Under the current system, employers sign up with one of the approved pension fund administrator plans and are required to pay pensions by the 15th of the following month.

The fund administrator must submit a report to the National Pensions Office on the pension contributions, which also includes those companies that have not paid pensions.

In turn, the information from fund administrator reports is used as a basis to follow up with employers that are not in compliance with the law.

“Since we rely on the reports from the fund administrators, we may not find out about companies that are not in compliance with the Pensions Law if they haven’t signed up with a fund administrator,” said Mr Theriault.

“The only other way we might know if an employer is not paying pensions, is if the employees themselves come in and file a complaint.”

What is needed, he explained, is to link the database of Immigration Department with the Pensions Office database to close the loophole.

Although the Pensions Office has access to the Immigration Department’s database, it needs a report that will allow the office to properly identify those companies not in compliance.

“What we would like to do is to make sure that pensions funds are paid up before the Work Permit Board renews a company’s work permits and the trade and business licence. That way we have a much better handle on this,” he said.

Mr Theriault stated that he is currently collaborating with the Immigration Department and wants to include an application to sign up for pension fund administrators in the packet given to companies that apply for a trade and business licence. However, he acknowledged that, although this would likely help new companies to remember to sign up with a pension fund administrator, it will not close the loophole.

The National Pensions Law (2000 revision) requires employers to pay 10 percent pension payments for employees, with one half being contributed by employers and the other half by employees. There has been some confusion among the business community as to the point at which employees become eligible for pension contributions. Mr Theriault explained that Caymanian employees and those with status are eligible for pensions from the first day that they start work.

Expatriate employees become eligible for pension contributions when they have worked in the Cayman Islands for nine months. There is a common misconception that if an expatriate employee had worked with a previous company and then started working for another company, the new employer can restart the nine-month clock before paying pensions. Another misconception is that employers don’t have to pay pensions on temporary work permit, regardless of how long the expatriate has worked in the country.

Employers should be aware of how long an expatriate worker has worked in the country. If the employee has been working for nine or more months, then the employee is entitled to pension contributions even if he or she has gone to a new company or is on a temporary work permit.

The Pensions Office got a big boost last week, with the conviction and sentencing of businessman Scott Henderson. He was convicted and sentenced on 79 counts of failing to pay pension contributions for three years for Office Pavilion and two and half years for Cayman Flooring.

Mr Henderson was fined $60,000 and ordered to pay $230,000 back to employee pension funds, in a case that was dragged out for over year and half.

The Henderson case is the first employer to have been convicted of failing to pay pensions since the Pensions Law came into effect in 1999. Although an appeal is expected on a portion of the judgement, this conviction is seen as a major victory to convey the message that employers can no longer be lax about paying pensions with no consequences.

Mr Theriault added that he is anticipating the written judgement on the Henderson case by Magistrate Margaret Ramsey-Hale, as there may be some comments on the Pensions law that may need to be strengthened. One area that may be weak is the potential conflict of employer and subcontractors noted Mr Theriault.

“The number one goal is to ensure the money gets into the pensions. We want to ensure that individuals reaching retirement age will have financial security,” said Mr Theriault.