Cease & Desist (C&D) Order

Mr. Mario E. Ebanks – Acting Superintendent of Pensions and Director of the Department of Labour & Pensions.

Published 10th February 2014, 2:57pm

Public Advisory – Cease & Desist (C&D) Order on new business for BAF Cayman Pension Plan

In accordance with Section 80 (a) & (b) of the National Pensions Law (2012 Revision), the National Pensions Board and the Acting Superintendent of Pensions in the National Pensions Office and the Director of the Department of Labour & Pensions, Mr. Mario E. Ebanks, has announced that the BAF Cayman Pension Plan (previously the BAF Cayman Guaranteed Pension Plan) has been given a Cease & Desist Order by the Superintendent in respect to soliciting and registering new pensions business.

The Order by the Superintendent of Pensions was made in 2013 pursuant to Section 16 (1) (a) and in accordance with Section 70 (1) & (2) (a) of the National Pensions Law (2012 Revision), appended to this Advisory for ease of reference. In summary, Section 70 of the Law empowers the Superintendent to order a registered pension Administrator or any other person to take or refrain from taking any action in respect of a pension plan or a pension fund.

The BAF Cayman Pension Plan is the current successor of the Pension Plan which was administered by the British American Insurance Company Limited (BAICO), and which was replaced as the Administrator in 2009, through a Court Order of 14th September 2009, in accordance with Section 70 (1) and 76 of the National Pensions Law. The BAF Cayman Pension Plan is established through a Trust Deed, with a local corporate Trustee, and an Administration Agreement between the “Trustee” and BAF Insurance Company Cayman Limited who serves as the “Administrator”.

Since it assumed the role of Administrator, BAF Insurance Company and the National Pensions Office, along with other stakeholders, agreed on a host of remedial actions which needed to be undertaken to bring the former BAICO Pension Plan, which BAF Pension Plan succeeded, into full compliance with the National Pensions Law and Regulations. A detailed Action Plan was agreed in October 2009. Regrettably several of those important requirements have still not been achieved by BAF, despite various efforts which were intensified since early in 2013.

The Order by the Superintendent, simultaneously with the ongoing remedial compliance work, means that BAF Pension Plan has been required to cease all marketing/business development and new pensions clients enrollments until the Pension Plan and Fund are brought into strict compliance with the National Pension Law and Regulations. It is important to note that the Cease & Desist Order is only in respect to NEW business, and existing pension’s clients can continue to expand their employees and conduct the other required transactions as normal.

The National Pensions Office wishes to reassure the public that throughout this difficult process, and on an ongoing basis, it is carefully monitoring and supervising the BAF Cayman Pension Plan and is in close collaboration with the senior and interim management of the BAF organization, both in Cayman and in the Commonwealth of the Bahamas. Included in this supervision are requirements for: monthly Management Accounts, monthly Custodian Statements on the Pension Fund investments portfolio, monthly membership and Liabilities data, the commissioning of audited financial statements, Investment Regulations compliance monitoring, Actuarial Valuations monitoring, and monitoring the implementation of best practices in governance and operational integrity.

The National Pensions Office, and the National Pensions Board, are also working in close collaboration with other stakeholders and strategic partners including the Cayman Islands Monetary Authority, the Trustees of the BAF Cayman Pensions Plan, the auditors, financial & systems analysts, and other professional advisors, as well as the counterpart regulator in the Commonwealth of the Bahamas (as needed). The National Pensions Law prescribes penalties for the failure by affected parties to comply with an Order of the Superintendent, ranging from a fine of five thousand dollars on summary conviction [Section 90 (1) ], to the dismissal of the Administrator [Section 16 (3) ].

Employers or Employees of the BAF Cayman Pension Plan who may have questions or concerns on this announcement or implications of the Superintendent of Pensions Cease & Desist Order may contact the National Pensions Office at 945-8960 or via e-mail at [email protected]

Excerpts from the National Pensions Law:

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Contact details for questions: Mario E. Ebanks, Acting Superintendent of Pensions; Direct office telephone number 244-4003. E-mail: [email protected].