The Cayman Islands is different from many 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 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.
Recent Changes
In June 2024, 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 from a Retirement Savings Arrangement ‘RSA’. This annual payment of funds has increased by 6.2%, from CI$14,125 in 2023, to CI$15,000 per year. The amount a retired person can withdraw is based on their age and account value. When the amount calculated from the indicated percentage in the Drawdown schedule is less than CI$15,000, the member is free to take the higher sum of CI$15,000. However, if the amount calculated is greater than CI$15,000, the member is free to take the greater amount. For more information, 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.
Other Recent Amendments
In January 2023, the National Pensions (Amendment) Act 2016, Commencement Order 2022 was passed with several notable amendments being introduced through the course of the year:
- From January 1st 2023, each pension plan is required to hold an Annual General Meeting within 6 months of the financial year end of the plan and must provide evidence of the meeting (agenda, attendance record, minutes and copies of other documents distributed) to the Department of Labour and Pensions within 3 months thereafter. Statements must also be provided at least semi-annually to each member and must show the date payments were received from the employer, amount received and the contribution period for which payment is made for each employer and employee.
- From March 1st 2023, higher fines may be levied on employers that avoid paying pensions. On summary conviction for a first offence of non-compliance, employers can receive fines up to CI$20,000 or possible imprisonment for up to 2 years, or both. Second offences can attract fines up to CI$50,000 or imprisonment up to 3 years, or both.
- From July 1st 2023, interest shall accrue on delinquent contributions (contributions not received by the 15th day following the earnings month) and are reportable to the Director on the 15th of the following month. Additionally, the administrator is to notify the affected employees within 60 days of the notification to the Director.
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.