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What to Expect When Retiring

NORMAL AGE OF PENSION ENTITLEMENT

 

As of January 1, 2017 the “Normal Age of Pension Entitlement” increased from 60 to 65 - however any person born in 1969 or earlier may choose to maintain their “Normal Age of Pension Entitlement” at age 60. Once you reach the age of 60/65 (age 50/55 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 for early retirement or the first day of the month following your 65th (or 60th for members born in 1969 or earlier) birthdate.

Pension payments

 

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. 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.

LUMP SUM

 

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 Withdrawal Options 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 Director of Labour and 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 Director of Labour and Pensions must approve all RSAs to ensure they comply with The National Pensions Law.

Life annuity

 

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 Director of Labour and 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.