The Public Service Pensions Board was established by Executive Council on 25th February, 1992 under the Pensions (Amendment) Law, 1991, that came into effect on 1st January, 1992.
This Law also established Public Service Pensions Fund. Employees began contributing to the fund at 4% effective 1st January, 1990. Employers began matching this with an additional 4% contribution with effect from 1st January, 1991. Contributors to and beneficiaries of public service pensions comprised of permanent and pensionable Caymanian employees of the Cayman Islands Government, Caymanian civil servants seconded to Statutory Authorities and elected members of the Legislative Assembly.
Prior to July 1996, Caymanian Group Employees received a reduced monthly allowance on retirement. In July 1996, the Pensions (Amendment) Law, 1996 made provision for the payment of full benefits to this category of employees on the same basis to those hired on a permanent basis and added Group Employees as contributors to the Fund. In January of the same year, the Government increased the employer contribution rate to 6%. This increase was later followed by a similar increase in employee contributions in January 1998.
Prior to 14th April 1999, pension benefits were paid out of general revenue and were regulated by the Pensions Law. At this time the plan was solely a defined benefit scheme. The Pensions Law provided for payment of retirement benefits to eligible employees with ten or more years of pensionable service to the Government.
Normal retirement age was sixty but pension benefits could begin at age 55 or, in special cases, at age 50 with the approval of the Governor. The maximum pension payable could not exceed 2/3rd of the highest pensionable emoluments drawn by employees at any time during the course of service. The formula used to calculate benefits varied depending on whether the employee joined the service before or after 10th July 1980, with a reduced benefit accruing to those who commenced service after.
Those employees who retired with less than 10 years of pensionable service received a gratuity not exceeding five times the annual amount of the pension which might have been granted if there had been no qualifying period. If pensionable employees served less than 10 years, there was no provision for pension contributions to be refunded.
With the coming into effect of new legislation on the 14th of April 1999, the Public Service Pensions Board (the "Board") was re-established as a Statutory Authority. Board's main office is located in Cricket Square (Century Yard), George Town and as 31 December 2007 employed 22 staff. The Board is responsible for among other things, administering.
The Public Service Pensions Fund (the "Fund"), communicating with plan participants and employers, prescribing contribution rates in accordance with the latest actuarial valuation and recommending amendments to the Public Service Pensions Plan (the "Plan") as needed.
The Public Service Pensions Law, 1999 (the "Law") repealed the Pensions Law (1999 Revision), and is the main law governing the Fund. The Law is in essence the Plan text. The Fund's main functions are to receive and invest pension contributions from public sector employers and employees and to pay out pension benefits as due under the Law. The Fund is vested in the Board.
The Plan has a defined benefit and a defined contribution component. All participants who joined the plan prior to 14th of April 1999 were enrolled in the Defined Benefit part of the plan. Those participants joining after this date were enrolled in either one of the two components depending on their circumstances.
The Public Service Pensions (Amendment and Validation) Law, 2000 was passed on 20th June 2000 to amend the date after which all new employees were to be enrolled in the Defined Contribution plan to 1st January 2000 and to close the Defined Benefit plan with effect from 31st December 1999. Those employees receiving Contracted Officers Supplement (COS) are exempted from participation in the Plan.
Additionally, it should be noted that the Board is statutorily required to administer the Parliamentary Pensions Plan and the Judicial Pensions Plan with their resulting Plan Funds being pooled together with the Plan Fund of the larger, main Plan (Public Service Pensions Plan) for investment purposes.
Public Service Pensions Law (2013 Revision), Public Service Pensions Regulations (2011 Revision), Public Service Pensions (Ex-Gratia Pensions) Regulations, 2012, Parliamentary Pensions Law, 2004 and the Judges' Emoluments And Allowances Law (2006 Revision) and the Judges Emoluments and Allowances Order 2005, Parliamentary Pensions (Amendment) Law, 2009.