Gov’t intervenes in dispute over bank’s savings plan

The Government of Barbados is intervening in a dispute brewing between some customers and a local commercial bank after claims by the clients that they are being “rushed” into making decisions regarding the proposed transfer of their Registered Retirement Savings Plans (RRSP).

Minister in the Ministry of Finance Ryan Straughn said on Tuesday he would investigate the claims to try to get to the bottom of the issue involving CIBC FirstCaribbean International Bank.

Straughn said he was not aware of the specific claims, but recalled having discussions with the bank sometime in September when that financial institution sought permission to effect the transfer. He disclosed that permission was granted with the understanding that the pensioners would not be disadvantaged during the process.

“CIBC came to us to see how best we can keep the pensioners’ value that would be transferred as whole as possible. We gave permission to be able to effect the transfer. The structure at present is that obviously if you are going to be withdrawing from your pension plan effectively, there is provision for withholding tax. So that happens with any of the current pension plans,” he told Barbados TODAY.

He added: “The bank wanted to transfer them over to Sagicor because part of the portfolio was held in bonds, if they were to be transferred in the current situation then the value of the pension would be diminished on the basis of how these bonds were currently traded if they had to cash them in.”

Straughn said the ministry went through a “whole” exercise with the regulators to determine how they could allow the bonds to be transferred into a new pension scheme but as currently structured so the persons would not lose any value.

“So from that perspective, we were working with CIBC to make sure that once a pensioner wanted to keep their plan they would not be disadvantaged. Right now we have some draft amendments which are being prepared by the Chief Parliamentary Counsel’s Office to be able to facilitate those who wish to continue without losing any value with the new persons who would be administering the pension plan,” he stated.

“But in relation to time, I am not sure what the issue is. If you wanted to shift your pension plan from one provider to another, there is a process to do that. This is a case in which it is being sold to an entity. If the person still wants to transfer, the process can transfer to anybody they wish to.

“In the context of what was brought to us, it was just to make sure that whatever the decision was, that persons were not disadvantaged with respect to any transfer. I haven’t seen the letter so I don’t know what was in it. But when they reached out to us we indicated that clearly, they needed to communicate…I know they are about 700 or so persons and we said they needed to communicate with those persons what was intended. We indicated they needed to communicate very clearly so that the process can be executed relatively smoothly,” the minister told Barbados TODAY.

The letter to which Straughn referred was sent by CIBCFC to the pensioners notifying them that the bank was exiting the asset management business in Barbados and intended to transfer their RRSPs to Sagicor.

However, some upset policyholders complained that the notice gave too little time for them to make an informed decision.

“At this stage our main goal is to ensure that there is a seamless transition of your arrangements with us to whichever option you chose,” the correspondence stated.

The options given were to withdraw the contributions, agree to the transfer to Sagicor or transfer the funds in the account to an RRSP with another service provider. Transfer to another RRSP provider would not attract the 25 per cent tax penalty.

However, some pensioners claimed they received the letter in late October which did not give enough time to make an informed decision.

The letter had also indicated a deadline date of November 8 for submission of the request.

“If we do not receive a withdrawal request from you by November 8, 2021, we will understand you to require a transfer of assets (less 25 per cent withholding tax) and we will communicate with you further in this regard, if necessary.” emmanueljoseph@barbadostoday.bb