With the New Year comes a raft of changes to Cayman’s retirement system, starting Jan. 1 with the increase of the retirement age from 60 to 65. The first set of changes will also increase the salary maximum so employers will have to contribute to pensions on up to $87,000 worth in salary.
The new National Pensions Law, passed unanimously by members of the Legislative Assembly, will bring big changes to Cayman’s retirement system in the coming year, with new changes to increase penalties for employers who shirk pension obligations.
Employment Minister Tara Rivers, in a press release, said, “These changes represent a milestone in that the National Pensions Law had not undergone any significant review or amendment in the past 18 years since the regime was first launched.”
The law increases retirement age by five years, and increases the age people will be eligible for early retirement from 50 to 55. The increase is mandatory for people who are 47 and younger in 2017. Older employees have the option to decide between retiring at 60 or 65.
The change for “year’s maximum pensionable earnings” means employees and employers will have to pay contributions on earnings up to $87,000 a year, increased from $60,000. A report in 2007 first recommended the increase. Both employers and employees can still elect to make contributions beyond the maximum, but are not required.
Other parts of the law are scheduled to come into effect through 2017. The Employment Ministry statement notes that new fines and the possibility of prison sentences for violating the National Pensions Law will commence in February.
The ministry notes, “These significant fine levels will give the Law more teeth and are another step in the process of building the culture of pension compliance.”
This article has been edited from the original.