Grenada has taken up a new pension plan which aims to provide post-retirement security to the country’s public workers who have put in years of dedicated service.
The new plan seeks to supplement employees’ National Insurance Scheme (NIS) Retirement benefits by providing an additional income in old age. While it enables public sector workers to save more money and access professional investment services, it also supports the government’s commitment to sustainable compensation management.
Contribution rates
Revealing details about the contribution rates under the plan, the Office of the Prime Minister of Grenada said while the employer contribution rates are three per cent below and six per cent above the NIS wage ceiling, the employee contribution rates are three per cent below and six per cent above the NIS wage ceiling.
All employees under both the new and existing plans can make contributions voluntarily. The maximum voluntary contribution deductible from salary is 10 per cent. The deductible percentage is adjustable after every six months. There are also provisions for lump-sum contributions on the condition that the source of the funds is verified and approved.
The employer will not match the voluntary contributions and the current established Grenadian government officers will be eligible to participate.
The statutory body contribution rate will be the same as the Grenadian government and statutory bodies getting government subventions will be ineligible to contribute at higher rates. They can pay a higher employer contribution rate if not receiving a subvention.
Eligibility and retirement
Those eligible to join the plan include all employees of the Grenadian government except established officers covered by an existing pension arrangement; unestablished officers aged 50-plus with 15-plus years of service and are eligible to have ex-gratia; those aged above 65; and short-term contract workers.
All permanent employees of statutory bodies that elect to participate are also eligible.
Newly hired permanent employees and existing employees who become eligible after the start date will be eligible to join the pension plan after inception. Established army officers may also transfer voluntarily within the first 12 months of the plan’s commencement. One cannot return to the previous arrangement after the transfer is completed.
The normal age of retirement for a Grenadian government employee is 60 years while for statutory bodies, it is 60 or 65, depending on rules. The earliest age of retirement of 55 (for government employees), subject to employer approval.
Benefits of the plan
The benefits of the plan include:
Upon retirement: Twenty-five per cent of contributions (member, employer, past service credit, return on investment) can be taken as a lump sum and the rest is used to purchase an annuity or drawn down based on guidelines.
Upon disability: The funds can be accessed at the member’s discretion
Upon death: Entire account value is paid to the named beneficiary (ies).
Withdrawal norms
For withdrawal of funds prior to retirement, the employer contributions remain inaccessible while in the case of employee contributions, up to 50 per cent is accessible upon resignation before 55 years of age. The withdrawals are limited to a maximum of two a year, with a minimum of $2,000 per withdrawal.
PM Dickon Mitchell welcomes plan
Grenadian Prime Minister Dickon Mitchell spoke about the plan saying the country aims to build a stronger and more resilient foundation for all its public workers through it, while promoting a culture of long-term security. Quoting Socrates to say, “The secret to change is focus…not on fighting the old, but on building the new,” the PM asked the people to discover the positive impact the plan has on Grenada’s workforce in the coming days.
In October 2024, the government of Grenada proposed the plan to ensure that the unestablished government workers get a pension other than what is expected under the NIS. Established workers are those appointed by the Public Service Commission to an established position in public service, while the unestablished ones are those who have no appointment letter to the post and work on a contract basis. PM Mitchell said the payment under the NIS is inadequate for those workers to continue with their standard of living and many slump into poverty after retirement.
Grenada’s much talked about Public Sector Employees (Pension Fund) Bill 2024 came into effect on January 1, according to the Commencement Order, marking a significant step in the country’s pension reform.
