Introduced by the government in June, the National Pensions (Amendment) Bill, 2015 is intended to increase retirement savings for private pension plan members, and improve employer compliance and the security of pensions in the Cayman Islands. Public meetings to give all residents an opportunity to discuss the bill and raise any concerns or questions were held in July and during the first two weeks of August. The bill is open for public comment until August 31, 2015.
Key changes proposed in the bill
- Raise the full retirement age from 60 to 65, and the earliest retirement age from 50 to 55 – delaying when you can access your pension. This change is based on longer life expectancy and the resulting need for Cayman pensioners to stretch their savings over longer retirement periods. Those who choose to work longer would contribute more to their pension savings over time.
- Increase the ceiling on annual pensionable earnings for members from $60,000 to $87,000. This means if you earn more than $60,000 each year, both you and your employer would need to contribute more to your pension – each paying 5% of yearly salary up to the new $87,000 maximum. Under the proposed change, a worker earning $75,000 who currently has a combined employer-employee contribution annual maximum of $6,000 would be eligible for a maximum contribution of $7,500.
- Eliminate pension contributions for employees who work less than 15 hours per week. Currently, all private sector workers and their employers must each contribute (excluding family-employed domestic workers).
- Allow employers to delay pension contributions for six-months from the hire date for employees who have newly entered the workforce. This affects those who have newly entered the island, and Caymanians who are entering their very first job. Currently there is no delay for Caymanians and up to a nine-month delay for non-Caymanians. This change would eliminate the greater starting costs to hire Caymanians.
- Extend how long you must wait before receiving your pension if you leave the Cayman Islands. The waiting period would increase from two years after the last contribution to three years. The change would also restrict lump-sum cash payments and favour transfer to an overseas pension plan.
The bill proposes to increase fines for not complying with the National Pension Law and lengthen the timeline for pursuing pension-related criminal or administrative offenses, increasing the limit from five to seven years. The proposed legislation will also shift the responsibility for overseeing pension plans to the newly created Department of Labour and Pension Services and remove the Office of the Superintendent of Pensions. Other changes would require private sector pension plans to standardize the way they communicate. Plans would be expected to hold annual meetings, file annual audited financial statements with the Department of Labour and Pensions, and increase the frequency of member statements to quarterly. These are all long-held communication practices by Silver Thatch Pensions and a key part of our transparent approach to communication with members, employers and other stakeholders.
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