The Cayman Islands are different from other jurisdictions when it comes to pensions. There are two pension sectors in Cayman, privately funded pension plans and Government funded pension plans for civil servants (see Government Pensions for information on Government funded pension plans).
The private sector pension plans are funded by employees and employers, but Government-mandated. The Cayman Islands Pension Law requires both employees and employers to contribute a total of 10% of the employee’s monthly salary to an approved pension plan. The law states that employees must contribute 5% and employers must match the 5%. Those who are self-employed are also required to contribute 10% of their salary to a pension plan.
COVID-19: Changes to the National Pensions Law
On the 23rd of April, 2020, an amendment to the Pension Law was passed to enable workers access to their private pension funds as a means of injecting money back into the local economy during the COVID-19 pandemic. This remained in effect until October 2020 and enabled residents to withdraw up to 100% of their pension funds not exceeding 10,000, and 25% of funds in excess of $10,000.
A pension payment holiday on contributions for both employees and employers was also introduced from 1st April 2020 and has been extended to remain in effect until 31st December, 2021. Please note that for all those who would like to continue paying their pensions at this time, they need to apply the monthly funds to the Employee Voluntary contributions and the Employer Voluntary contributions box (and not the mandatory box). For more information on the National Pension (Amendment) Law 2020 and a list of Notary Publics, please see this page.
National Pensions (Ammendment) Law 2016
In May 2016, the National Pensions (amendment) Law 2016 was passed with over 50 provisions revised. A few of those changes to the Pension Law include:
- Adjusting the normal age of entitlement from the age of 60 to 65 for those who are 47 and younger as of January 1, 2017. Those who were 48 and older as of January 1, 2017, may still retire at 60 (early retirement at 50).
- Raising the maximum annual pensionable earnings from CI$60K to CI$87K
- Accessing voluntary contributions for housing, medical, educational, and unemployment purposes
- Withdrawal of pension funds
- Transfers from private sector pension plans to the Public Service Pension Board.
Under the National Pensions (amendment) Law 2016, the way members can access their funds when they terminate employment on Island has also changed. Effective from 31st December 2017, a member who has CI$5K or more in their account may elect to transfer the balance of the pension assets to a pension plan, pension entitlement savings arrangement, or life annuity that is outside of the Cayman Islands. Prior to completing the transfer, a member must cease employment on island; make no contributions to the pension plan; and not reside on the Island for two years.
The amendment also stipulates that members will no longer be able to request a lump sum payout after December 30th 2019. After which, refunds will only be available to members under two conditions:
a) the total value of the pension fund is less that CI$5K (this is also done at the administrators discretion)
b) if a member reached the age of 65 and is unable to transfer their pension benefit to an approved pension plan, life annuity, or similar arrangement.
Generally, should you choose to leave the Cayman Islands and the total value of your pension assets are less that CI$5K, you may request to have your funds paid out to you and this is usually available six to eight weeks after your last contribution has been received by the pension provider.
If you have a query regarding the new Pension Law, call the Department of Labour and Pensions at (345) 945 8960 or visit www.dlp.gov.ky.