The Cayman Islands is 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).
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The private sector pension plans are funded by employees and employers but are Government-mandated. The National Pensions Act requires employers to remit a total of 10% of the employee’s monthly earnings to an approved pension plan, with no more than 5% coming from the employee and no less than 5% coming from the employer. Those who are self-employed are required to contribute 10% of their earnings to a pension plan. Please note that the National Pensions (Amendment) Act, 2023 which was published in December 2023 has made a few changes. Please read below.
Amendments to the National Pensions Act (2023)
As of December 2023, those that are Caymanian and have a private pension can now withdraw up to CI$50,000 to purchase an existing dwelling, to construct a new dwelling unit or to purchase residential land.
Those that have an existing property can now withdraw up to CI$100,000 from their private pension, as long as it will completely pay off their outstanding mortgage.
There are restrictions on the new rules, including that the following month (after being given a cheque from the pension company), the recipient must increase their pension contributions by 3% per month (from 5% employee contribution to 8%) until the total amount has been repaid or the recipient retires.
Please see the National Pensions (Amendment) Act, 2023 for all the details.
Other Recent Changes
In July 2023, due to the rising cost of living, Government increased the amount pensioners in the private sector can take from their retirement funds at retirement age. This annual payment of funds has increased by 9.5%, from CI$12,900 to CI$14,125 per year. A retired person can withdraw any amount up to the annual maximum based on their age and account value. If you are seeking more information on this new increase, contact your pension plan provider directly.
If you have a query, call the Department of Labour and Pensions (Tel: (345) 945 8960) or visit their website.
National Pensions (Amendment) Law 2016
In May 2016, the National Pensions (amendment) Act 2016 was passed with over 50 provisions revised. A few of those changes to the Pension Act include:
- Adjusting the normal age of entitlement from 60 to 65 for those who are 47 and younger as of 1st January 2017. Those who were 48 and older as of 1st January 2017 may still retire at 60 (early retirement at 50).
- Raising the maximum annual pensionable earnings from CI$60,000 to CI$87,000. Allowing access to additional voluntary contributions (AVCs) for housing, medical, educational and unemployment purposes.
- Non-compliance from employers can result in fines up to CI$10,000 and possible imprisonment.
If you leave the Cayman Islands
Generally, should you choose to leave the Cayman Islands and the total value of your pension assets are less that CI$5,000, 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 Act, call the Department of Labour and Pensions at (345) 945 8960 or visit their website.