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1 PLAN PLAN ADMINISTRATORS’ ADMINISTRATORS’ MEETING MEETING MARRIOT COURT YARD MARRIOT COURT YARD JUNE 29, 2005 JUNE 29, 2005 1. 1. INTRODUCTION INTRODUCTION NPO NPO JUNE 2005 JUNE 2005
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1 PLAN ADMINISTRATORS’ MEETING MARRIOT COURT YARD JUNE 29, 2005 1. INTRODUCTION NPO JUNE 2005.

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Page 1: 1 PLAN ADMINISTRATORS’ MEETING MARRIOT COURT YARD JUNE 29, 2005 1. INTRODUCTION NPO JUNE 2005.

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PLAN PLAN ADMINISTRATORS’ADMINISTRATORS’

MEETING MEETING

MARRIOT COURT YARDMARRIOT COURT YARD

JUNE 29, 2005JUNE 29, 2005

1.1. INTRODUCTIONINTRODUCTION

NPONPO

JUNE 2005JUNE 2005

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2. Review of Agenda2. Review of Agenda

Expectations of the MeetingExpectations of the Meeting

Responsibilities/Requirements of AdministratorsResponsibilities/Requirements of Administrators

Specific IssuesSpecific Issues

BrochuresBrochures

Guidance NotesGuidance Notes

Pension Providers’ AssociationPension Providers’ Association

Additional ItemsAdditional Items

Future Meetings/Wrap-upFuture Meetings/Wrap-up

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3. Expectations of Meeting3. Expectations of Meeting

““OURS” – the AgendaOURS” – the Agenda

We would like to ensure that you, as significant We would like to ensure that you, as significant stakeholders, are aware of the Law, your stakeholders, are aware of the Law, your responsibilities and requirements under it, and the responsibilities and requirements under it, and the constraints that the Law imposes on you, as constraints that the Law imposes on you, as administrators (and employers), and on us, as administrators (and employers), and on us, as regulators.regulators.

So that you know where we are coming from ……… So that you know where we are coming from ……… so that we can get your input and feedback prior to so that we can get your input and feedback prior to taking stances on interpretation.taking stances on interpretation.

We are still discovering things said or done by past We are still discovering things said or done by past regulators and trying to uncover why (matter of regulators and trying to uncover why (matter of interpretation?).interpretation?).

““YOURS” YOURS”

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4. Responsibilities/Requirements of Administrators4. Responsibilities/Requirements of Administrators

Some Definitions:Some Definitions:

– ““administrator” means a person who manages a pension administrator” means a person who manages a pension planplan

– ““approved provider” means an insurance company or approved provider” means an insurance company or other company licensed to undertake pension plans in other company licensed to undertake pension plans in the Islandsthe Islands

– ““multi-employer pension plan” means a pension plan multi-employer pension plan” means a pension plan established and maintained for self-employed persons or established and maintained for self-employed persons or employees of two or more employers who contribute or employees of two or more employers who contribute or on whose behalf contributions are made to a pension on whose behalf contributions are made to a pension fund, but does not include a pension plan where all the fund, but does not include a pension plan where all the employers are affiliatesemployers are affiliates

– ““pension committee” means a committee that is the pension committee” means a committee that is the administrator of a pension planadministrator of a pension plan

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4. Responsibilities/Requirements of Administrators4. Responsibilities/Requirements of Administrators

Prohibitions of administration of an unregistered pension Prohibitions of administration of an unregistered pension planplan

6. (1) Subject to subsections (2), (3) and (4), no 6. (1) Subject to subsections (2), (3) and (4), no person shall administer a pension plan for the benefit person shall administer a pension plan for the benefit of employees unless the plan has been registered by of employees unless the plan has been registered by the Superintendent and a certificate has been issued the Superintendent and a certificate has been issued in respect of the plan by the Superintendent.in respect of the plan by the Superintendent.

Refusal or revocation of registrationRefusal or revocation of registration

7. (1) No person shall administer a pension plan if the 7. (1) No person shall administer a pension plan if the registration of that plan has been refused or revoked registration of that plan has been refused or revoked by the Superintendent.by the Superintendent.

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4. Responsibilities/Requirements of Administrators4. Responsibilities/Requirements of Administrators

Who may administer a pension Plan?Who may administer a pension Plan?

8.(1) For the purposes of this Law, only the following persons may 8.(1) For the purposes of this Law, only the following persons may administer a pension plan-administer a pension plan-(a)(a) an employer;an employer;(b)(b) a pension committee at least fifty per cent of which shall be a pension committee at least fifty per cent of which shall be representatives of members of the pension plan and a majority of representatives of members of the pension plan and a majority of which shall hold Caymanian status or be permanent residents of the which shall hold Caymanian status or be permanent residents of the Islands;Islands;(c)(c) an approved provider where that provider provides all of the an approved provider where that provider provides all of the benefits under the pension plan, or a representative or agent of that benefits under the pension plan, or a representative or agent of that provider;provider;(d)(d) a board of trustees appointed pursuant to the pension plan, at a board of trustees appointed pursuant to the pension plan, at least fifty per cent of which shall be representative of members of the least fifty per cent of which shall be representative of members of the pension plan and a majority of which shall hold Caymanian status or pension plan and a majority of which shall hold Caymanian status or be permanent residents of the Islands;be permanent residents of the Islands;(e)(e) a board, agency or other person made responsible by this Law a board, agency or other person made responsible by this Law or any other or any other lawlaw for the administration of the pension; or for the administration of the pension; or1995 Revision1995 Revision(f)(f) a trust company licensed in accordance with the Banks and a trust company licensed in accordance with the Banks and Trust Companies Law (1995 Revision).Trust Companies Law (1995 Revision).

Who’s in the room? Administrators or Agents or Both?Who’s in the room? Administrators or Agents or Both?

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4. Responsibilities/Requirements of Administrators4. Responsibilities/Requirements of Administrators

8 (3) An administrator shall ensure that the administration, 8 (3) An administrator shall ensure that the administration, custodianship and investment of the pension plan and fund custodianship and investment of the pension plan and fund are undertaken by qualified and experienced persons or are undertaken by qualified and experienced persons or bodies.bodies.

8 (5) An administrator, subject to any approval of the 8 (5) An administrator, subject to any approval of the Superintendent to different arrangements given under Superintendent to different arrangements given under section 6(3) , shall be based or represented in the Islands.section 6(3) , shall be based or represented in the Islands.

12 (3) An administrator shall apply to the Superintendent 12 (3) An administrator shall apply to the Superintendent within thirty days after the date on which the pension plan within thirty days after the date on which the pension plan is amended for registration of the amendment.is amended for registration of the amendment.

12 (5) An amendment of a pension plan is not effective until 12 (5) An amendment of a pension plan is not effective until it is approved by the Superintendent.it is approved by the Superintendent.

14 (3) Notwithstanding any provision in a pension plan, a 14 (3) Notwithstanding any provision in a pension plan, a plan that has been registered shall be deemed to be plan that has been registered shall be deemed to be amended so that it complies with this Law and the amended so that it complies with this Law and the regulations.regulations.

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4. Responsibilities/Requirements of Administrators4. Responsibilities/Requirements of Administrators

Refusal or revocation of registrationRefusal or revocation of registration

15.15. (1) The Superintendent shall refuse to register a pension (1) The Superintendent shall refuse to register a pension plan or an amendment to a pension plan which does not plan or an amendment to a pension plan which does not comply with this Law.comply with this Law.

(2) The Superintendent may revoke the registration of a (2) The Superintendent may revoke the registration of a pension plan which is not being administered in accordance pension plan which is not being administered in accordance with this Law.with this Law.

(5) Where the Superintendent refuses to register a pension (5) Where the Superintendent refuses to register a pension plan or revokes the registration of a plan, the administrator plan or revokes the registration of a plan, the administrator shall wind up the pension plan in accordance with this Law shall wind up the pension plan in accordance with this Law and the regulations.and the regulations.

16.16. (1) An administrator shall ensure that-(1) An administrator shall ensure that-

(a) the pension plan and pension fund are administered in (a) the pension plan and pension fund are administered in accordance with this Law and the regulations; andaccordance with this Law and the regulations; and

(b)(b) the pension plan and any amendment to the pension plan and any amendment to the plan are administered in accordance with the the plan are administered in accordance with the documents filed with the Superintendent upon registration documents filed with the Superintendent upon registration of such plan or amendment.of such plan or amendment.

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4. Responsibilities/Requirements of Administrators4. Responsibilities/Requirements of Administrators

(2) An administrator shall-(2) An administrator shall-

(a) upon payment of the prescribed fee, file each year during (a) upon payment of the prescribed fee, file each year during the continuation of a pension plan an annual information the continuation of a pension plan an annual information return relating to the pension plan in the prescribed form;return relating to the pension plan in the prescribed form;

(b) within six months of the end of a financial year of a (b) within six months of the end of a financial year of a pension plan or such longer period as the Superintendent pension plan or such longer period as the Superintendent may allow, file the audited accounts of a pension fund;may allow, file the audited accounts of a pension fund;

(c) & (d) cover actuarial valuations and other reports(c) & (d) cover actuarial valuations and other reports

(3)(3) If an administrator fails to comply with any requirement If an administrator fails to comply with any requirement under this section, the Superintendent may dismiss the under this section, the Superintendent may dismiss the administrator and act as or may appoint another administrator and act as or may appoint another administrator of the plan.administrator of the plan.

(4)(4) The reasonable administration costs of the Superintendent or The reasonable administration costs of the Superintendent or the administrator appointed by the Superintendent of any the administrator appointed by the Superintendent of any action taken under subsection (3) shall be paid out of the action taken under subsection (3) shall be paid out of the pension fund.pension fund.

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4. Responsibilities/Requirements of Administrators4. Responsibilities/Requirements of Administrators

17. (1) An administrator shall-17. (1) An administrator shall-

(a) exercise the care, diligence and skill in the administration (a) exercise the care, diligence and skill in the administration of a pension plan and in the management and investment of of a pension plan and in the management and investment of the pension fund that a person of ordinary prudence would the pension fund that a person of ordinary prudence would exercise in dealing with the property of another; and exercise in dealing with the property of another; and

(b) use in the administration of a pension plan and in the (b) use in the administration of a pension plan and in the management and investment of a pension fund all relevant management and investment of a pension fund all relevant knowledge and skill that, by reason of the administrator’s knowledge and skill that, by reason of the administrator’s profession, business or calling, he ought to possess’profession, business or calling, he ought to possess’

(2) “conflicts with private interests”(2) “conflicts with private interests”

(3)”employ one or more agents – actuaries, accountants, (3)”employ one or more agents – actuaries, accountants, investment professionals, etc.”investment professionals, etc.”

(4) “these become deemed agents of the administrator”(4) “these become deemed agents of the administrator”

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4. Responsibilities/Requirements of Administrators4. Responsibilities/Requirements of Administrators

(5)(5) An administrator who employs an agent shall-An administrator who employs an agent shall-

(a) personally select the agent;(a) personally select the agent;

(b) be satisfied of the agent’s suitability to perform the acts (b) be satisfied of the agent’s suitability to perform the acts for which the agent is employed; andfor which the agent is employed; and

(c) supervise the agent as far as practicable and reasonable.(c) supervise the agent as far as practicable and reasonable.

(6)(6) An agent of an administrator is subject to the standards An agent of an administrator is subject to the standards that apply to the administrator under subsections (1) and (2).that apply to the administrator under subsections (1) and (2).

(7) (8) & (9) “administrators and agents are entitled to usual and (7) (8) & (9) “administrators and agents are entitled to usual and reasonable fees and expenses as provided for by the plan”reasonable fees and expenses as provided for by the plan”

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4. Responsibilities/Requirements of Administrators4. Responsibilities/Requirements of Administrators

Section 20 and the regulations provide for information from Section 20 and the regulations provide for information from the administrator to eligible employees (members)the administrator to eligible employees (members)

Section 21 and the regulations provide for notice (and Section 21 and the regulations provide for notice (and voting) of proposed amendments.voting) of proposed amendments.

Section 22 and the regulations provide for annual (at least) Section 22 and the regulations provide for annual (at least) statement of pension benefits and also for termination statement of pension benefits and also for termination statements.statements.

Section 23 outlines the requirement to make available Section 23 outlines the requirement to make available documents and information on written request from various documents and information on written request from various parties – limited to once a year (per party).parties – limited to once a year (per party).

Section 24 provides for inspection of documents at the Section 24 provides for inspection of documents at the National Pensions Office of certain documents by various National Pensions Office of certain documents by various parties.parties.

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4. Responsibilities/Requirements of Administrators4. Responsibilities/Requirements of Administrators

48.48. (1) The administrator or an agent of an administrator (1) The administrator or an agent of an administrator shall shall notify the Superintendent in writing of any contribution notify the Superintendent in writing of any contribution

which is in arrears within forty-five days of becoming which is in arrears within forty-five days of becoming aware aware that such contribution has not been paid.that such contribution has not been paid.

(2) Where the Superintendent is notified in accordance with (2) Where the Superintendent is notified in accordance with subsection (1), the Superintendent shall direct the relevant subsection (1), the Superintendent shall direct the relevant employer to pay the arrears within two weeks, failing which employer to pay the arrears within two weeks, failing which the Superintendent may commence or direct the the Superintendent may commence or direct the administrator to commence proceedings in a court of administrator to commence proceedings in a court of competent jurisdiction for the recovery of the arrears.competent jurisdiction for the recovery of the arrears.

49. (5) An administrator has a lien and charge on assets of the 49. (5) An administrator has a lien and charge on assets of the employer in an amount equal to the amounts deemed to be employer in an amount equal to the amounts deemed to be held under subsections (1), (3) and (4).held under subsections (1), (3) and (4).

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4. Responsibilities/Requirements of Administrators4. Responsibilities/Requirements of Administrators

58. (1) An administrator may terminate and wind up a pension 58. (1) An administrator may terminate and wind up a pension plan in whole or in part.plan in whole or in part.

70. (1) The Superintendent, in the circumstances mentioned in 70. (1) The Superintendent, in the circumstances mentioned in subsection (2), may order an administrator or any other subsection (2), may order an administrator or any other person to take or refrain from taking any action in respect person to take or refrain from taking any action in respect

of of a pension plan or a pension fund.a pension plan or a pension fund.

(2) The Superintendent may make an order under this (2) The Superintendent may make an order under this section if the Superintendent is of the opinion that –section if the Superintendent is of the opinion that –

(a) the pension plan or pension fund is not being (a) the pension plan or pension fund is not being administered in accordance with this Law, the regulations or administered in accordance with this Law, the regulations or the the pension plan;pension plan;

(b) the pension plan does not comply with this Law and (b) the pension plan does not comply with this Law and the the regulations; orregulations; or

(c) the administrator of the pension plan, the employer or (c) the administrator of the pension plan, the employer or any other person dealing with a pension plan is any other person dealing with a pension plan is

contravening contravening a requirement of this Law or the regulations.a requirement of this Law or the regulations.

72 & 73 deal with the leave of those affected by decisions of the 72 & 73 deal with the leave of those affected by decisions of the Superintendent for appeal.Superintendent for appeal.

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4. Responsibilities/Requirements of Administrators4. Responsibilities/Requirements of Administrators

81 (2) The Superintendent may request an employer, an 81 (2) The Superintendent may request an employer, an administrator or a member of a pension plan to provide administrator or a member of a pension plan to provide information necessary to compile the statistical information necessary to compile the statistical information, and such persons shall comply with the information, and such persons shall comply with the request within a reasonable period of time.request within a reasonable period of time.

82 (1) The Superintendent or the Board may require an 82 (1) The Superintendent or the Board may require an employer, an administrator or any other person to employer, an administrator or any other person to supply to the Superintendent or the Board such supply to the Superintendent or the Board such information and within such time limits as they may information and within such time limits as they may specify for the purpose of ascertaining compliance with specify for the purpose of ascertaining compliance with this this Law and regulations.Law and regulations.

(4) The Superintendent or the Board may require an (4) The Superintendent or the Board may require an administrator to secure an appraisal of any or all of the administrator to secure an appraisal of any or all of the assets of the pension fund by one or more independent assets of the pension fund by one or more independent valuers, or the Superintendent or the Board may obtain valuers, or the Superintendent or the Board may obtain the appraisal at the expense of the administrator.the appraisal at the expense of the administrator.

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4. Responsibilities/Requirements of Administrators4. Responsibilities/Requirements of Administrators

RegulationsRegulations

10.10. (1)(1) The administrator shall every two years notify all The administrator shall every two years notify all members and former members of their right under section 19 to members and former members of their right under section 19 to establish an advisory committee.establish an advisory committee.

23.23. (1)(1) The administrator shall, within thirty days after The administrator shall, within thirty days after receipt of notice of the date of death of a member or former receipt of notice of the date of death of a member or former member who is not receiving payments from the pension fund member who is not receiving payments from the pension fund where the death results in the spouse, beneficiary or estate of the where the death results in the spouse, beneficiary or estate of the member or former member becoming entitled to a benefit, provide member or former member becoming entitled to a benefit, provide the spouse, beneficiary or legal representative with a statement the spouse, beneficiary or legal representative with a statement that sets out-that sets out-

(a)(a) the name of the pension plan and its registration the name of the pension plan and its registration number;number;

(b)(b) the amount and method of payment of the benefit;the amount and method of payment of the benefit;(c)(c) the amount, if any payable under section 31(6);the amount, if any payable under section 31(6);(d)(d) where applicable, the basis for the indexation of a where applicable, the basis for the indexation of a

pension;pension;(e)(e) where applicable, the amount of the pension resulting where applicable, the amount of the pension resulting

from additional voluntary contributions; andfrom additional voluntary contributions; and(f)(f) the options available to the spouse of the deceased member the options available to the spouse of the deceased member

pursuant to section 39(2).pursuant to section 39(2).

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4. Responsibilities/Requirements of Administrators4. Responsibilities/Requirements of Administrators

RegulationsRegulations

24. (1) An administrator provided with a certified copy of a 24. (1) An administrator provided with a certified copy of a court order under section 43(5) shall, where the member court order under section 43(5) shall, where the member named in the order terminates employment, notify the named in the order terminates employment, notify the person named in the order that the member has terminated person named in the order that the member has terminated employment and provide a copy of the statement given to employment and provide a copy of the statement given to the member and advise the person of the options available the member and advise the person of the options available under section 34.under section 34.

27. (1) At least sixty days prior to a member’s normal 27. (1) At least sixty days prior to a member’s normal retirement date or the date at which a member of a pension retirement date or the date at which a member of a pension plan has indicated that he intends to retire, the plan has indicated that he intends to retire, the administrator of the plan shall advise the member of any administrator of the plan shall advise the member of any options respecting payment of the pension available to the options respecting payment of the pension available to the member under the pension plan, the Law member under the pension plan, the Law or the regulations or the regulations and the time period in which the options may be exercised.and the time period in which the options may be exercised.

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5. Specific Issues5. Specific Issues

RSA Processing requirementsRSA Processing requirements– Outlined in Law (regulations) and Guidance NotesOutlined in Law (regulations) and Guidance Notes– Fax vs. CourierFax vs. Courier

Updated payout scheduleUpdated payout schedule– 20% increase in thresholds in accordance with inflation 20% increase in thresholds in accordance with inflation

$5,000 is embedded in the Law$5,000 is embedded in the Law

Minimum for annuity – examples later for Minimum for annuity – examples later for thresholdsthresholds

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5. Specific Issues5. Specific Issues

Additional Voluntary ContributionsAdditional Voluntary Contributions

– Definition - means a contribution to a pension fund by a Definition - means a contribution to a pension fund by a member in excess of the amount the member is required by a member in excess of the amount the member is required by a pension plan or this Law to contributepension plan or this Law to contribute

Defined by the pension plan or the LawDefined by the pension plan or the Law Has been interpreted to be contributions made over age 60, on Has been interpreted to be contributions made over age 60, on

earnings over $60,000 or in excess of 10% (5% for e’ee) earnings over $60,000 or in excess of 10% (5% for e’ee) If the plan requires contributions in these cases, they are not If the plan requires contributions in these cases, they are not

voluntaryvoluntary

When are they payable/refundable?When are they payable/refundable?

Age 60 in a lump sumAge 60 in a lump sum

On early retirement?On early retirement?

– Defer payment to 60 then a lump sum?Defer payment to 60 then a lump sum?– Partial payout in accordance with thresholds then balance at Partial payout in accordance with thresholds then balance at

age 60?age 60?– Roll into RSA/Annuity amount and forms part of threshold and Roll into RSA/Annuity amount and forms part of threshold and

“lifelong” income/“lifelong” income/– Same timing as regular pension but does not form part of Same timing as regular pension but does not form part of

threshold?threshold?

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5. Specific Issues5. Specific Issues

RefundsRefunds

– Provided for in section 53 of the Law, available 2 years after Provided for in section 53 of the Law, available 2 years after employment has terminated provided that employee:employment has terminated provided that employee:

Ceases to reside in the Islands (6 months)Ceases to reside in the Islands (6 months) Has not had a contribution to a pension plan within last 2 yearsHas not had a contribution to a pension plan within last 2 years

– Additionally:Additionally:

(3) Notwithstanding subsection (1), on application by the (3) Notwithstanding subsection (1), on application by the administrator, contributions and interest thereon may be refunded administrator, contributions and interest thereon may be refunded to a member with the consent of the Superintendent if -to a member with the consent of the Superintendent if -

– (a) the pension plan provides for the refund; and (a) the pension plan provides for the refund; and – (b) the pension plan meets prescribed requirements.(b) the pension plan meets prescribed requirements.

NOTESNOTES

– The Law does not differentiate between plan members (i.e. The Law does not differentiate between plan members (i.e. Caymanians/non-Caymanians)Caymanians/non-Caymanians)

– What if member has outstanding contributions owed by a What if member has outstanding contributions owed by a delinquent employer?delinquent employer?

Member should not be penalized!Member should not be penalized!

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5. Specific Issues5. Specific Issues

Ex-pat coverage – 9 months Ex-pat coverage – 9 months ““ continuous” continuous”

continuous”, in relation to employment, membership or service, continuous”, in relation to employment, membership or service, means continuous notwithstanding regard to periods of temporary means continuous notwithstanding regard to periods of temporary suspension of employment, membership or service of less than six suspension of employment, membership or service of less than six months, and notwithstanding periods of lay-off from employment;months, and notwithstanding periods of lay-off from employment;

25 (2) Employers are not required to provide pension plans, or to 25 (2) Employers are not required to provide pension plans, or to contribute to pension plans, for the benefit of employees who do not contribute to pension plans, for the benefit of employees who do not have Caymanian status, or who are not permanent residents, within have Caymanian status, or who are not permanent residents, within the meaning of the Immigration Law (1997 Revision) and who, in the meaning of the Immigration Law (1997 Revision) and who, in either case-either case-

(a) have been working in the Islands for a continuous period of nine (a) have been working in the Islands for a continuous period of nine months or less; ormonths or less; or

(b) are employed to do housework in private residences.(b) are employed to do housework in private residences.

Considerations:Considerations: Laid-off vs. leave of absenceLaid-off vs. leave of absence Quit/terminatedQuit/terminated Leaves Islands (5 or 7 months)Leaves Islands (5 or 7 months) Returns to different employerReturns to different employer Took refund/didn’tTook refund/didn’t Couldn’t get refund (plan or >$5,000)Couldn’t get refund (plan or >$5,000)

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5. Specific Issues5. Specific Issues

Casual employees/multiple plan membershipCasual employees/multiple plan membership

Water authority exampleWater authority example

Employer must agree and register with two plansEmployer must agree and register with two plans

Any interest among administrators?Any interest among administrators?

Opportunity to consolidate accounts once a year Opportunity to consolidate accounts once a year (more often vs. administrative fees – currently exists (more often vs. administrative fees – currently exists on each “termination?)on each “termination?)

Inter-plan cooperationInter-plan cooperation

Treasure IslandTreasure Island

Refunds, transfer dates and cash–out datesRefunds, transfer dates and cash–out dates

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5. Specific Issues5. Specific Issues

DisabledDisabled

The law defines “The law defines “disabled”, in relation to a member, disabled”, in relation to a member, means unable because of a physical or mental means unable because of a physical or mental condition to perform most or all of the tasks related to condition to perform most or all of the tasks related to that member’s employment;that member’s employment;

Section 40, which has as a pre-amble – “variation of Section 40, which has as a pre-amble – “variation of payments to disabled persons” states :payments to disabled persons” states :

– A pension plan may provide for the payment of A pension plan may provide for the payment of greater benefits under the plan to a member greater benefits under the plan to a member whose life expectancy is likely to be reduced whose life expectancy is likely to be reduced because of the mental or physical disability of that because of the mental or physical disability of that member.member.

There is an internal conflict as they do not both refer There is an internal conflict as they do not both refer to the same concept, “life expectancy” is not to the same concept, “life expectancy” is not necessarily related to “disabled”.necessarily related to “disabled”.

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5. Specific Issues5. Specific Issues

Section 36 & 39Section 36 & 39

Thus it seems clear that Section 36 applies where a pension is Thus it seems clear that Section 36 applies where a pension is already payable, hence its reference to a “pension paid under a already payable, hence its reference to a “pension paid under a pension plan” and the lack of any requirement to calculate the pension plan” and the lack of any requirement to calculate the value of the interest in the pension fund, because it has already value of the interest in the pension fund, because it has already been converted into a pension. By contrast, Section 39 applies to been converted into a pension. By contrast, Section 39 applies to a member of a pension plan who dies before payment of a pension. a member of a pension plan who dies before payment of a pension. At that point, his interest in the plan crystallizes into a right for his At that point, his interest in the plan crystallizes into a right for his spouse to have an immediate or deferred pension the value of spouse to have an immediate or deferred pension the value of which is calculated by reference to the value of the pension which which is calculated by reference to the value of the pension which the member could have obtained, had he not died.the member could have obtained, had he not died.

““BC” July 2004BC” July 2004

Simply put:Simply put:

Section 36 – children may have an interestSection 36 – children may have an interest

Section 39 – only the spouse has an interestSection 39 – only the spouse has an interest

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5. Specific Issues5. Specific Issues

Delinquency reportsDelinquency reports

Required by section 48 (1) of the LawRequired by section 48 (1) of the Law

Timing – within 45 days of becoming awareTiming – within 45 days of becoming aware

An administrator doing a competent job will be aware An administrator doing a competent job will be aware the 16the 16thth of the month following the month the of the month following the month the contributions are for – or beforecontributions are for – or before

This is the expectation of the National Pensions Office, This is the expectation of the National Pensions Office, of administrators wanting to have their plans of administrators wanting to have their plans registered in the Cayman Islandsregistered in the Cayman Islands

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5. Specific Issues5. Specific Issues

Three Directive policyThree Directive policy

– Drags out the inevitable and makes it more difficult to Drags out the inevitable and makes it more difficult to eventually collect and makes it “harder” on employers eventually collect and makes it “harder” on employers and administrators.and administrators.

This policy is under review, along with “45 day” This policy is under review, along with “45 day” rulerule

– ““45 day” rule requires a change to the Law, to alter.45 day” rule requires a change to the Law, to alter.

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5. Specific Issues5. Specific Issues

EarningsEarnings means- means-

– (a) in the case of an employee, any wages, salary, leave pay, (a) in the case of an employee, any wages, salary, leave pay, fee, commission, bonus (to the extent that the bonus is fee, commission, bonus (to the extent that the bonus is equivalent to more than twenty per cent of the employee’s equivalent to more than twenty per cent of the employee’s basic salary or wage for the period in question) or gratuity, basic salary or wage for the period in question) or gratuity, expressed in monetary terms, paid or payable by an expressed in monetary terms, paid or payable by an employer (directly or indirectly) to that employee in employer (directly or indirectly) to that employee in consideration of employment, but does not include severance consideration of employment, but does not include severance payments, retirement or long service recognition payments payments, retirement or long service recognition payments or health insurance premiums; andor health insurance premiums; and

– (b)(b) in the case of a self-employed person, income in the case of a self-employed person, income of that person prescribed and calculated in accordance with of that person prescribed and calculated in accordance with the regulations;the regulations;

Do your definitions agree? Are they communicated to Do your definitions agree? Are they communicated to e’ers and e’ees?e’ers and e’ees?

Applicability of bonusesApplicability of bonuses Are there problems/misuse of 20% threshold?Are there problems/misuse of 20% threshold?

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5. Specific Issues5. Specific Issues

InterestInterest

– The Law Section 50. An employer shall be liable to pay The Law Section 50. An employer shall be liable to pay interest to a pension fund on all money that is due to be interest to a pension fund on all money that is due to be paid by him to that pension fund at the current prime paid by him to that pension fund at the current prime rate in the Islands plus five percent, calculated on a daily rate in the Islands plus five percent, calculated on a daily basis.basis.

– Timing – starts accumulating on the 16Timing – starts accumulating on the 16thth of the month of the month following the month the contributions are for.following the month the contributions are for.

– Interest accrues on both the employer and employee Interest accrues on both the employer and employee pension contributions due.pension contributions due.

– Administrators are responsible for calculating and Administrators are responsible for calculating and collecting interest due – and notifying employers that it is collecting interest due – and notifying employers that it is the Law.the Law.

– This is the expectation of the National Pensions Office, of This is the expectation of the National Pensions Office, of administrators wanting to have their plans registered in administrators wanting to have their plans registered in the Cayman Islandsthe Cayman Islands

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5. Specific Issues5. Specific Issues

Interest “spreadsheet”Interest “spreadsheet”

– We have prepared a spreadsheet you may want to use to We have prepared a spreadsheet you may want to use to calculate the interest due on delinquent contributions.calculate the interest due on delinquent contributions.

– We suggest you make the matter of interest on We suggest you make the matter of interest on delinquent contributions a prominent feature in your delinquent contributions a prominent feature in your communication material provided to both employers and communication material provided to both employers and employees.employees.

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6. Brochures6. Brochures EmployerEmployer

– Distribution throughDistribution through Plan AdministratorsPlan Administrators Trade & Business Licensing (Immigration) including at annual Trade & Business Licensing (Immigration) including at annual

renewalsrenewals National Pensions Office – NPO websiteNational Pensions Office – NPO website Other?Other?

EmployeeEmployee

– Distribution throughDistribution through Plan AdministratorsPlan Administrators Restaurants/food marketsRestaurants/food markets LibrariesLibraries National Pensions Office – NPO websiteNational Pensions Office – NPO website Other?Other?

Need for other Brochures?Need for other Brochures?– RefundsRefunds– Eligibility/ex-pat coverageEligibility/ex-pat coverage– Marriage breakdown/death benefitsMarriage breakdown/death benefits

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7. Guidance Notes7. Guidance Notes

Last (first?) reproduction October 1999Last (first?) reproduction October 1999

Limited rewrites/re-issuesLimited rewrites/re-issues

Existing ones need to be rewrittenExisting ones need to be rewritten

Need exists for additional Guidance NotesNeed exists for additional Guidance Notes

Section 36 vs. 39Section 36 vs. 39 EtcEtc..

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8. Pension Providers’ Association8. Pension Providers’ Association

Comprised of “most” of the Multi Employer Plan Administrators.Comprised of “most” of the Multi Employer Plan Administrators.

Public Sector Pension Plan Administrators have been an invited Public Sector Pension Plan Administrators have been an invited observer.observer.

Has been formally established, however is currently inactiveHas been formally established, however is currently inactive

Due to nature of industry (including competition amongst Due to nature of industry (including competition amongst providers), Association needs some “generic” assignments if it is providers), Association needs some “generic” assignments if it is going to survive.going to survive.

Guidance notesGuidance notes Law reviewLaw review Investment guidelinesInvestment guidelines Actuarial reviewActuarial review Formalized SIP&GFormalized SIP&G Investment reporting guidelinesInvestment reporting guidelines Self - regulation or subject to auditSelf - regulation or subject to audit Educational opportunities – trustees/administrators/membersEducational opportunities – trustees/administrators/members

National Pensions Office recognizes that there is value in such an National Pensions Office recognizes that there is value in such an organization.organization.

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Additional Agenda ItemsAdditional Agenda Items

Example for self-regulation – subject to audit – RSA’sExample for self-regulation – subject to audit – RSA’s

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Future Meetings/Wrap-upFuture Meetings/Wrap-up

Future MeetingsFuture Meetings

Need?Need? Timing? (quarterly/semi-annually/annually/as needed Timing? (quarterly/semi-annually/annually/as needed

basis only)basis only) TopicsTopics How to (need to?) reach all administrators?How to (need to?) reach all administrators?

Wrap-upWrap-up

Thank you for your time, attention and participationThank you for your time, attention and participation