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Amendments to the National Pensions Law

Published 8th January 2018, 4:11pm

The National Pensions (Amendment) Law 2016, which was unanimously passed in the Legislative Assembly in May 2016, will officially come into force on New Year’s Eve with one change – the use of the term “Cabinet” instead of “Governor” – followed by key changes that take effect on 1 January 2017. However, the majority of amendments that will happen under the new Law will take effect on 1 February 2017 or later, say officials from the Ministry of Education, Employment & Gender Affairs.

“The Government has now made the necessary Orders to ensure that many of the changes made to the National Pensions Law earlier this year will come into effect starting January 2017 as was previously indicated. Other changes that require regulations to support the administration of the Law will be brought into force later in the year once the regulations have been drafted and approved by the Legislative Assembly,” stated Hon. Tara Rivers, the Minister with responsibility for private sector pensions regime. “These changes represent a milestone in that the National Pensions Law had not undergone any significant review or amendment in the past 18 years since the regime was first launched. We are happy to have taken this significant step forward which has resulted in the Office of the Complaints Commissioner (OCC) confirming that the Ministry and the Department of Labour and Pensions are substantially in compliance with the recommendation made in the OCC’s 2010 Own Motion Investigation

Report entitled Penny Pinching Pensions.” Minister Rivers went on to say, “The refinement of the pensions regime should be a regular work in progress, and this Government has demonstrated its commitment to looking at ways to further strengthen the regime on a regular and intermittent basis as necessary,”


As of 1st January 2017, the commonly used term “normal retirement age” will be replaced by “normal age of pension entitlement” in order to clarify that the member is not required to retire at this age but is instead eligible to access his/her pension benefits. The normal age of pension entitlement will also increase from 60 to 65 in recognition of the increasing longevity of life in the population and members’ desire or need to continue working for a longer period of time. This increase in the normal age of pension entitlement to 65 years of age also automatically shifts the age at which a member could be eligible for early pension entitlement from 50 to 55 years of age.

Through the Normal Age of Pension Entitlement Option Order, 2016 approved by Cabinet on 29th November 2016, persons who will turn sixty (60) years old between the dates of 1 January 2017 and 31st December 2029 can choose to retain the age of 60 as their normal age of pension entitlement, and also be able to opt for early retirement at the previous early retirement age of 50 years old. The reference to the year 2029 will signal that persons who are 48 years old in 2017 are eligible to opt for 60 as the normal age of pension entitlement as they would turn 60 years old in 2029. However, all members who are aged 47 and younger in 2017 will automatically fall within the provisions of the National Pensions (Amendment) Law, 2016, and their normal age of pension entitlement will be 65 years of age with an early pension entitlement age of 55 years old.

Another significant change which takes effect on New Year’s Day is to the “year’s maximum pensionable earnings” (YMPE). This is the amount above which an employee and employer are no longer statutorily required to pay pension contributions. However, there is nothing in the National Pensions Law and nothing contained in the 2016 Amendment Law that prohibits the payment of contributions on earnings above this amount. The YMPE will increase from CI$60,000 to CI$87,000 which means that pension contributions will be required to be paid on earnings up to $87,000. This increase is consistent with recommendations from the 2007 Mercer Report.


Many of the changes that will commence in February 2017 are in relation to the increase of current fines and the introduction of new fines which include the possibility of imprisonment periods. The fines in the National Pensions Law had not been amended since its implementation in 1998, and the increases are in line with recommendations from both the 2007 Mercer Report and 2010 OCC Report. These significant fine levels will give the Law more teeth and are another step in the process of building the culture of pension compliance. As usual, such penalties will be determined by the Court, and the introduction of administrative fines will be contained within the revised Regulations.


Two significant changes relating to pension payment exemptions will come into effect in March 2017. The new amendment to the definition of “employee” in the National Pensions (Amendment) Law, 2016 will exempt all Caymanians who are under 23 years of age and pursuing full time education and their employers from having to contribute to a pension plan.

In addition, a new definition for domestics will change the pension requirements for this group of people. Previously the definition was a person “employed to do housework in private residences,” in essence a maid. However, the revisions in the Law have change the term to a “household domestic” as defined in the Labour Law (2011 Revision). The definition of a “household domestic” in the current Labour Law is “a person employed in a private home as a maid or gardener.” These employees and their household employers will not be required to pay pensions.


Other portions of the Law that will come into effect over the next few years relate to transfers and refunds. The commencement date for the changes in regards to transfers is one (1) year from the Commencement Date of the Law, i.e. 31 December 31, 2017. On that date, the criteria for transferring pensions overseas will be the termination of a member’s employment; the member no longer residing in the Cayman Islands; and no pensions contributions for a period of 2 years or more.

Under the new Law, refunds of members’ pension contributions will no longer be allowed unless the member – who has attained the normal age of pension entitlement (65) – can provide evidence to the Director of Labour and Pensions that he/she cannot transfer his/her pension benefits to another pension plan, pension entitlement savings arrangement or life annuity. This amendment to the Law will commence in three (3) years on 31 December 2019. This will allow members who are currently considering utilising the refund option the ability to do so, as well as give employers time to plan in the event that employees decide to leave the jurisdiction.

“These changes are significant for various segments of the population and we urge employees and employers to familiarise themselves with the new Law,” said Christen Suckoo, Chief Officer in the Ministry. “The Ministry and Department of Labour and Pensions will continue to provide education and information regarding the changes made as a result of the National Pensions

(Amendment) Law, 2016, and the Department of Labour and Pensions will continue to meet with the Pension Plan Providers to go over the changes that are occurring in the Law.”

For more information about the National Pensions (Amendment) Law, 2016, contact the Department of Labour and Pensions on 945-8960, email the Department at or visit their website at A copy of the National Pensions (Amendment) Law 2016 (Commencement) Order, 2016 and the Normal Age of Pension Entitlement Option Order, 2016 may be obtained from extraordinary gazette listing at