(CMR) Local pension providers have begun making emergency COVID-19 payouts in earnest as the 45-day deadline looms. However, there are limitations that could impact the payout process slightly that many have not been fully considered.
Some pension companies are working feverishly around the clock to meet the legal deadlines.
The payout deadline for anyone who applied on May 1 is Tuesday, June 16. The 45 day period was set out in the National Pensions (Amendment) Law, 2020 which was passed to set out the terms for the COVID-19 emergency funds access.
The Department of Labour and Pensions recently clarified the respective timeframes for payouts in keeping with section 8 of the Interpretation Law (1995) with all pension administrators on island to ensure full compliance.
It was clarified that the counting of days starts the day after the application is received – for applications received Friday, May 1; day 1 would be Sunday pursuant to section 8(a).
Saturdays and Sundays are included in the calculation of time except they cannot be counted as the last day most likely because companies including banks are not open on those days. Public holidays are also excluded from being the last day. Instead, the following day would be the last day for payouts.
For example, if the 7 days for receipt falls on a Sunday the required acknowledgment receipt would be due on Monday instead.
One pension company will be paying out over $140 million dollars based on applications received thus far. However, their local bank has certain regulations in place that only allow them to purchase so much cash on any given day. One source shared:
“Clients need to understand we are doing everything in our power to ensure payouts are handled in accordance with the payout timeframe. We are constantly in communication with the banks and their treasurers to ensure access to KYD – they have regulations which they will breach if they sell us too much on any single day.”
Royal Bank has a daily limit of KYD $8 million per day.
KYD payouts are said to be ready pending available cash. It does not appear that any other legislation was amended to allow banks to work around those existing restrictions.
In 2017 all six class A retail banks collaborated on a project to set up the Cayman Islands Automated Clearing House (CIACH) to facilitate the faster processing of payments between institutions. There are restrictions in place there as well.
There is also a consideration of how much available cash the actual banks have on hand. It is expected that Silver Thatch will be doing a substantial payment on Tuesday to be fully compliant.
Some pension members continue to complain that they have not heard anything at all from their pension administrators. There is no indication of what will happen to those companies that have issued no acknowledgment emails or approvals to members.
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