Pension law allows double-dip for employees aged over 60

Deputy Director of Pensions Amy Wolliston
Deputy Director of Pensions Amy Wolliston

Older workers in the Cayman Islands private sector will still be eligible to access their pension funds when they reach age 60 under the newly amended National Pensions Law, whether they have actually retired or not.

The legal changes, approved by the Legislative Assembly this summer, allow for a “double-dip” situation where a worker who is still employed and contributing to a retirement plan while they are between ages of 60 and 65 can receive an annual pension payment from their retirement fund, as well as their salary.

The new National Pensions Law sets the “age of pension entitlement” [when a person can receive their pension], at age 65. However, transitional provisions of the law allow individuals aged between 48 and 60 when the new law takes effect to continue to use age 60 as their age of pension entitlement, Pensions Superintendent Amy Wolliston confirmed this week.

Those aged 47 and younger when the law takes effect would not be able to claim their pension funds until age 65, and will not be given the option to start withdrawing retirement funds between ages 60 and 65, unless they opt for early retirement and no longer work for their employer.

The change in the “age of pension entitlement” under the new law takes effect on Jan. 1, 2017.

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Questions were asked concerning whether those older workers still had to contribute to a pension plan between ages 60 and 65 during a meeting this week between government pension managers and Cayman Islands Tourism Association officials.

“If you keep working [past age 60], then you still have to pay [into a pension],” Ms. Wolliston said.

So the worker who “grandfathered in” (at least age 48 when the new law takes effect on Jan. 1) could receive payments from their retirement fund starting at age 60 even if they were still working. However, while receiving those payments, they would still have to make additional payments into the retirement fund until age 65.

After age 65, if the employee is still working, they no longer have to make pension contributions and can withdraw from their retirement account as they normally would, Ms. Wolliston said.

The private sector retirement funds all function like a U.S. 401(k) savings account, meaning the amount of money in them is finite – based on what the employee managed to save ahead of retirement. Once the fund is depleted, the individual will not receive any further payments.

The new pensions law will also change – as of Jan. 9 – the maximum amount retirees can withdraw from their savings in a private sector pension plan each year.

Private sector retirees participating in a National Pensions Law-mandated retirement savings plan can currently withdraw a maximum of $12,000 per year from those accounts, regardless of how much they have saved or their current age. Under the new government policy, the minimum and maximum withdrawal amount a pensioner can take each year will vary, based on age and savings. The minimum amount an individual can withdraw under the government Retirement Savings Arrangements scheme will be increased to $12,480 per year for all pensioners.

For Retirement Savings Arrangements accounts that have “smaller” balances, the $12,480 annual amount will be the maximum withdrawal, according to the ministry. This is being done to ensure “plan members have a basic pension amount that lasts for their entire retirement and that they do not use all of their pension funds before their anticipated death,” according to Employment Minister Tara Rivers.

Individuals who have more money in their retirement savings accounts can withdraw more. Also, the withdrawal amount can be adjusted for inflation in future years under the new scheme.

The rates at which retirees can withdraw from their pension accounts, starting at age 50 (if they have taken early retirement) and going all the way up to age 102 have been set by government. For example, for a person who retires at age 60 and has a suitable amount in their retirement savings account, they can withdraw a minimum of 1.97 percent from their account that year and a maximum of 4.73 percent for the year, based on how much they have in the account.

For a person age 70, the minimum percentage is 2.18 of the savings account funds remaining and a maximum 5.68 percent of the account balance.

“Pensioners who have larger amounts in their account will be able to withdraw an increasing amount on a yearly basis above the proposed $12,480 [minimum] threshold, as well as have the option to withdraw a lump sum amount any time after age 90,” a ministry statement released Monday indicated.

The average life expectancy in Cayman typically hovers between age 80-82.

Minister Rivers said the changes would allow many retirees to live more independently “in their golden years.”

A decade ago, the Mercer consulting firm warned government in an evaluation of the private sector retirement system that the amounts being contributed by pension plan members were not enough to provide suitable income replacement in retirement.

The contribution rate for private sector employees, five percent of their salary matched by a five percent contribution from their employer, has not been increased since then.


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  1. Perhaps good intensions are a good thing, but if someone is healthy enough to work, they should not be collecting a pension.

    Also, and a more important thing is that when the older people leave their career positions, that makes room for a young person to fill that job. The answer to an increasing number of people seeking work is not to force an increase in the size of the work force.