Everything you need to know about government pension plans in the Cayman Islands including contribution rates and retirement age.
Civil servants and other public servants are members of the Public Service Pensions Plan (PSPP), which is administered by the Public Service Pensions Board (PSPB). This means that 15 ministries and portfolios of the Cayman Islands Government, along with 13 statutory authorities and Government-owned companies are actively participating in the PSPP.
As the largest pension administrator in the Cayman Islands, the PSPB oversees pension accounts for over 10,000 individuals, with over 1,800 of these members being pensioners.
The PSPP has both defined benefit and defined contribution components. Any member who joined the PSPP prior to January 2000 is part of the defined benefit plan portion. Individuals who join the PSPP after January 2000 are part of the defined contribution plan. This means that if you are looking at starting employment with one of the PSPP’s participating employers, you will join the defined contribution plan.
Contributions & Rate of Return: For plan members of the defined contribution plan, contributions of 6% will be deducted from your salary or wages and will be credited to your employee contribution account. A further 6% of your pensionable earnings will be credited to your employer contribution account on your behalf by your employer. The balances in both these accounts will increase each year based on a credited rate of return, which is calculated from the average of the rates of return received on investments for the previous three years, net of expenses.
Retirement Options: Your age, years of service and Caymanian status are all factors that will determine your retirement options, or options available to a plan member if they leave the PSPP before becoming eligible to retire. The normal retirement age is 65, but early retirement options are available for plan members with at least 10 years of qualifying service. Upon electing to retire, a plan member can collect a full monthly pension, or they can elect to commute up to 25% of their benefit as a lump sum and receive a reduced monthly pension.
If a plan member is no longer employed with a participating PSPP employer and they are not eligible for retirement, they have options to leave their accrued benefit in the Plan until retirement, transfer it to another approved plan in the Cayman Islands or request a cash-out of their accrued benefit. Of note, the cash-out option is subject to satisfying specific conditions relating to a non-Caymanian no longer working and residing in the Cayman Islands.
