The rising cost of living has led government to increase the amount pensioners can take annually from their retirement funds from $12,900 to $14,125 a year.
On Thursday, 13 July, the Department of Labour and Pensions announced the 9.5% increase in annual disbursement of funds under a Retirement Savings Arrangement (RSA) –the equivalent of $102 a month.
This is the second increase in 15 months. In April last year, the amount was raised from $12,480 to $12,900.
The National Pensions Act permits members to access their pension benefit at retirement, either through an annuity or an RSA.
The amount a person can withdraw annually is calculated according to the member’s age and account value.
Director of Labour and Pensions Bennard Ebanks, in the statement announcing the increase, said, “In consultation with the Board, I am pleased to have approved another increase as it means more funds are accessible annually to our seniors who may need it to maintain their households. As prices rise we hope this increase helps to offset the Islands’ increased cost of living.”
According to the consumer price index issued by the Economics and Statistics Office, inflation rose 6.6% from the last period when the RSA disbursement figure increased by 3.3% in April 2022.
Minister for Border Control and Labour Dwayne Seymour said in the statement, “There is a belief that retired persons can only withdraw $1,000 a month, and this isn’t true. The amount a person can withdraw is based on a calculation of their age and the amount in their account. I support this increase as it’s important that we take care of our seniors and those most vulnerable in our community.
“With access to a larger payment, we hope it makes them become more confident in supporting themselves. This is just one of government’s initiative demonstrating its commitment to holistically evaluating pension matters.”
Guidance notes issued by the Department of Labour and Pensions state that the age of the member is defined as the person’s age at the start of the calendar year in which the payments are being made. A retired person can withdraw any amount up to the annual maximum based on their age and account value, the guidance notes state.
According to the Department of Labour and Pensions, pension fund members have the option of terminating their RSA and transferring the balance to an approved annuity, or if they are 89 or older, they have the option of taking the full RSA account balance with a written notice of at least 60 days.
All applications received from 1 Jan. 2023 and all approved RSAs are entitled to the new maximum figure, $14,125, at their next disbursement, the department stated.
The increased disbursement figure came into effect on 1 July, so members who received their annual disbursement from 1 Jan. to 30 June should be provided a subsequent payment for the difference between the new and previous RSA figure of $12,900 per annum.
The department advised anyone with queries relating to the new increase to contact their pension plan administrator.
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