What is a Pension Plan?

A pension plan is a retirement savings program designed to provide individuals with a stable and predictable income after they retire. Employers, employees, or both may contribute to the plan during the employee’s working years. These contributions are then invested on behalf of the employee to grow over time until retirement.

What is a Defined Contribution Plan?

A Defined Contribution (DC) plan is a retirement savings plan where both employees and employers make regular contributions to an individual retirement account for the employee. The final benefit received by the retiree depends on the amount of contributions made and the investment performance of those contributions over time. 

Contribution Guidelines

Contributions to your pension plan are based on total earnings, which include salaries, wages, leave pay, fees, commissions, gratuities, and bonus payments exceeding 20% of basic pay. The maximum pensionable earnings are capped at CI$87,000. 

Eligibility

Since June 1, 1998, every person aged 18 to 65 in the Cayman Islands who is a member of a defined contribution pension plan is required to contribute to that plan. This mandate is outlined in the National Pensions Act (2024 Revision).

Employer Responsibilities

Employers are required to contribute to the pension plan within 15 days after the end of each contribution period. If contributions are not made by this deadline, the administrative agent must notify the regulators, the Department of Labour and Pensions, of any arrears within 45 days of becoming aware of them. Employers must also pay interest on overdue contributions at the Cayman Islands’ prime rate plus 5%, calculated daily.

Self-Employed Individuals

Self-employed individuals must contribute an amount equivalent to 10% of their earnings. These contributions must also be paid to the pension plan within 15 days following the end of the contribution period. By adhering to these guidelines, both employers and self-employed individuals ensure compliance with the National Pensions Act and contribute to a secure retirement future.

Employer Responsibilities

Employers are required to contribute to the pension plan within 15 days after the end of each contribution period. If contributions are not made by this deadline, the administrative agent must notify the regulators, the Department of Labour and Pensions, of any arrears within 45 days of becoming aware of them. Employers must also pay interest on overdue contributions at the Cayman Islands’ prime rate plus 5%, calculated daily.

Self-Employed Individuals

Self-employed individuals must contribute an amount equivalent to 10% of their earnings. These contributions must also be paid to the pension plan within 15 days following the end of the contribution period. By adhering to these guidelines, both employers and self-employed individuals ensure compliance with the National Pensions Law and contribute to a secure retirement future.

Mandatory Contributions

  • The National Pensions Act requires that contributions to a registered pension plan be 10% of earnings, with 5% paid by the employer and 5% deducted from the employee's wages, up to a maximum pensionable salary of CI$87,000. Contributions must be paid by the 15th day of the month following the deduction. Late payments incur interest at the Cayman Islands prime lending rate plus 5%.
  • Once contributions are received as cleared funds, they are used to purchase units in your Verdant Isle Pensions Plan, registered in your name. The number of units purchased depends on the unit price at the contribution date. Contributions received by midday three business days before the unit pricing date will be applied promptly; otherwise, they will be held until the next pricing date.

Additional Voluntary Contributions (AVCs)

In addition to mandatory contributions, you may make Additional Voluntary Contributions (AVCs) from your salary. AVCs provide an opportunity to increase your retirement savings beyond the required amounts. Under the National Pensions Act in the Cayman Islands, units purchased with AVCs can be withdrawn under detain grounds upon Retirement, Education, Housing, Unemployment and Ill Health. 

Unit Pricing

The unit price is calculated by valuing the investments of the Verdant Isle Pensions Plan, deducting costs and expenses, and dividing the net amount by the number of issued units. This price fluctuates based on the underlying investment values, so the number of units you receive each month may vary. 

Access to Information

The National Pensions Act grants you rights to information and documents related to your Verdant Isle Pensions Plan. Within 30 days of starting work, you should receive a copy of the Member Handbook, explaining the plan’s provisions and your rights and obligations. Additionally, you will receive a bi-annual statement detailing your membership status.

To track your investments and access more information, use your provided username and password to log into the secure online Member Portal. If you have forgotten your credentials, Click here to reset your password.