pension plans - jamaica
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Pension PlansLOWENFIELD ALLEYNE
Introduction
Pension plans provide employees with a structured, tax efficient mechanism to set aside a portion of salary to provide them with income during retirement years.
Purpose of a Pension Plan
The sole purpose of a pension plan is the provision of pensions or annuities for employees, either on retirement at a specified age and after completion of a specified period of
service or earlier retirement on becoming incapacitated, or on the death of employees, for their widows/widowers, children or other
dependents. A pension plan represents a long-term commitment to the welfare of
employees at the end of their working career.
Why are Pension Plans Necessary?
Pension systems play a vital role in modern societies. Social safety for elderly Steady source of income during retirement Alleviate the incidence of old-age poverty
ILO (2010): worldwide approx. 40% of working-age population legally covered by contributory pension schemes. 70% in developed countries 33% in developing countries
The Situation in Jamaica
Benefits
RETIREMENTUpon attaining the retirement age (i.e. between 50 years and 65 years), as determined by the member, a portion of the accumulated balance can be paid as a cash lump sum (tax free) subject to the maximum limit permitted under the Income Tax Act or any other relevant Act. The remainder of the fund is converted to a stream of income through the purchase of an annuity or similar product.
DISABILITYIn the event that you are deemed permanently disabled prior to retirement, your pension benefit will be paid under the terms set out in the contract/trust deed and rules.
DEATHIn the event that you die before retirement, a refund of the total amount of contributions to the scheme, together with interest, is payable to the named beneficiary.
Participation
Once you have met the eligibility requirements, you can participate in the scheme through: Contributions of a maximum of 20% of your annual gross taxable income or
emoluments, subject to the prevailing income tax limit. Transfers of balances from existing Approved Retirement Schemes for
Superannuation Funds. You are required to contribute to the scheme at least once per year.