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mandatory contributions as prescribed by law
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a flexible savings arrangement for Additional Voluntary Contributions (AVCs)
Under the mandatory aspect of the pension plan, employees and their employer make contributions based on the employees’ earnings. These are referred to as basic contributions. Basic contributions are automatically invested in one or two of three available investment portfolios – conservative, balanced and growth – based on the employee’s personal profile (i.e., age, income range and marital status). Funds are shifted automatically if there is a significant change in an employee’s personal profile. At retirement, the money accumulated in an employee’s pension account – including investment earnings – is used to provide a retirement income.
Employees also have the option to make Additional Voluntary Contributions – or AVCs. The employer can make AVCs on the employee’s behalf. AVCs are simply contributions that are over and above the required contributions made to the DC pension plan. The employer and employee each control what – if any – AVCs they make. The employee decides where the AVCs are invested and can choose from five professionally managed investment portfolios.
Overview of the Verdant Isle Pensions Plan
The Verdant Isle Pensions Plan is a Defined Contribution (DC) retirement savings program designed to secure your employees’ financial futures. The plan includes:
1. Mandatory Contributions: Required by law, these contributions are made by both employees and employers based on the employee’s earnings.
2. Additional Voluntary Contributions (AVCs): A flexible savings arrangement that allows for contributions beyond the mandatory requirements to enhance retirement savings.
Contribution Requirements
As an employer, you are required to contribute to your employees’ pension plan. Here’s how it works:
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Total Contribution: Together, the contributions from both you and your employee must equal 10% of the employee’s earnings, with an annual cap on earnings of CI$87,000.
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Employer’s Contribution: You must contribute at least 5% of the employee’s earnings.
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Employee’s Contribution: The employee is responsible for contributing the remaining percentage needed to reach the total 10%. If you choose to contribute more than 5%, the employee’s required contribution can be reduced accordingly..
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Contribution Schedule: Contributions must be made monthly and accompanied by a contribution sheet reflecting the breakdown of contributions. Payments are due by the 15th of the following month.
Additional Voluntary Contributions (AVCs)
In addition to the mandatory contributions, both you and your employees can make Additional Voluntary Contributions (AVCs) to boost retirement savings. Here’s how AVCs work:
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Flexibility: Both the employer and the employee can make AVCs. These contributions offer flexibility in the amount and frequency and can be set up through payroll deductions or direct payment to the Plan.
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Employer Benefits: Employers may choose to offer AVCs as an additional benefit, even though it is not required under the National Pensions Act. This can enhance the overall retirement savings plan for employees and demonstrate the employer’s commitment to their financial well-being.
Contributions Record
The Contributions Record is used to report the details related to mandatory, additional voluntary, and Property Repayment contributions. Contribution details should be listed separately for each employee.
Submission: The completed Contributions Form must be sent to the Administrative Agent, Saxon Administration, along with a cheque covering contributions for the period covered by the form. Cheques should be made payable to “Verdant Isle Pension Plan.”
Currency
Contributions can be paid in either Cayman Islands dollars or U.S. dollars. Contributions received in Cayman Islands dollars will be converted to U.S. dollars at the rate of $0.83. No foreign exchange fees or commissions are charged for this service.
Contributions Deadline
Contributions should be remitted to Verdant Isle Pension Plan no later than the 15th of the month following the end of the pay period. This includes both the contributions deducted from and/or made on behalf of the employee.
Late Contributions: If you are unable to make contributions by the due date, notify the client services agent as soon as possible. Failure to remit contributions on time will result in penalties under the National Pensions Act.
Remitting Contributions for New Employees
When remitting contributions for a new employee, ensure the new employee is listed on the Contributions Input Form. If you have not already submitted the Member Enrollment Form and received the new employee’s member number, please ensure that the enrollment form is sent with the Contributions Form.
Processing New Employees: Contributions for new employees that are remitted without a completed Member Enrollment Form cannot be processed and may be returned to the employer.