Caymans Announce Pension Payment Holiday

by Phillip Morton, Investors Offshore.com

29 April 2010

The Cayman Islands government has announced changes to the National Pensions Law, effective since April 26, that will allow a temporary one-year suspension of pension contributions for Caymanians and a temporary two-year suspension period for non-Caymanians.

The amendment will affect private sector employers, employees, and self-employed individuals.

Explaining the rational for the suspension, Cayman Islands’ Pensions Minister Rolston Anglin, said that: "In the current economic climate, pension contributions place a considerable financial burden on employers, employees and self-employed persons.”

"With some businesses facing closure, this relief might enable them to survive these tough economic times."

To participate in the suspension, Anglin explained, businesses must be in compliance with the National Pensions Law.

"Any employer participating in the suspension term must be up-to-date with their contributions or have made arrangements for the payment of any arrears before participation can begin," he said. "This is to avoid compounding any existing non-compliance with the National Pensions Law."

Acting Superintendent of Pensions, Amy Wolliston noted that while participation is voluntary it is not automatic. She explained that both parties must first agree to the suspension, then sign a written agreement that replaces employment-contract pension obligations. Once those steps are completed a formal application must be made to the pension plan administrator, who must approve the suspension before companies can cease making contributions.

Another participatory condition, she noted, is that pension plan membership must be maintained. That is, all employers and employees - regardless of when they are employed - must be members of a registered pension plan. In fact, businesses established during the pension holiday period are also obligated to establish a pension plan and ensure that their employees are members.

Similarly, opportunities to suspend pension payments are extended to self-employed persons. However the same conditions apply. Self-employed individuals must formally apply to their pension plan administrator before suspending payments, and must maintain their membership within a pension plan.

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