Q: Since I have migrated and have no intention of returning to live in Jamaica, could I give my benefits to someone else, such as a relative or friend who needs it more than I do.  I've done pretty well for myself in the United States of America (USA) and am looking towards a good retirement package. I do not think that I might need the benefits that might be due to me after having worked as a civil servant in Jamaica for 20-odd years before migrating. My son wants to come back in a few years to live (that's why I'll be back). Could I give him any of the benefits that could help him get set up there? Are the benefits assignable and or transferrable and if so how do I go about getting this done?

Ans: Congratulations on achieving a good retirement package that will contribute to your financially secure retirement as a result of your working years in the USA.   However, one could only agree that you have a good package if the following could be answered in the affirmative: (i) your package will provide a guaranteed lifetime income which is 100% of your gross income at retirement and that the income will be indexed by say 5% per annum until death and (ii) in addition provide your spouse and children, if applicable, with a guaranteed lifetime indexed income for their lives.  Is it correct to say that your ‘good package’ from the USA will be paid from a combination of the following sources of income: State Benefits – Social Security, Occupational Pension Plan benefits from all the Employers you have worked with for the 20 years in the USA, life insurance proceeds which will be used to purchase an annuity, personal savings and investments and your spouse’s income, if applicable?

If you have not made such a list of your sources of income and how much guaranteed lifetime ‘indexed’ income will be available from each source to provide you with the 100% of your income at retirement and indexed at say 5% per annum, then it may be wise to reconsider whether or not you do have a ‘good retirement package’.  You see, over the years, it has become popular to think of a good retirement package only in terms of accumulated capital rather than a mix of capital and indexed income.  One thing you can be assured of is that when you finally retire from your current employment, it is not the capital that will be as important as whether or not you will have guaranteed lifetime income that is indexed.  Once you have ascertained that level of income in the USA, then you may or may not need to collect your income from the available sources you are eligible to receive from Jamaica.  But as you would realize, there’s a sense of caution being stated here and that you should seek advice from a USA Financial Advisor, if you haven’t done so already, before making the decision about whether or not to claim your Jamaican benefits.  Finally, three other factors you should take into consideration are (i) whether you have enough long-term care, (ii) retiree health care and (iii) nursing home care.  These three items can be quite expensive for retirees.  Therefore, even if you have a good USA package to start with you should continue to do some investments from that income during your retirement to meet these potential expenses.

 Unfortunately, most people who contribute to Jamaican State Benefits, such as National Insurance Scheme (NIS) and National Housing Trust (NHT) or even their occupational retirement savings plans i.e. the civil service plan you would have contributed towards during your 20 years employment in Jamaica, think that the income is too small or they just forget about the benefits in the event of old age, disability or death. The NIS Act 1966 and the NHT Act 1967 govern the life events when claims can be made and to whom they can be paid.  Hence, with regards to your son, who is an adult, you will not be able to assign or transfer your benefit payments to him during your retirement your retirement years.  In other words you cannot direct NIS or NHT to pay him your benefits unless you appoint him as your agent to collect your benefits for you.  However, you can receive the benefits and allocate to whomever you wish.  But again there’s caution here, that you should check your guaranteed lifetime income before you make this decision and it may be wise for you to claim your 20 years of benefits from Jamaica and distribute as desired rather than an initial thought of giving it away.  These benefits are mainly payable as a result of old age, disability and death and benefits are usually payable to a spouse or children who are minors, that is, under the age of 18.

With regards to your occupational pension benefits from the civil service, where you worked as a nurse, these benefits are also only payable to you during your retirement and you will need to check with the organization to determine whether the statute governing the plan allows you to transfer your benefits to your son.   Always keep in mind that these types of occupational retirement savings plans are governed by laws and their own Trust Deed and Rules and before you make any decision regarding your benefits you will need to check the constitutive documents to determine your rights and how you can exercise them. 

While the foregoing addressed your question generally, let’s focus now specifically on your question and whether your state or occupational pension benefits from the Pensions (Civil Service Family Benefits Act) 1976 and the Pensions Act 1947 and any Amendments, can be transferred or assigned to a relative.

STATE BENEFITS

The NIS Act allows a relative of a contributor to receive the contributor’s benefits on their behalf.  To achieve this, the contributor is required to fill out an ‘agent’ form authorizing the relative to collect the benefit.  The form must be witnessed by a J.P., Notary Public or Solicitor and the relevant supporting documents such as a birth certificate, NIS number and TRN card for the contributor must be provided. The relative must also have a valid I.D.

The NHT also provides for a relative or friend of the contributor to request special contribution refunds.  This refers to refunds being paid to contributors who fall under certain prescribed categories such as retiree, migrating expatriate or invalidity pensioner.  The contributor and named relative or friend must provide NIS and TRN numbers, authorization letter stamped by a Justice of the Peace as well as any other documents, depending on the contribution refund being accessed.

Since you didn’t provide any background information on whether your son previously worked in Jamaica or not, we will take both scenarios into consideration in educating you on how he can access or become eligible for any benefits. If your son is 18 years and over and has never worked in Jamaica, once he becomes employed or decides to be self-employed, he should make it a priority to contribute to the NIS and NHT or ensure that his employer is making the contributions on his behalf. His NIS contributions, having satisfied the requirements of being paid for a minimum of at least 3 years or 156 weeks, will make him eligible for the various benefits available such as old age benefit, spousal benefit, funeral grant, etc.  As it relates to the NHT, he would also have to provide the same documents in their original format.

Civil Service Benefits:

                It is highly recommended that you obtain a copy of the statutes mentioned above and any Amendments to determine whether or not you can transfer your benefits to your named beneficiaries or request information from the Head of the Department of the public sector where you worked prior to your emigration to the USA.  The next step is to obtain the necessary claim forms, complete and submit as soon as possible.  Remember, you have earned it, attained retirement age and so claim your benefits.

We trust that you will initially ensure that you do have enough guaranteed lifetime indexed income from all your sources of income from the USA and Jamaica before you make the decision to transfer your Jamaican income to someone else.  Today’s retirees need indexed income because of inflation and the compounding effect it can have on reducing your income over time.  Whatever sum of income you have to start your retirement may not be sufficient to last you for 30 to 40 years: this is what the current life expectancy is for most retirees.  If you do decide to pass on your income to your son, it may be best for you to claim your benefits first and then pass on to him as desired.  Alternatively, you may wish to consider investing the income and then establishing a family trust which will benefit your son and grandchildren.  However, before you make your decision, please do get advice from a qualified financial retirement planner.

We wish you and your son the best for the future and let us know how you progress with your final decision.

Disclaimer: The information provided is a guide and does not purport to provide any advice on any particular financial product for retirement financial and lifestyle planning.  Much more information is needed to do so.  Hence, for your Jamaican benefits you are advised to obtain advice from a Financial Services Commission licensed (FSC) insurance sales representative and/or an investment advisor.