an easily accessible and comprehensive resource for information pertaining to the roles of all affected parties and their responsibilities, as well as copies of laws and Regulations, and information on the authorities which enforce them. The NPO website is at www.npo.gov.ky. Visitors to the website can also learn about limits on pensionable-earnings and contributions, how commissions and gratuities are treated by the law, employee eligibility and the rules pertaining to the self-employed. Mr. Theriault explains that, “Historically, breaches of the law create a significant burden on the authorities which enforce it, in particular the National Pensions Office and the pension providers, who are responsible for ensuring that delinquent companies are compliant.” He added, “There are currently a number of companies who are in arrears with their pension payments and the NPO is making stringent efforts to ensure that employees obtain all monies due to them. However, we would much rather reduce this number of delinquent companies by ensuring that all employers are fully informed about, and compliant with, their obligations before they are in breach, rather than through time-consuming investigations afterwards.” Mr. Theriault points out that, “There is no shortage of good examples to follow in the Cayman Islands, with the number of companies keeping-up with their contributions being vast in comparison to a small minority who do not.” He adds, “That said, it is important also to remember that any failure to pass on the full amount of an employee’s pension contributions will have a negative impact on the ultimate pension received, which is why we must seek to ensure compliance in every single case.”