If you are employed in the Cayman Islands, both you and your employer must contribute towards your pension. The contributions that both of you make are related to your total earnings. Total earnings include salary, wages, leave pay, fees, commission or gratuity, as well as bonus payments that are more than 20% of your basic pay. Earnings do not include severance payments, retirement long service recognition payments, and health insurance premiums that are paid by the employer. Anyone earning more than CI$87,000 is not required to make pension contributions on the amount of earnings above CI$87,000 in a calendar year, although they may choose to do so voluntarily. However, employers are only obligated to match contributions on the first CI$87,000 of income.
Every self-employed person must contribute a sum equivalent to 10% of their earnings up to CI$87,000 at a minimum.
Employers are required by law to contribute an amount that is no less than 5% of your earnings. As an employee, you should not be required without your consent to pay more than 5% of your earnings.
The employee’s contributions must be deducted at regular intervals, and together with the employer’s contribution, paid directly into the pension fund. Contributions must be made within 15 days of the last day of the month, in which the contributions were due. Late contributions will be subject to interest.
By law, every employer in the Cayman Islands has to provide a pension plan for its workers. Those that don’t are committing an offence and can be heavily fined. This means that anyone working between the ages of 18 and 65 must be a member of a recognised pension plan, even if they are self-employed, working part-time, are casual workers, probationary staff or on short-term contracts, in fact anyone working must have a pension plan.
If someone has more than one employer, then each employer must pay into the employee’s pension plan.
Expatriates are allowed nine months (a grace period) before legally having to begin paying pensions.
If you leave the island between employers for more than three months, then your 9 month grace period starts over.
The only people excluded are expatriates employed as household domestics.
You can also visit www.dlp.gov.ky for more information about pensions in the Cayman Islands and download a copy of the National Pensions Law.
The money that each of you deposit into your pension is called your basic contribution. When you are a member of the Chamber Pension Plan, the basic contribution automatically gets deposited into an account in your name, and then it’s invested into one of five Chamber Lifecycle Funds (read more about Lifecycle Funds). Which Fund your money gets deposited into depends on your age on the date you join the Plan. Your basic contributions will continue to be placed into this account until you retire, or elect to transfer your assets, if you are eligible.
How your money is invested changes over time, with the type of investments reflecting how long you have until you reach the normal retirement ago, according to the Pensions Law.
Lifecycle funds take the guesswork out of investing, because they automatically adjust the combination of assets they invest to reflect your evolving investment needs and goals.
Additional Voluntary Contributions (AVCs)
If you want to take less risk than the asset allocation suggested for your target year, you could allocate your Additional Voluntary Contributions (AVCs) to a more conservative lifecycle fund. You also have the option to invest your AVCs in a more aggressive portfolio if you are willing to take more risk.
With AVCs, you contribute as much – or as little – as you like. There’s no maximum and no minimum.
Plus, you can save a different amount each month if you want, based on what you can afford. You decide how to invest your AVCs. Choose from one of the Chamber’s five Lifecycle Funds, all run by world-class investment managers.
Save through your employer by payroll deduction, or set up a Chamber AVC account and send in your contributions as you’re able.
About Your Retirement
There’s no time like the present to protect your future
People are generally living longer, healthier lives than in the past, which means if you retire at age 65, you may spend more than 25 years in retirement. That’s a long time to live on a “basic” retirement income, so now, more than ever before, it's vital that you start saving for your retirement as soon as you can. By starting to save today, you’ll be better prepared to grow your future income and enjoy more security during all those years after you stop working.
Your retirement income needs will depend on what your expenses are likely to be, but it is generally accepted that we will need between 70% and 85% of our pre-retirement income to live comfortably in retirement.
When thinking about how much income you will need when you retire, here are a few important details to bear in mind:
- How much you have saved so far.
- How you have invested your savings.
- When you’d like to retire.
- Other income you expect to receive in retirement.
- How will your medical expenses be paid.
- How long you think you’ll live; and
- Your spouse or partner’s situation – does he or she have a source of retirement income?
Calculate different scenarios with our Pension Calculator so you can plan ahead for retirement.
How to Read Your Statement
You can check your Chamber Pension Plan statement online at any time: just enter your user name and password on the Membership Log-In page. If you do not have a user name and password, contact the Administrator. Alternatively you can review your semi-annual statement which you will receive by mail.
The Chamber Pension Plan statement is designed to provide information about your pension account at a number of different levels of detail. The Account Summary section gives you an overview with regard to the value of your pension and your investment return. The Transaction Detail section allows you a more detailed look at each transaction that took place during the statement period.
It is important to review your personal information such as name, address, birthdate, beneficiaries and the employer you work for. Please note only your current employer name should be visible. Notify us straight away of any changes or errors.
Check the period covered by this statement and note your member number – quote this number with any queries.
The Account Summary gives you the current value of your account. The growth/ (decline) in your account (i.e. your investment return) is calculated by subtracting the amount of money you and your employer(s) have put into your account from the current value of your account.
The Transaction Detail section gives you the value of your account at the beginning of the statement period as well as net contributions made by you and your employer(s) during the statement period and the value of your account, including investment returns, at the end of the statement period. It also explains the growth/ (decline) in the value of the units in your account during the statement period.
You will also notice a detailed breakdown of each contribution/redemption including the dollar value and the units purchased/redeemed in each transaction. There should be a minimum of six transactions on your semi-annual statement. Please contact the Administrator if this is not the case.
The statement also shows the month your employer sent in your contributions. Please note that if your employer sends in contributions a month in arrears (for example if June's contributions were sent in July), they will appear on your statement during the month they were received (so the June contributions will appear in July).
In general, the National Pensions Law states that refunds are not allowed from a pension plan.
However, a refund can be paid if all of the following apply:
- The value of the member's pension account is less than CI$5,000; and
- The member's employment is terminated; and
- The member no longer resides in Cayman. A waiting period and/or proof of non-residency may be required (for example, a work visa, a current utility bill in the member's name from their new address, sworn affidavit of non-residency, etc.)
If the value of the member's account is greater than CI$5,000 they may transfer their account (with the Superintendent of Pensions' approval) to an approved retirement account in another country. Otherwise, the National Pensions Law requires a two-year waiting period before the member's pension can be paid out in a lump sum.
A person is deemed to have ceased to be a resident in the Islands when they have been absent from the Islands for a period of six months or more. When calculating a period of absence, any periods of residence in the Islands for a continuous period of less than three months will not be taken into account.
As there are additional requirements based on the circumstances of members receiving a refund, there are nine forms available, depending on the situation of the member.
Redemption - Early Retirement Over $5000
Redemption - Retirement Over $5000
Redemption Request - Over $5000
Redemption Request Caymanian
Redemption Early Retirement Under $5000
Redemption Retirement Under $5000
Redemption Request Under $5000
Members should contact the Administrator should they have any questions concerning meeting the requirements for a refund. The Administrator can be contacted at email@example.com.
The member's pension cannot be paid out or transferred until their employer makes the final contribution to their account. This may be six weeks or more after the member has stopped working. As a result, you should be aware that a refund or transfer may take three months or more, so do not plan on using a pension refund to leave the Island or to pay expenses.
Administrative expenses incurred while executing the refund, such as draft and courier fees, will be deducted from the refund amount.
Fees and Charges
We do not charge fees to join or leave the Chamber Pension Plan. In addition, we don’t charge monthly account maintenance fees, as may be charged in some other plans. As a not-for-profit entity, the only fees we charge are used to pay expenses related to the management and administration of the Plan.
The performance of the Chamber Pension Plan is reported after all fees. There are no hidden fees. The most recent audited expense ratio containing all expenses of the Plan, was 1.26% as of 30 June 2016.
How to Enroll
Your employer will ask you to complete and sign an Employee Enrollment Form (if they do not, please ask them for a form). They will also ask you to provide a copy of your passport. If you have worked for an employer in the past that was part of the Chamber Pension Plan at the time (not just your last employer, but any employer in their past) it is important to advise your new employer so they can complete the form with your membership number. This will ensure that your new contributions will be added to your previous contributions.
Your employer will then send the signed form to the Administrator, to complete the enrollment process. Thirty days after they have been notified that a new member is eligible to join the plan, the Administrator will advise your employer about the provisions of the pension plan and your rights and obligations.
What to Expect When Expatriating
Many members live in Cayman for a period of time working as an expat. After an expat leaves Cayman, there are certain guidelines that must be followed in order to get a refund from your Pension account.
Please see the Refunds section for more detailed information.
What to Expect When Retiring
Once you reach the age of 65 (age 55 in the case of early retirement) there are certain options you are eligible for in respect of your account beginning the first day of the month following your retirement date.
The purpose of The National Pensions Law is to provide and mandate a means for members to contribute to their retirement savings during their working career. On retirement these savings are used to provide an income stream to allow members to support themselves once they are no longer working. In other words, a member contributes to their pension plan each month so they can receive a regular income payment after they retire.
The Chamber Pension Plan is a Defined Contribution Plan. In short, this means that an account is opened for each member and the amount of money they receive after retirement is based on the amount of money contributed to their individual account while they were working, including both the employer and employee portions, plus or minus the net return that has been earned on those funds during the life of the member's account.
Unless a member's retirement savings are less than CI$5,000, a lump-sum cash payout of retirement savings is NOT an option. The retirement savings must be used to provide an income stream.
Joint and survivor
The National Pensions Law dictates that all pensions must be “joint and survivor” with a member's spouse if the member is legally married on the date of their retirement or death. This means that if the member dies the pension will continue to be paid to the member`s spouse in regular payments. If this scenario is relevant to you, please contact the Chamber Pension Plan Hotline for additional details.
Options on retirement
When a member reaches retirement eligibility age there are three options, outlined below, which allows them to begin drawing their pension as income. If you are approaching retirement age and would like to discuss these options in more detail please contact the Chamber Pension Plan Hotline.
This option is ONLY available if the total value of a member's retirement savings is less than CI$5,000. In this case, the Trustees of the pension plan may allow the member's pension to be paid in one lump-sum. Please see Refunds for additional information.
Retirement Savings Arrangement
A Retirement Savings Arrangement (RSA) is simply the member’s same account they had at retirement date, but which has now been approved by the Superintendent of Pensions to begin making retirement payments.
As a general rule of thumb, the RSA is the best alternative if a member's retirement savings are less than CI$200,000. Unlike a life annuity, an RSA will not necessarily provide a life time pension as it is structured to pay out a member's pension by a set amount per year until the account is depleted. An RSA is more cost efficient than a life annuity since there is no element of profit to a life insurance company built in.
The Superintendent of Pensions must approve all RSAs to ensure they comply with The National Pensions Law.
On retirement, a member's retirement savings can be transferred to a life annuity. Life annuities are typically offered by life insurance companies. The member's retirement savings are invested by the life insurance company and used to provide a regular income stream to the member for the remainder of their life (and their spouse's life if the member is married at the date of retirement). The amount of income paid will depend on the size of a member's retirement savings. The larger the retirement savings, the larger the retirement income.
The Superintendent of Pensions must approve all life annuities to ensure they comply with The National Pensions Law. If you are considering a Life Annuity, please contact Chamber Pension Plan Hotline for the detailed list of criteria set out in The National Pensions Law.
Guidelines in Mortality Cases
If a member dies, there are a number of variables that affect when and how the deceased member's pension is dealt with. In general, the following guidelines apply:
Where the member's pension benefit is less than CI$5,000 at the time of death
- If there is a surviving spouse but no dependent children, the money is paid in a lump sum to the surviving spouse.
- If there is a surviving spouse with dependent children, the money is paid in a lump sum to the surviving spouse.
- If there is no surviving spouse but there are dependent children, the money is paid in a lump sum to the guardian of the children for their maintenance, benefit, and education or paid directly to the children if the guardian authorises it.
- If there is no surviving spouse and no dependent children, the money is paid in equal lump sum(s) to the named beneficiaries and/or the member’s estate.
Where the member's pension benefit is greater than CI$5,000 at the time of death
- If there is a surviving spouse but no dependent children, the name on the member`s account is changed to the surviving spouse. The surviving spouse then has the same rights as the former member (the deceased).
- If there is a surviving spouse with dependent children:
- the name on the account is changed to the surviving spouse;
- up to 50% of money is to be held for the children's maintenance, benefit, and education until they reach the age of 23 or cease full-time education, whichever comes first;
- after the children reach age 23 the remaining money from their 50% remains in the pension plan and becomes the property of the spouse.
- If there is no surviving spouse but there are dependent children:
- 100% of the money is to be held for the children's maintenance, benefit, and education until they reach the age of 23 or cease full-time education, whichever comes first;
- after the children reach the age of 23 or cease full-time education, the remaining pension is paid in equal lump sums to each child.
- If there is no surviving spouse and no dependent children, the money is paid in a lump sum(s) to the named beneficiaries and/or estate.
NOTE: Some of these guidelines vary if the member was retired at the time of death.
Please contact the Chamber Pension Plan Hotline regarding any specific situations.
All self employed persons must contribute a sum equivalent to 10% of their earnings up to CI$60,000 at a minimum.
There are a number of special considerations that relate to self employed members of the Chamber Pension Plan.
Enrolling as a self-employed member
To join the Chamber Pension Plan Plan, contact the Administrator to request the necessary forms. The main form is the New Employer Application Form. This is the same form that is completed by employers joining the pension plan. The Employer Application is supplemented by the Deed of Adherence which, when signed by the self employed person, binds the person to the terms and conditions laid out in the Declaration of Trust for the pension plan.
After completing the forms, return them to the Administrator. The Administrator will notify the Superintendent of Pensions and complete the application process.
Making contributions as a self-employed member
Contributions can be made in three ways:
a. By setting up a standing order with your bank to transfer a fixed amount of money from your account to the Chamber Pension Plan account automatically each month. The amount transferred must comply with the minimum contribution rates outlined in the Law. When setting up the standing order, the name of the account at Bank of Butterfield is “The Cayman Islands Chamber Of Commerce Pension Plan” and the account number for KYD is “02-201-070310?; and for USD is “01-201-070310”.
b. By completing a Bank of Butterfield Chamber Pension Plan Deposit Slip (available at the Administrator’s office – 90 North Church St. 2nd Floor or the bank branch) and mailing it, along with your contribution cheque, to the Administrator. When completing the Deposit Slip, your membership number should be entered in place of Company Number, and your name should be entered in place of Company Name; or
c. By completing a Bank of Butterfield Chamber Pension Plan Deposit Slip (available at the Administrator’s office – 90 North Church St. 2nd Floor or the bank branch) and making your contribution in person at the bank.
To become a member of Chamber Pension Plan, please fill out and return the New Employer Application Form.
When getting married there are many things to change such as your surname or your beneficiaries.
To make any changes to your account, a Change of Member Information Form must be filled out and submitted to the Administrator with a copy of your marriage certificate.
Why choose the Chamber Pension Plan?
- The real costs to members of the various plans in the Cayman Islands are very poorly understood.
- The simplest example of this is in "layered fees"; the majority of our competitors (by assets) for example have substantial investments in mutual funds or hedge funds. Some are even invested in Hedge Funds of Funds. What this means is that you, if you were a member of one of those plans, are paying for at least three levels of operating expenses (the Plan, the hedge fund of funds, and the sub-hedge funds that the fund of funds invests in, and you would be bearing the cost of management fees and performance fees at both of the two lower levels). The result of all of those layers of fees, if you were a member, is essentially less of a return to you.
- The Chamber Pension Plan does not invest in fund of funds or hedge funds, and with the exception of our global equity index manager Vanguard, our Plan has only one layer of operating costs. In addition, the Chamber Pension Plan charges no performance fees, management fees, or account-level charges.
- Lifecycle Funds simply provide a better product than our competitors.
- Automatically reduce the risk that you are taking as you get older, for example, you are much less likely to have a sudden drop in value of 40%+ (as happened Worldwide in 2008) just before you retire. This scenario could easily happen in a plan that provides only a single fund for all investors, or in a plan that allows you to just invest into a single equity fund, but this could not happen in the Chamber Pension Plan, as you will have had your equity exposure reduced significantly as you approach retirement age.
- Your investment will not be switched around among units of different classes, which can be confusing and difficult to know what exactly you are being invested into.
- Your statement will be clear and easy to read.
- You can get web access to your statement and account details at any time.
- In-person or telephone contact available on-island.
- Customer service team to assist you - no other plan in the Islands can match the experience or response time of our administrative team.
Competitive, Conservative risk-adjusted returns
- Since 2009 returns have been competitive with a world-class asset management team maximizing the net return to members.
- Lifecycle Funds contain a portion of fixed income securities which, while dampening the up-side gain of the portfolio in an increasing equity market, will buffer losses in those months that equities drop (and stocks do drop from time to time, although the history of equities is that they have always gone on to achieve new highs). This is what we mean by conservative, and the risk-adjusting factor is in the Lifecyles.
- Our goals are your goals. We are a not-for-profit organisation that was created by its members.
- We function independently from a profit-motivated bank or insurance company.
- We do not work for commission, performance fees, management fees, or the like.
- If the membership of the Plan wants to hire a different asset manager or service provider we can do it.
- We aim to be the most transparent plan in the Islands.
- We are proud of our product and have nothing to hide, so we are all in favour of disclosure, particularly balanced and fair disclosure among all competitors in the market; we will continually seek ways to deliver better transparency to you, our members.