When you retire, you will have three options for receiving your retirement benefits: an annuity, a retirement income fund or a retirement savings arrangement (RSA).
If you choose the Annuity option, all of your Silver Thatch Pensions investment will be cashed in and the money used to buy an annuity. There are different types of annuities available, but in all cases an annuity guarantees you a fixed income for a period of time.
The amount of your annuity income will depend on a number of factors, such as the amount of money available to purchase the annuity, your age, the type of annuity you buy, and interest rates at the time of your annuity purchase.
If you have a spouse at the time of your retirement, your annuity must (by law) include a joint and survivor benefit. This will ensure that if you die before your spouse, the annuity will continue to pay your spouse a fixed, lifetime benefit.
2. Retirement Income Fund (RIF).
If you choose the Retirement Income Fund option, a portion of your Silver Thatch Pensions investment will be cashed in at retirement and paid to you. Amounts will also be cashed in and paid to you on a regular basis during your retirement. The Retirement Income Fund option will not be available to you at retirement if the value of your Silver Thatch Pensions investment is less than US$100,000.
Here’s how the Retirement Income Fund works:
You can cash in up to 10% of the value of your Silver Thatch Pensions investment. Every six months thereafter, 2.5% of the value of the investment at the start of that year will be cashed in and the proceeds paid to you.
Starting in the year following your retirement
If the value of your remaining investment is higher at the end of the year versus the beginning of the year (after your benefits have been paid), the difference will be cashed in and the proceeds paid to you. If the value of your remaining investment is lower, no additional payment will be made.
Trustees have the discretion to change the provisions of a retirement income fund to protect the interests of a retired member.
- If the total value of your investment at retirement is US$300,000, you can choose to receive a one-time cash payment of up to US$30,000. The remaining investment will continue to be held in your name.
- If, after taking your one-time payment, you have US$270,000 left, you will receive two semi-annual payments of US$6,750 over the coming year (or US$13,500 per year).
- If the total value of your investment is US$270,000 at the start of the second year of retirement but is US$280,000 at the end of the year (after your benefits have been paid), you will receive a one-time, lump-sum cash payment of US$10,000 and your semi-annual payments for the coming year will remain at US$6,750.
- If the total value of your investment is $270,000 at the start of the second year of retirement but is US260,000 at the end of the year (after your benefits have been paid), you will not receive any lump-sum cash payment and your semi-annual payments for the coming year will be slightly reduced to US$6,500.
3. Retirement Savings Arrangement (RSA)
The National Pensions Law was implemented in 1997 and the RSA (Retirement Savings Arrangement) is a payment plan which is in use until the system reaches maturity. RSAs are used so that members who have retired (minimum age 50 years) and wish to access their retirement funds can do so, without having to purchase an annuity or have the uncertainty of income created by a RIF (Retirement Income Fund).
RSAs are payments which are made on a regular basis (either monthly or annually – it’s up to you) in accordance with a payment schedule issued by the National Pensions Office. The payment schedule acts much like a pension envisaged by the law, in that it escalates by 2% annually until all funds are exhausted, and any balances remaining on death are to be paid to the spouse, children/or estate. Currently the first year RSA payment is capped at CI$12,000, if you have less than that amount in your account your whole account will be paid out to you in the first year.
Additionally, members may collapse their RSA at any time and purchase an annuity.
It is mandatory that upon early retirement, all contribution sources (Mandatory, Additional and Voluntary) are included in the RSA Arrangement. On Normal and Late Retirement only Mandatory sources are required to be included and you can choose to elect to redeem the voluntary sources as you wish.
If your balance is under 5k
If at retirement the value of your Silver Thatch Pensions investment is less than CI$5,000, then your account can be cashed out without having to select any of the retirement benefit options.
If you have Additional Voluntary Contributions (AVCs)
Once you are past the normal retirement age (currently set at 60) you may also access all or part of your AVCs by making a request in writing to Saxon Pension Services. But bear in mind that your application could take up to 45 days to process.