First Pension Case in Court

Cyril Theriault,
Superintendent of Pensions

Thursday,  August 18, 2005

Pre-trial hearings were due to start this week with the first case of an employer not paying staff pension contributions.

Scott Henderson owner of Cayman Flooring and Kitchen Specialists appeared in court on 16 August before Magistrate Grace Donalds, but the hearing was adjourned until 8 September because Mr Henderson’s attorney, Clyde Allan, was unavailable to attend court.

If convicted Mr Henderson and Cayman Flooring and Kitchen Specialists will be facing up to a $5000 in fines and penalties up to $500 for each day the employer has been overdue for pensions.

Although the Superintendent of Pensions, Cyril Theriault, did not comment on how long Cayman Flooring is overdue in contributions, he said that most employers that are being considered for court have been delinquent as far back as 2001.

“This is the first employer that we have taken to court since the National Pensions Law took effect in 1998,” said Mr Theriault.

“We are expecting this case to set a precedent on how court cases against employers will proceed in the future.”

Currently there are 550 employers under investigation for not making pensions contributions on a timely basis. Mr Theriault estimated that there may be six employers which could go as far as prosecution.

“These are companies that will have to be elevated to a point where we have to deal with them this financial year one way or the other,” he added.
“Either they will come on board and begin current contributions and contributions owed or we will have to bring the file to the Solicitor General to take her best advise whether we will proceed with the filing of charges.”
For years, there have been many employers that have reportedly not kept up with contributions to pensions plan with little or no consequences.

Since Mr Theriault took over as the Superintendent in November 2004, the Pensions Office has grown from two to five employees including the new Pensions Inspector Pierre Lauticsher.

Mr Theriault stated that a number of companies that are delinquent are not necessarily having problems financially.

Companies might be reminded about delinquent payments once or twice a year and even make one or two payments and then fall back into bad habits of non-payment, because there was little follow up.

Mr Theriault said that one issue has been that plan administrators varied in reporting an overdue employer. As part of the plan to pensions up to date, the Pensions Office has completed reviewing the files of employers from the major plan administrators, which included the Cayman Islands Chamber of Commerce, Silver Thatch, British Caymanian and British American.

He added that companies in arrears are responsible for paying interest.

“We have entered into an agreement with delinquent employers that are making a bona fide effort to make payments on what is owed and keep current. In the end that will have the best result because the Pensions Office as well as the employer don’t need the expenses of prosecution. And they won’t be subject to fines.

There are provisions contained in the law about the interest that is accumulated on delinquent payments which is prime rate plus 5 percent.
Often it is cheaper if a business goes to the bank and borrows the money and pays off the pensions owed.

Mr Theriault explained that agreements with a number of employers have been made for a plan to pay off the contributions in arrears. And if those companies have kept up with the payments, then companies can avoid being prosecuted.

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