SMART Retirement

What is the SMART Retirement Plan?

The SMART Retirement Plan is an Approved Retirement Scheme sponsored by NCB Insurance Company Limited (NCBIC) exclusively for members who wish to contribute towards retirement income.

The Scheme is operated under the guidelines provided by The Pensions (Superannuation Funds and Retirement Schemes) Act 2004.

Who is eligible for membership in the SMART Retirement Plan?

Three categories of persons are eligible for membership.

• Employed persons who are not members of an approved retirement scheme or approved superannuation fund, or

• Self employed persons who are not currently contributing to an approved retirement scheme, or

• Persons who wish to transfer their benefits from an approved superannuation fund or retirement scheme upon termination of employment.

Members must be a Jamaican resident between ages 18 and 69 years old.

What is the benefit of membership in the SMART Retirement Plan?

Members are allowed to incrementally build retirement income and receive tax deferred benefits as do persons who contribute to superannuation funds.

What are the tax benefits for sums accumulated under the SMART Retirement Plan?

• Up to 20% of your remuneration or chargeable income (before tax) may be saved in the SMART Retirement Plan.

• Investment income earned through the years of a member’s participation in the SMART Retirement Plan are tax free

• Lump sum payments (up to 25% of accumulated value) made at retirement to members will be tax free

• Lump sum paid on death of the member to a named beneficiary is tax free

• Retirees will also benefit from additional tax exemptions.

How much can I contribute?

The maximum contribution allowed is 20% of remuneration or chargeable income (before tax).

Remuneration includes allowances, bonuses or perquisites.

Prior to enrolment, you will be required to sign a declaration indicating that your contribution to the SMART Retirement Plan will not exceed 20% of salary.

Can an Employer make contributions on behalf of employees?

Yes. Contributions can be made by a company on behalf of employees. The employers’ contribution however, cannot exceed 10% of the employees’ salary.

The contributions of both employer and employee must not exceed 20% of employees’ salary. The employer does not have to match payments made by the employee.

What is important is that the total contribution does not exceed 20% of each employee’s salary.

How are contributions made to the SMART Retirement Plan?

Contributions may be made monthly, quarterly, semi annually or annually.

Each member must make at least one contribution per year.

Payments can be made using Salary Deductions, Pre-Authorized Payment, NCB e-Link (internet), NCB IVR (payment via telephone), over-the-counter payments at NCB branches and any other payment methods introduced from time to time.

How are the funds invested?

There are currently two fund established, namely the SMART Balanced Fund and the SMART Fixed Income Fund which are unitized.

The trustees may establish new investment funds from time to time.

Member may choose how their contributions are to be allocated in these funds.

The SMART Balanced fund shall be invested in fixed income securities, equities and real estate and any other assets permitted under the Pensions Regulation.

The SMART Fixed Income Fund shall be invested solely in fixed income securities such as bonds.

How can I be sure that my funds will be available at retirement?

As with all similar investments, it is recommended that you increase your savings periodically to keep pace with inflation.

A good rule of thumb is to increase your contributions each year in line with salary increases.

As experienced managers of long-term investment funds and retirement planning solutions, NCBIC will apply sound investment strategies to the management of your funds.

We do not, however, guarantee the rate of return on your retirement funds as they are determined by prevailing market conditions.

On application for membership, you will be advised about the various fund options available, including the investment philosophy and relevant risk profile, to aid you in making the appropriate allocation decision based on your personal risk tolerance.

Can the allocations to the funds be switched? If so, what are the conditions associated with switching?

Fund re-allocation is changing your contribution percentage allocation while Inter Fund Transfer (or switching) is the transferring of a part or whole of your account value from one investment fund to another investment fund. Both Fund Re-allocation and Inter Fund Transfers are allowed without charge subject to the following conditions:

• Requests for reallocation of your contributions will be limited to two (2) each year

• Requests for Inter fund Transfers will be limited to two (2) each year.

These limits may be changed by the company from time to time.

How are members advised of the values under the SMART Retirement Plan?

Once per year a statement will be sent to members indicating fund allocations, unit value and fund value.

At what age may I retire?

On application the member will select a retirement age which will be between 60 and 65.

A member is allowed to retire not earlier than 10 years prior to the selected retirement age (early retirement) and no later than 5 years after the selected retirement age.

What are the options available on retirement?

On retirement your accumulated value will be used to purchase an annuity.

The default or normal form of annuity is Single Life 5 Year Guarantee.
The member may elect a different form of annuity such as Single Life Annuity with 10 or 15 years guarantee period or Joint and Survivor Annuity.

A member may also elect to convert a portion of his annuity and receive a single tax free lump sum payment and a reduced pension/annuity.

The maximum lump sum payment shall not exceed the greater of:

a. 25% of the member’s accumulated value

b. 3.125 times the annual annuity

What is an annuity?

This is a series of retirement payments derived from your accumulated value as at retirement date.

These payments may be fixed or variable depending on the option selected and are payable for life.

If a member dies prior to retirement, how are the accumulations under the SMART Retirement Plan treated?

The accumulated value is payable as a lump sum to the named beneficiary upon receipt of evidence of death of the member.

The beneficiary should be 18 years or older but if the beneficiary is a minor a trustee should be appointed to act on the child’s behalf.

What provisions are available for members who terminate early because of disability?

The accumulated value will be used to purchase an annuity for a member who becomes permanently disabled at any time prior to retirement.

How is disability defined under the SMART Retirement Plan?

A member will be treated as permanently incapacitated if the Trustees have considered suitable medical evidence and are satisfied that the member is incapable, due to permanent mental or physical incapacity of carrying on his/her occupation or any occupation of a similar nature for which he/she is trained or fitted.

The member shall produce such medical evidence from a licensed physician acceptable to the Sponsor.

Can I make withdrawals before retirement?

No. In accordance with the pensions’ regulations, members are not allowed to make withdrawals from any approved retirement scheme until the selected retirement age or earlier if retirement is due to disability.

Other than on retirement, death and disability - under what conditions can membership be terminated?

A member may terminate his/her membership by giving at least 10 days notice to the Sponsor (NCBIC).

The Sponsor may also terminate a member

• If a member ceases to be eligible

• If the member ceases to make the minimum allowable contribution unless otherwise permitted by the Sponsor

• If the member fails to make further contributions after the expiration of the notice that his/her accumulated value in the scheme falls below the stipulated minimum.

What are the options available on termination?

Two (2) options are available:

a. The accumulated value under the SMART Retirement Plan may be transferred to an approved superannuation fund or another approved retirement scheme

b. The accumulated value can also be retained in the fund until the member reaches the retirement age or dies.