Pension Holiday Gazetted
Published 30th July 2010, 5:41pm
Amendments to the National Pensions Law, allowing a temporary one-year suspension of pension contributions for Caymanians and a temporary two-year suspension period for non-Caymanians, takes effect Monday, 26 April. This amendment will affect private sector employers, employees, and self-employed individuals. Explaining the rational for the suspension, Minister with responsibility for pensions, the Hon. Rolston Anglin, JP, said "In the current economic climate, pension contributions place a considerable financial burden on employers, employees and self-employed persons. "With some businesses facing closure, this relief might enable them to survive these tough economic times." To participate in the suspension Minister Anglin explained that businesses must be in compliance with the National Pensions Law. "Any employer participating in the suspension term must be up-to-date with their contributions or have made arrangements for the payment of any arrears before participation can begin," he said. "This is to avoid compounding any existing non-compliance with the National Pensions Law." Acting Superintendent of Pensions Amy Wolliston noted that while participation is voluntary it is not automatic. "Persons who wish to continue making contributions throughout the one- or two-year term may continue to do so," she said, "But employers and employees must apply to participate." She explained that both parties must first agree to the suspension, then sign a written agreement that replaces employment-contract pension obligations. Once those steps are completed a formal application must be made to the pension plan adminstrator, which must approve the suspension before companies can cease making contributions. Another participatory condition she noted is that pension plan membership must be maintained. That is, all employers and employees - regardless of when they are employed - must be members of a registered pension plan. In fact, businesses established during the pension holiday period are also obligated to establish a pension plan and ensure that their employees are members. Similarly, opportunities to suspend pension payments are extended to self-employed persons. However the same conditions apply. Self-employed individuals must formally apply to their pension plan administrator before suspending payments, and must maintain their membership within a pension plan. For more information, refer to the National Pensions Law (2010 Revision). A copy is available on the Cayman Islands Government web portal www.gov.ky. Look for it under the features section. Pension Suspension Application Procedure To participate in the pension suspension employers must:
- Ensure that all pension contributions are current. If they are not, then a payment plan must be agreed with the pension plan administrator to reduce outstanding contributions.
- Find out which employees wish to voluntarily participate in the pension holiday.
- Ensure that written agreements, which supersede/replace employment-contract pension obligations, are signed by each participating employee and the employer. (Agreement-templates are available from pension plan administrators.)
- Apply to the pension plan administrator for approval by submitting:
- the standardised application along with proof of nationality; and
- the written employer and employee agreement.
- Ensure that you are current with all pension contributions if not, then develop a payment plan with the pension administrator to reduce outstanding contributions.
- Formally apply to your pension administrator to temporarily suspend pension contributions.
- Maintain your pension plan membership.