Aerial view of coastline of Grand Cayman, Cayman Islands (Photo: The Guardian)

Cayman’s pension cash-out causing headaches for some financial institutions

Aerial view of coastline of Grand Cayman, Cayman Islands (Photo: The Guardian)

Some pension plan providers in the Cayman Islands had a chance on Friday (June 19) to share details of the administration of their plans with members of the Public Accounts Committee.

At least two of the providers used the occasion to share some of the difficulties they have in making pension pay-outs as a result of recent changes to the Pensions Law.

Legislators in Cayman recently amended the pensions law to allow individuals, not yet at pension age, to withdraw up to $10,000 at minimum and up to $10,000 plus to 25 per cent of the funds from their pension accounts as a means of mitigating the economic hardships caused by the COVID-19 pandemic.

President and CEO of Fidelity Pensions Limited, Brett Hill, said that his entity had faced serious public backlash among challenges as his company struggled to make pay-outs within the allotted time-frame.

Hill stated that the amendment had resulted in serious problems for his entity, including having received serious threats from the public.

As a result of the recent changes, Hill said he has had to increase his staff complement, invest in new information technology software, and is also looking to lease new office space come next month.

According to Hill, the problem stems from the perception people have of pensions as a tax.

Hill said that of his 11,000 members about 3,000 had applied for early withdrawals from the pension scheme.

“There seems to be a slowing down but we are up to 3,000 odd people who have applied which you will appreciate is a very large volume and we are also dealing with a high volume of phone calls and a lot of negative PR, ” Hill told the Public Accounts Committee.

Hill shared that negative press had forced Fidelity to retain the services of a public relations company. 

“The other difficulty which we are dealing with if I may now take off my pensions hat and put my banking hat on, now that we are paying out monies to members, there is a limit to how much the electronic funds’ transfer management system can handle so we are dealing with this on multiple fronts. And we are also with dealing with some fairly serious threats from the public – I won’t go into the details because some of the threats that are being made are not terribly pleasant,” said Hill

When asked by elected member for Bodden Town West, Chris Saunders, about the relationship management aspect of the operation, given that Fidelity has only three local staff members, Hill noted that until the recent amendment to the law they had been managing, further adding the facetious remark that they did not have any PR issues either.

Hill, however, did share that because they were a part of a larger group, some of the workload had been offset by staff at the company’s Bahamas location.

Saunders said that while he was sympathetic to the fact that Fidelity’s business would have been geared towards 1,000 employers paying in each month which means that it would likely be one lump sum cheque that would cover many rather than many individuals and such recognised the change in volume but pressed Hill about additional IT investments, given the changes noting that processes really needed to be automated.

Hill said that while his company had invested in software, it was not so simple as there were additional challenges like poor handwriting and identifications not being cleared.

He went on to say that his company had to get things right as he was not interested in paying fines for every little indiscretion or facing time in Northwood, making reference to the local prison.

“You have to understand and you understand the funds’ industry as well as I do, if you make an application during May to have your pension paid back to you, I can only legally pay you based on the main have – and all of the pension funds are funds of funds – so we are reliant on the funds providing us with their haves which normally takes 12-14 days -which leaves me with one day to turn that around and pay people -it is simply not possible,” said Hill.

Despite the challenges, Hill said that he was confident that all those who applied in May would get their money by the end of June.

–Denieca Brown