Chamber warns of coercion over pension holiday

(CNS): Following the recent move by government to remove the mandatory obligation for employers and employees to pay 10% of earnings into pension funds the Cayman Islands Chamber Pension Trustees have raised their concerns that employees may be forced to agree to employers stopping their pensions even though the new law says it must be voluntary.  The Chamber has also warned that regulating and managing this change in the law will prove problematic increasing the costs of pension administration as well as allowing more non-compliance.

 In a public statement the Chamber trustees said the move was not endorsed by them.

“It is our fear that the average worker may be coerced into taking the pension holiday without being properly educated on how their decision may impact them financially. Although the election is discretionary and to be made by the employee, it is imperative that he or she is made fully aware of the fact that they are giving up the employer match of 5% of their income along with negatively impacting the growth of their retirement nest egg,” they stated.

The pension overseers also stated that the enforcement and regulation of the holiday would negatively contribute to the already growing issues of non-payment that are rampant within most plans on island. “Administration of such a change in the law will be challenge to say the least and in our opinion, could lead to much greater administration costs, therefore negatively impacting pension plan costs in general,” the trustees warned. They did however welcome the fine of CI$10,000 for those convicted on non-compliance.

“We urge plan members to educate themselves before rushing to any decision and to consult the Chamber Pension office should they have any questions,” the trustees added.