A HANDBOOK OF INFORMATION FOR MEMBERS

Transcription

1 A HANDBOOK OF INFORMATION FOR MEMBERS What is the JMMB Ltd. Retirement Scheme? The JMMB Retirement Scheme (JMMB RS) is a tax advantaged retirement arrangement as defined under the Income Tax Act and the Pensions (Superannuation Funds and Retirement Schemes) Act It is established by Jamaica Money Market Brokers Ltd ( the Sponsor ) to provide benefits upon retirement to members of the Scheme. Who qualifies to become a member of the JMMB RS? The JMMB RS is open to all Jamaican workers between the ages of 18 and 69 years. It is designed to provide tax deductibility of contributions and tax free interest earnings as permitted under the relevant Jamaican statutes. Any individual who is self-employed or employed in non-personable positions and do not contribute to an approved superannuation Scheme or another approved retirement scheme are eligible to join the Scheme. In addition, the individual must be within the age of eligibility. Upon termination for employment potential members are entitled to transfer their pension benefits from an approved superannuation Scheme to the JMMB Retirement Scheme which is an approved retirement scheme. JMMB RS Members Handbook/ Pensions Department December

2 How does someone benefit from being a member of the JMMB RS? The Individual member may receive benefits from being in the JMMB RS in a number of ways: 1) Claiming Benefits In order to claim pension benefit a member must satisfy either Normal, Late, Early or Disability Retirement criteria. 2) Normal Retirement A member s Normal Retirement Date shall be any day (chosen prospectively by the member) between the ages of 60 years and 65 years. Once the member attains that date, he shall be entitled to receive a Normal Pension. 3) Late Retirement A member of the Scheme, seeking to delay retirement, cannot retire at a date greater than five (5) years beyond his normal retirement date. 4) Early Retirement A member may choose to retire early within 10 years of his Normal Retirement Date and begin to receive a pension immediately. Such a pension is called an Early Retirement Pension. 5) Disability Retirement If a participant/member becomes totally and permanently disabled as a result of bodily injury, ill-health, disease or mental disorder, he shall be retired. The Trustees acting on the advice of a duly qualified and registered medical practitioner shall determine the disability of the member The Trustees may determine the permanency of the member s disability at any reasonable time prior to his Normal Retirement Date. Such a participant shall receive a Disability Retirement Pension. 6) Pension Benefit Claim Procedure One year prior to reaching normal or late retirement the member will be informed in writing of the approaching normal retirement date. Three months before reaching normal retirement age the member shall be given options available from which he or she shall make relevant choices. These choices include: 1. Opt for the purchase of an annuity through a life insurance company and/or 2. Opt for the creation of an appropriate investment instrument which may be available at that time. 3. Postpone retirement to a late retirement date (not more than five years after the normal retirement date) JMMB RS Members Handbook/ Pensions Department December

3 7) Deferred Pensioner Any participant/member who has ceased to contribute to the Scheme and i) is not in receipt of any of the above pensions, and ii) has not elected to transfer his monies to another Scheme becomes eligible to receive a Deferred Pension either at this Early Retirement Date or his Normal Retirement Date. 8) Amount of Pension At retirement, the member has two options as to the source of his pension i) he can choose to secure his pension from a Life Insurance Company, or ii) he can choose to secure his pension through JMMB Ltd by which an appropriate investment instrument will be bought. The Actuary to the Scheme shall acquire quotations from the Life Insurance Companies on behalf of the member. The Actuary shall also outline the terms and conditions attaching to the pension to be received from the Scheme. Such a pension shall be guaranteed for life by JMMB. The member will then make a decision as to source of pension and type of pension. The amount of pension shall be determined by - age/mortality - sex - interest rate - expenses - amount held in investments Pensions shall be payable monthly on the first day of each month beginning with the first day of the month following retirement date. Pensions payments made to members may be at least once per year. If the number of payments are to be varied. This must be communicated to the member so affected Under all circumstances the total amount of the member s pension benefit payment cannot exceed the equivalent to 75% of the Member s final salary after 37 ½ years of service. This is the maximum pension benefit payable and will be prorated for shorter periods of service. 9) Termination Benefits If a member ceases to contribute to the Scheme, he may either i) Have his own accumulated amount paid out in full in the form of cash, should the contributions cease before he completes 5 years in the Scheme ii) Have the Employer accumulated amount returned to employer or remain in Fund to provide pension at Normal Retirement Age (NRA) or transferred to another Approved Pension Scheme. iii) Have his own accumulated amount remain in Fund to provide pension at Normal Retirement Age (NRA) or transferred to an approved superannuation fund or retirement scheme. 10) Death Benefits JMMB RS Members Handbook/ Pensions Department December

4 a) If a member dies prior to retirement, his beneficiaries shall be entitled to receive the full value of the investments standing to his credit in the Scheme in the form of a lump sum or a pension as is allowable under the Law. b) Whenever a member dies after retirement, provided he had opted to receive his pension from the Scheme, his beneficiaries may be entitled to a Terminal Bonus, said Bonus to be determined by the Actuary. How does a member become eligible for Deferred Pension Benefits? When a Member ceases to contribute to the Scheme and is not in receipt of any of the forms of pension benefits payable to Members and has not elected to transfer his monies to another Scheme, the this ember becomes a Deferred Pensioner and is eligible to receive a pension either at his or her early retirement date or normal retirement date. Who has access to members personal information? Members of the JMMB RS do not have access to the personal information of fellow members. However the authorized staff of JMMB Ltd. as the Investment Manager and Administrator does have access to information on each member of the JMMB RS. These persons are contractually bound to keep this information confidential. In relevant situations it may be necessary to provide information about individual members as required by Jamaican law. What happens to members contributions after they are made? The members contributions are invested in an efficient and prudent way which takes into consideration the members unique circumstances. JMMB shall deduct an amount equivalent to 2.50% from every contribution paid for Administrative expenses. The member bears all the investment risks up to the retirement age. The balance of the contributions is then allocated based on prescribed criteria and invested in the available Funds or elect a default option. Based on the risk tolerance of each member their contributions will be placed in the respective funds. There shall be a choice of three Funds Conservative, Aggressive and Moderate Fund. Investment Management Fees will be 85 basis points annually and deducted monthly on the total funds under management All fees associated with the operation of the Funds shall be deducted from as and when they arise. The Funds shall be valued daily. What are the differences between self employed member and those who are employees of an organization? JMMB RS Members Handbook/ Pensions Department December

5 Self employed members file their own tax returns. These persons tend to have fluctuating incomes and as a result their retirement scheme contributions may or may not be consistent. At the end of the tax year, the income tax filings made by these members will simply note their contribution to the JMMB RS. For those members who are employed to an organization, the company would typically make the deductions and remit same to JMMB in its role as administrator of the retirement scheme. How do members make contributions to the Retirement Scheme? Contributions to your JMMB RS Investment Account can be made in a number of ways. These are: Salary deductions can be made for employees by their company and remitted to the JMMB RS. Lump sum payments can be made on an ad hoc basis via cheque payments for self employed members. Contribution Payments may also be made by bank order. These payments should be made at least annually Are there limits to how much members may contribute? Note that the current stipulated limit is $6000 per annum however it is anticipated that changes to tax law will move this to 20% of salary. Can member contributions be increased? Member contributions can be increased at anytime, once these increases are in line with the stipulations of the Pensions Act and the Income Tax Act. How is the value of members portfolio determined? Contributions to the JMMB RS are allocated to separate asset portfolios based on the individual member s predetermined objectives, needs and time horizon of the member. The actual value depends on the performance of the market value of the assets purchased. What happens if the JMMB RS is wound up? JMMB RS Members Handbook/ Pensions Department December

6 Should JMMB in its role as sponsor decide to discontinue the retirement scheme then the following shall obtain: 1. At least six months notice shall be given to the Trustees 2. The Actuary shall determine the liability in respect of all pensioners receiving pensions from the Scheme. Should there be a deficit in respect of this category of members, then JMMB must make good the shortfall. 3. The Actuary shall then seek to secure annuities from Life Insurance Companies for these pensioners. 4. The expenses of Winding-Up constitute the first charge on the Scheme. 5. All members, except pensioners shall have their net asset values (after deduction for all expenses) transferred to other retirement schemes of their choice. Transfers to Superannuation Funds are also allowable. 6. Return to JMMB any surplus left after giving the legal maximum benefits How are members contributions invested? The overall objective of the Scheme is to provide optimized rates of return based on the willingness and ability of individual retirement scheme members to tolerate appropriate risk levels. The investment policy approved by the trustees for the JMMB Retirement Scheme is based on the fact that each individual s circumstances, objectives and risk tolerance will be different and will vary over time. The flexibility to address these varying circumstances is achieved by the use of three broad fund types: aggressive, moderate and conservative. What are the fees charged to the retirement scheme? Management Fee The Investment manager is paid a fee that is calculated on the total value of the fund. The fee is equivalent to 85 basis points (or 0.85%). The fee is calculated on the value of the Fund s assets on a monthly basis. Administrator Fee The Administrator is paid a fee which is calculated on the amount of contributions received by the member. The fee is equivalent to 2.50% of incremental contributions received. Brokerage Buying and selling of securities are handled by the Investment Manager which utilizes the trading desk of the Investment Manager which holds a seat on the stock exchange. The Investment Manager trades for the JMMB RS Members Handbook/ Pensions Department December

7 account of the JMMB Retirement Scheme on a preferred client basis. The settlement of all trades is done by the Investment Manger. The Scheme also bears the costs of other expenses of the Scheme including audit, legal, and printing and stationery costs. Investing in Third Party Funds To the extent, that the scheme invests in other funds managed by external managers and the Investment Manager What information is provided to members of the Scheme? The Trustees will provide the following to members: 1. Regular at least annually reports to inform the members of matters that affect the Scheme and pension Schemes in general. Such reports will be in the form of newsletters; meetings and seminars; articles and other suitable media. They will cover such topics as, descriptions of the benefits and rules; explanation of legal matters; developments here in Jamaica and abroad and so on. 2. Benefit statements will be prepared for the members within 3 months of the end of each Scheme Year 3. The benefit statement will show both the accrued and projected benefits for both Defined Benefit Schemes and Defined Contribution ones. 4. A written statement of the benefits will be issued to a member or his representative should his status change on account of termination, transfer to another fund, retirement, the entry of a new member, etc. 5. The trustees will provide a benefit statement whenever a deferred pensioner requests one. 6. Each year a copy of the annual report on the scheme will be supplied to each active member and all other members who requests one. What happens if a complaint arises? 1. Complaints shall be dealt with fairly, expeditiously and transparently 2. The process shall be free of charge to complainants 3. The process will deal with complaints from all parties that have an interest in the scheme and its operations, e.g. sponsors, beneficiaries, participants, trustees and agents of the above 4. The complaint shall be kept in a register 5. The trustees, investment managers and administrators shall ensure that the complaint is resolved as soon as possible 6. Once a decision is made the trustees, investment managers and administrators shall notify the complainant in writing within fourteen days of the decision. The notice shall explain the reason for JMMB RS Members Handbook/ Pensions Department December

8 the decision state the documents upon which the decision makers relied explain that the complainant may refer to the FSC if he is unhappy with the decision. 7. Should three months pass without a decision the trustees, investment managers and administrators shall notify the complainant of the reason for the delay and the likely date for the decision How is the JMMB RS Governed? Legal responsibility for the governance and general operation of the JMMB RS falls to the trustees of the Scheme. The Trustees operate in a similar manner as the board of directors of a company. Their task is to manage the pension plan so that it achieves its aim of providing the promised benefits in full as they fall due: they manage the fund in the best interests of the members. They must be deemed fit and proper to hold such an office no criminal record, bankruptcies, dubious reputation etc. The names of the current trustees are: NAME ADDRESS & TELEPHONE NUMBER Carl Aldridge 6 Haughton Terrace, Kingston ext 5024 Melony Bogle 6 Haughton Terrace, Kingston ext 2369 Imani Duncan-Waite 6 Haughton Terrace, Kingston ext 2267 Joan Edwards` 6 Haughton Terrace, Kingston ext 3734 Lola Fong-Wright 6 Haughton Terrace, Kingston ext 2370 Paul Gray 6 Haughton Terrace, Kingston ext 2250 Sheldon Powe 6 Haughton Terrace, Kingston ext 3439 Contact Information Administrator and Investment Manager Name: Jamaica Money Market Brokers Address: 6 Haughton Terrace Kingston 10 Telephone: (876) , (876) 998 JMMB Fax: (876) info@jmmb.com Website; JMMB RS Members Handbook/ Pensions Department December

9 Responsible Officer for the Administrator Name: Mr. Keith Duncan Title: Group Chief Executive Officer Company: Jamaica Money Market Brokers Limited Address: 6 Haughton Terrace Kingston 10 Telephone: (876) ext 3487 Responsible Officer for the Investment Manager Name: Mr. Adrian Stokes Title: Senior Investment Manager Company: Jamaica Money Market Brokers Limited Address: 6 Haughton Terrace Kingston 10 Telephone: (876) ext 3757 Auditor Name: KPMG Peat Marwick Partner: Mr. Linroy Marshall Address: The Victoria Mutual Building 6 Duke Street Kingston 6 Telephone: (876) Fax: (876) firmmail@kpmg.com Actuary Name: Actuary: Address: Actman International Limited W. St. Elmo Whyte 3-3A Richmond Avenue Kingston 10 Telephone: (876) Fax: (876) JMMB RS Members Handbook/ Pensions Department December

10 1. The JMMB board of directors appoints at most fifty percent plus one of the trustees. The members appoint the others called member trustees. If deferred and current pensioners number thirty or more they appoint at least one of the member trustees 2. Where the trustees themselves lack the expertise necessary to perform any function, they may hire such expertise 3. Such expertise include accounting services, administrative capabilities, investment management, actuarial advice, legal advice and other services 4. The ultimate responsibility is the trustees : they have to account for all that happens in the plan. Hence they are duty bound to monitor the performance of those to whom they delegate the various tasks. The trustees can remove any adviser whose performance they deem to be unsatisfactory. In their stead the trustees can appoint other advisers. 5. The trustees and those to whom they delegate various tasks are to: Ensure that the plan operates according to the Trust Deed and Rules Ensure that the plan operates within the legal framework Collect all contributions and pass them to the investment managers Send information to the relevant authorities within the deadlines; e.g. 1. Rule books, annual contribution certificates to the members 2. Hold regular trustee meetings at least annually 3. Annual lists of members, salaries, contributions to the FSC 4. Do annual accounts for the plan and submit same to the FSC 5. Do triennial actuarial valuations and submit same to the FSC 6. Collect and maintain proper records pertaining to the plan Pay all benefits and expenses in full as they fall due Alter the provisions of the plan only if a majority of the members agree Reduce no benefits already earned in respect of service done so far JMMB RS Members Handbook/ Pensions Department December