Pensions Prosecution

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Published 12th December 2006, 12:12pm

Following the Pensions Office's first successful prosecution of an employer for non-compliance, employers are advised to ensure that they fulfil their obligations to provide pension plans for their employees under the Cayman Islands National Pensions Law (NPL). This week, the National Pensions Office (NPO) gained a summary conviction against an employer who failed to meet the legal pensions obligations for staff, and who furthermore failed to comply with the NPO's repeated requests for information. In this particular case the defendant was levied a fine of $2,600, payable within the week, and on default of the payment, to serve 2 months in prison. After receiving a complaint of non-compliance on 22 April, 2003 against Edward Steve McLaughlin (operating as Caristef Construction and Heavy Equipment), the NPO sent letters to the company requesting the relevant information. However, these letters, as well as follow-up investigations, telephone calls, faxes and other communications over a one-year period, were met with negative results. A court summons, and several months of expensive and time-consuming court appearances, then followed. "We are pleased that the courts have looked at failure to comply with the NPL as a serious violation," said Cayman Islands' Superintendent of Pensions Cyril Theriault. "We encourage all employers and employees in these Islands to ensure that they meet their pension responsibilities." He added that even after conviction, if non-compliance continues, further litigation could occur, which may lead to increased fines or a prison sentence. The National Pensions Office, with a staff of seven, including three inspectors, monitors and enforces the provision of pension services to all private-sector employees in the Cayman Islands, amounting to in excess of 25,000 pension accounts. When non-compliance is reported to the NPO, or when the NPO becomes aware that a company is not providing a retirement savings plan, the office will request that the employer complete a questionnaire to explain the situation. The questionnaire addresses such areas as the number of employees; the name of the company's pension plan; the pension provider; and details of recent financial contributions. Section 82 of the Law provides that the information be provided within the time limit set out in the request. This is so the office can ascertain compliance with the law and the regulations. Failure to comply with such a request is subject to a fine, on summary conviction, of $1,000. Upon receipt of the requested information, the NPO will work with cooperative companies to resolve the situation in the best manner possible. "If there is no plan, or if all the required contributions have not been made to the plan, we will try to work out a payment plan with the employer," added Mr Theriault. "This payment plan would require the timely payment of current contributions and a schedule for paying any arrears owing, in a timely manner." Failure to reach an agreement and to follow its terms and conditions will result in further charges being laid under the NPL. These carry fines much greater than failure to provide information, ranging from $5,000 to $10,000 on each charge and possible additional fines of $500 a day for each day that the required pension payments are not made. More information on employers' and employees' pensions responsibilities is available from the NPO or National Pensions Office.