Think of a pension as a replacement for your paycheck when you stop working. Employers and employees in the Cayman Islands have been required by Law, since 1998, to contribute to an approved pension plan. Employer-sponsored pension plans can provide a crucial source of retirement income so it is important to make sure you are contributing to the right plan throughout your working life.
The RF Pension Plan uses a more conservative, value-based ap-proach to investing, designed to protect the funds you have and provide consistent long-term returns. Investment vehicles have been carefully selected for excellent long-term performance, even during difficult markets. For added protection, the plan uses multiple in-vestment managers who are industry leaders in their respective areas of expertise, and who have achieved some of the best returns in their asset class.
Your official date of Entitlement Age is the first day of the month, on or after your 65th birthday. If you choose this age of pension entitlement, a Notification of Retirement and Election Application must be completed thirty (30) days after your entitlement date. You can also take an early pension entitlement at age 55 (once you cease employment), or even a late one at age 70. Just let us know your pension entitlement date. Your funds stay invested in the plan at all times so the choice is yours.
Members who were 48 in 2017 or older may also choose 60 as their Entitlement Age; opting for an early Entitlement Age of 50 (once they cease employment).
There are various figures circulating on this amount, but the most helpful figure is probably at between 70% to 85% of your pre-retirement income.
There are many considerations that should be reviewed when calculating what you will need for retirement:
- Will I have a mortgage?
- Will I have enough to cover healthcare costs outside of insurance?
- What are my household expenses each month?
- Do I plan to travel extensively?
Your pension plan forms the core of any retirement income so it is important to monitor its performance during your working life. The table below will show you what an employee can expect at the age of entitlement for each $100 a month contribution with a matching dollar-amount employer contribution (a total monthly contribution of $200.)
| 0% | 3% | 5% | 7% | |
|---|---|---|---|---|
| 5 Years | $12,000 | $12,962 | $13,658 | $14,402 |
| 10 Years | $24,000 | $28,018 | $31,186 | $34,819 |
| 25 Years | $60,000 | $89,425 | $1,19,599 | $1,62,961 |
| 40 Years | $96,000 | $1,85,675 | $3,06,478 | $5,28,034 |
Use the chart to easily work out the age of pension entitlement benefits for your own contributions by simply multiplying the numbers in the table appropriately. For example, if you and your employer each contribute $220 per month, multiply by 2.2. For $378 per month, you would multiply by 3.78.
You have the following options you can apply for under the plan:
The Trustee can redeem all of your units and purchase a Retirement Annuity in your name from a recognized provider. This annuity will provide for the member and spouse until death.
The second option is to redeem your units in accordance with the National Pensions Office Retirement Savings Arrangement (RSA). The schedule is set by the Department of Labour and Pensions that sets out the annual minimum and maximum amount of money that can be withdrawn from your RSA based on your age and account balance. The minimum allowance is CI$12,480 annually with an inflation factor built in each year that will be determined by government.
Once you reach the normal age of pension entitlement (currently set at 65 for those born after 31st December 1969 and 60 for those born before), you may access all or part of your AVCs.
The third option allows those members whose balance is less than CI$5,000 a full refund at the time of age of entitlement.
The final option is to cash 10% of your units initially, and then draw the rest over time, an option we refer to as ‘Retirement Drawdown’. You will then receive payment twice yearly of 2.5% of your retirement benefit until it is fully drawn down. This option may be better for some members because it allows the value of your contribution to continue growing over time and keep pace with inflation.
Under the current Pensions Law, 10% of earnings must be contributed to a pension plan monthly. No more than 50% of this amount should be contributed by the employee, and no less than 50% should be contributed by the employer. For example, if your monthly earnings are CI$3,000, you must contribute CI$150 and your employer must match this contribution to arrive at a total contribution of CI$300. Earnings are capped at CI$87,000 per year (CI$8,700 pension contributions) meaning pension is required on earnings up to CI$87,000 per year (CI$8,700 pension contributions). Any contributions submitted above the 10% and earnings cap are considered Voluntary contributions.
Pension plan investment performance counts because you’re relying on your pension to help provide for your retirement. Given enough time, your pension savings can really add up - especially if your pension fund is performing well. An increase in investment performance of just 1% can equate to 17% more in your pocket when you retire. Check your last pension statement - are you maximizing your pension entitlement benefit via a well performing pension plan?
The RF Pension Plan has made a commitment to protect your investments by electing an Asset Allocation Advisor. The role of the Advisor is to provide guidance to the trustee on asset allocation and the selection of investment managers. A complete list of these investment managers and asset allocation may be found atRF Group. You can also call a customer service representative at 746.6010 for more details.
Voluntary contributions are a great way to maximize your pension entitlement savings in the RF Pension Plan. Put any extra money you get as a bonus or inheritance straight to work in your pension plan at any time. These contributions will be tracked separately on your member statement as Voluntary Contributions.
RF provides semi-annual member statements to its members via mail or you can view your statement and other information at any time by logging into the website to view your account. Your information is accessible any time via the website.
According to the Cayman Islands National Pensions Law, if you are married, your spouse is automatically designated your beneficiary. If you are not married, you must complete a Designation of Beneficiary(ies) Form naming whoever you would like as your beneficiary(ies). You may select more than one (1) person if you like – it is your choice.
Signing up for the RF Pension Plan is as simple as signing two forms and providing a legal ID. We are committed to providing our members with a hassle-free experience - we will even come to your office and assist in the completing of the forms.
To switch to RF, take these simple steps:
- Let your employer know you would like to change plans, as employers are required to change plans if their employees are not happy with the current plan. The employees must vote to change and a majority of the employee vote is required.
- Each employee will complete their current pension provider’s transfer form.
- The employer will append the employee transfer forms to a cover letter requesting the transfer of assets to the RF Pension Plan.
- RF will provide a RF Pension Plan Enrollment form to the employees and an Employer Application form to the employer.
As a member of the RF Pension Plan you instantly qualify for preferential treatment on other financial transactions with RF Group. We offer helpful, friendly face-to-face, email, or telephone guidance to members ready to draw their pension entitlement benefits as well as those leaving the island who need advice on the best way to proceed.
Your choice of pension plan will impact your financial status both now and in the future. Use your membership in the RF Pension Plan to gain access to additional RF Group products, so you benefit now and later.
As a member of the RF Pension Plan you have financial options if you leave the island permanently or for an extended period of time. If your account balance is over CI$5,000 you may leave your funds to compound and grow in the RF Pension Plan, transfer your balance to another approved pension plan, or transfer the funds to an annuity.
Balances under CI$5,000 are entitled to all of the above as well as full refund three (3) months after leaving the Cayman Islands.
If your account balance is greater than CI$5,000, you can transfer your account balance to another approved pension plan or annuity if all the following applies:
- Employment is terminated in the Cayman Islands
- No contributions have been made on your behalf for two (2) years or more
- Cease to be a resident of the Cayman Islands for a period of two (2) years or more
You may withdraw up to CI$50,000, as a loan, from your account to build or buy a house or land, or to pay off an existing mortgage; subject to the following conditions:
- You must be Caymanian, under the Immigration Law (2010 Revision)
- If you are using the funds to buy or build a home, you must not already own a dwelling unit in the Cayman Islands.
- If buying land, you must not own any other land in the Cayman Islands
- If you are using the funds to pay off an existing mortgage on a home, the amount must be enough to pay off the loan in full
This is considered a loan and you are required to pay an additional 1% of your earnings each month to pay it off for 10 years or until you reach age of pension entitlement; whichever comes first. This means you will pay 6% of your earnings each month and the employer will pay 5% each month of your earnings.
Please contact a representative for additional details.
Based on amendments to the National Pension Law effective March 31, 2017, AVCs may be withdrawn before age of pension entitlement for the following reasons:
- Housing – includes renovating, building or buying a house for yourself, buying residential land for yourself, or repaying the outstanding balance of your mortgage in full (excludes paying rent).
- Medical expenses – for non-elective medical treatment that is not covered by your health insurance.
- Temporary unemployment – for up to six (6) months (starting three (3) months after your termination)
- Education – for your full-time education expenses, or for a dependent child under the age of 23.
You are not required to repay the money withdrawn from your AVCs.
Please contact a representative for additional details.
RF Group offers a suite of options combined protect you and your family throughout your working and retired life. In addition to our pension plan, we offer other investment options outside of the pension plan. RF Group is committed to you and your financial future - ask your Human Resources Manager about the RF Pension Plan today and call us for further information.
If you have any other question please call RF Pension Services: +1 345-746-6010
email:pensionky@rfgroup.com or online at: RF Group.