Common Features

This section explains the benefits payable of the Plan that are common to both the Defined Benefit Part and the Defined Contribution Part. It should be read in conjunction with the Defined Benefit Part or the Defined Contribution Part, depending on which Part of the Plan you are in.

Credited Interest

Under both parts of the Plan you will have a Participant Contribution Account based on all the contribu­tions you have paid into the Plan along with Credited Interest which is added each year. Under the Defined Contribution Part, you will also have an Employer Contribution Account, which is based on the contributions that your employer has credited to the Plan on your behalf, along with Credited Interest. The calculation of Credited Interest is the same in both cases.

At the end of each year, the Administrator will determine the rate at which interest is credited as the average of the rates of return received on the Plan's investments for the previous three years, net of expenses. A full year's interest will be added to your account balance as at the beginning of the year and interest will be added to each contribution added to your account over the course of the year, pro-rated to take into account the amount of time between the date the contribution was added and the end of the year. If you leave or retire from the Plan part-way through a year, then a similar calculation will be performed and interest will be added to your account balances up to the date you leave.

Example: Suppose that the Plan obtained rates of return (net of expenses) on its investments of 6%, 7% and 11 % over the last three years. Then the rate of interest for the current year would be 8% which is the average of 6%, 7% and 11 %. If your account balance at the beginning of the year was $1,000 then the Credited Interest on your account balance would be $80 (which equals 8% of $l,000).

If a contribution of $100 was added to your account halfway through the year, then this would be added to the account balance along with interest on this additional contribution. The interest on this contribution for a half-year would be calculated as:

$100 multiplied by one-half of 8% = $4.

If these were the only adjustments to your account balance, then the account balance at the end of the year would be calculated as:

$1,000 + $80 + $100 + $4 = $1,184.

Return of Contributions

The total of all the benefits paid to you and to your beneficiaries after your death will never be less than the balance in your Participant Contribution Account when you retired (or when you died if you had not yet retired). If there is a balance remaining in your account after the last monthly pension payment has been made to you or your last surviving beneficiary, then a lump sum equal to the difference will be paid to your designated beneficiary.

Late Retirement

If you continue to work beyond age 60, you will be treated as if you have been re-employed. You will be deemed to have retired on your 60th birthday, and then been re-employed the following day. In other words, if you continue to work past age 60 you will receive your full pension, you will no longer have to pay contributions to the Plan and you will continue to be paid your normal salary or wage.

Re-employment

If after you had already retired and were receiving a pension from the Plan, you were to be re-employed in a post which would normally be pensionable under the Plan, then you would continue to receive your existing pension but would be ineligible to make further contributions to the Plan or to accrue further benefits under the Plan.

Commutation Option

Any pension payable to a participant or to a surviving spouse of a deceased participant may be partially commuted. This option is entirely at the discretion of the pensioner, allowing him/her to receive some of the pension as an immediate cash lump sum, in return for reduced monthly pension payments. The maximum amount of pension that can be commuted for a cash lump sum is 25%, leaving a minimum residual pension equal to 75 % of the full pension amount. The amount of lump sum payable in return for the pension commuted will be calculated in accordance with Plan actuarial tables, depending on the age of pensioner. The table below shows the commutation rates for participants between the ages of 50 and 60 (note that separate rates apply to spouses of deceased participants):

Participant's Age Commutation Rate
50 193.77
51 191.33
52 188.81
53 186.22
54 183.56
55 - 60 180.82

Example: Suppose that a pension is payable to you of $1,000 per month.

  • You may choose to receive the full monthly pension of $1,000, in which case no commutation lump sum would be payable.
  • You may elect to receive the maximum commutation possible, in which case $250 (which equals 25% of $1,000) per month of your pension will be commuted for a cash lump sum, leaving a residual pension of $750 (which equals $1,000 minus $250) per month. The cash lump sum payable will depend on your age at your benefit commencement date, but assuming you were a participant aged 55 it would be calculated as: $250 multiplied by 180.82 = $45,205
  • You may alternatively elect to commute any percentage of your pension between 0% and 25%. Suppose that you choose to commute 10 % of your pension. Your pension will then be reduced by $100 (which equals 10% of$l,000) per month, leaving a residual pension payable to you of$900 (which equals $1,000 minus $100) per month. The lump sum payable to you would be calculated as: $100 multiplied by 180.82 = $18,082.

Duty-Related Disability

In addition to the disability retirement pensions payable under each part of the Plan, more generous benefits are payable if the disability is duty-related. For this benefit to be payable, you must be taking a disability retirement and the reason for the disability retirement must have been incurred whilst in the actual discharge of your duty and without your own default. The additional benefit payable in these circumstances is a pension equal to one-third of your Final Average Pensionable Earnings whether you are retiring from the Defined Benefit Part or the Defined Contribution Part.

Duty-Related Death

The in-service death benefits payable under each part of the Plan may be enhanced if the death is duty-­related. For this to apply, death must occur whilst in the actual discharge of duty and without your own default. In this event, your spouse's pension will be at least equal to one-quarter of your Final Average Pensionable Earnings whether you were in the Defined Benefit Part or the Defined Contribution Part.

Also, if you die leaving up to six dependent children, then the pension payable to each child will be at least one-sixth of the spouse's pension, as specified in the previous paragraph. If you die leaving more than six dependent children, then a pension equal to the spouse's pension will be split equally amongst them. In the event that you die leaving dependent children but no surviving spouse, then the children's pensions specified above shall be doubled.

Pension Increases

All pensions payable under the Plan are subject to annual pension increases once they are in payment. This applies to pensions payable on Normal Retirement, Early Retirement, Disability Retirement, Special Retirement and on payment of deferred pensions as well as to all surviving spouses' and dependent children's pensions payable under both the Defined Benefit Part and the Defined Contribution Part of the Plan.

These increases are guaranteed based on the increase in the Consumer Price Index (CPI) of the Cayman Islands over the previous year. If the increase in the CPI is less than 5% over the previous year, then your pension is guaranteed to increase by the full rise in the CPI. If the increase in the CPI is greater than 5%, then your pension will increase by more than 5% but less than the full increase in the CPI. The table below summarizes the pension increase that you would receive for various values of the CPI.

Increase in CPI Pension Increase
1% 1%
2% 2%
3% 3%
4% 4%
5% 5%
6% 5.8%
7% 6.6%
8% 7.4%
9% 8%
10% 8.6%
11% 9.2%
12% 9.8%
Greater than 12% At least 9.8%, but can be more at the Board's discretion

Example: Consider a participant or a beneficiary of a participant who is receiving a pension of $1,000 per month. If the increase in the CPI over the previous year is 3%, then a pension increase of 3% will be granted and after the pension increase the pension in payment will have increased to $1,030 per month. If the increase in the CPI is 7% over the previous year, then the pension increase will be 6.6% and the pension in payment after the increase will be $1,066 per month.

Minimum Cash Out

In order to avoid the Plan having to administer and pay many small monthly pension amounts, a lump sum payment may be made at death or retirement. In particular, if the lump sum value of the pension payable to you or your beneficiaries is determined to be less than $5,000 then the Administrator may pay the benefit as a single lump sum amount equal to this lump sum value. Such a payment will constitute a full discharge of the Plan's liability and no further payments will be due from the Plan.

Designated Beneficiary

There are a number of cash benefits from the Plan which may be payable to your Designated Beneficiary in certain circumstances. Your Designated Beneficiary can be any person or persons designated by you during your lifetime and you can alter your designation at any time to allow for changing family circumstances.

Should you die without having designated a beneficiary, or if all of your Designated Beneficiaries die before you, then any payment which would have been paid to your Designated Beneficiary will instead be paid to your Estate.

Participant Rights

You will never lose the right to a pension under the current Law, even if convicted or declared bankrupt. Any pension granted is also exempt from execution, seizure, attachment or any other process in respect of any debt or claim of a creditor. The pension is also not transferable or assignable except if a debt is due to the Government, or a Court Order directs the pension payments to a dependant.

Ex-Gratia Pension

The ex-gratia recipients are former Caymanian civil servants over the age of 60, who were not in receipt of any pension, allowance, gratuity or contracted officer’s supplement. Those with an aggregate of four or more years but less than ten years of service receive an ex-gratia pension of two hundred dollars per month. Those with ten or more years of service received an ex-gratia pension of three hundred dollars per month. It should be noted that these payments are not subject to increase for cost of living nor augmented annually.