Jamaicans will now have more retirement dollars to look
forward to following changes made to the Income Tax Act.
The Senate Friday passed amendments which are aimed at ensuring fewer people end up broke after retirement.
The changes also bring the Income Tax Act in line with the 2005 Pensions Act and is part of the ongoing reform of pensions regulations.
The amendments were piloted by Minister without Portfolio in the Ministry of Finance Don Wehby.
The changes deal with the maximum pensions payable, and allow for self employed persons to get some tax relief as they save towards retirement.
"The bill seeks to provide for the following: the maximum annual contribution in respect to the superannuation fund should not exceed 20 per cent of the employee's remuneration," said Senator Wehby.
"This is made up of a maximum contribution by the employer of 10 per cent of the employee's remuneration and 10 per cent by the employer. However, where the employee contributes less than 10 per cent the employee may contribute the difference,"
The income tax act now says self employed cannot contribute more than $6,000 a year to private pension plans.
That is to be moved to a maximum 20 per cent of yearly earnings, a provision that also applies to people who are not self employed.
It also means that employees can contribute more than the normal ten per cent to their pension schemes.
A second key change is the removal of restrictions on lump sum deposits and the payment to dependents after a contributor's death.
"There are also vast increases in the payment of lump sum on retirement regarding the superannuation fund. Provision is made for an amount not exceeding the commuted value of one quarter of the accrued pension up to a maximum of 12.5 times one quarter of the annual pension which would result in $781,250," he continued.
The Senate Friday passed amendments which are aimed at ensuring fewer people end up broke after retirement.
The changes also bring the Income Tax Act in line with the 2005 Pensions Act and is part of the ongoing reform of pensions regulations.
The amendments were piloted by Minister without Portfolio in the Ministry of Finance Don Wehby.
The changes deal with the maximum pensions payable, and allow for self employed persons to get some tax relief as they save towards retirement.
"The bill seeks to provide for the following: the maximum annual contribution in respect to the superannuation fund should not exceed 20 per cent of the employee's remuneration," said Senator Wehby.
"This is made up of a maximum contribution by the employer of 10 per cent of the employee's remuneration and 10 per cent by the employer. However, where the employee contributes less than 10 per cent the employee may contribute the difference,"
The income tax act now says self employed cannot contribute more than $6,000 a year to private pension plans.
That is to be moved to a maximum 20 per cent of yearly earnings, a provision that also applies to people who are not self employed.
It also means that employees can contribute more than the normal ten per cent to their pension schemes.
A second key change is the removal of restrictions on lump sum deposits and the payment to dependents after a contributor's death.
"There are also vast increases in the payment of lump sum on retirement regarding the superannuation fund. Provision is made for an amount not exceeding the commuted value of one quarter of the accrued pension up to a maximum of 12.5 times one quarter of the annual pension which would result in $781,250," he continued.
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