Group Pension Scheme

Occupational Pensions

Mauritian Eagle Insurance Company Limited offers the services as a “Pension Provider” whenever an employer decides to provide a pension for one or more of his employees.

The Group Pension Scheme involves the employer paying money to the insurance company to provide benefits clearly earmarked for each employee under the blanket cover of one “master” or “group” policy covering all employees. This arrangement is called the insured pension scheme.

Pensions provided by employers for their employees are known as occupational pensions and is governed by the Income Tax Regulations of 1996.

Pension Benefits

The employee will receive on retirement a pension for the duration of his or her life. It may be possible to arrange for a pension to be payable not only during the employee’s lifetime but also during the lifetime of the employee’s spouse - a joint life pension.

The maximum pension available for payment is two-thirds of the Basic Salary. The pension may remain at the same level during the employee’s retirement or may increase at regular intervals (known as an escalating pension). Provisions for increases in pensions are limited to 3% per annum.

At the time of retirement, the employee can commute up to 25% of his pensions in return of tax-free lump sum.

It is worth noting that pension benefits are portable for all schemes effective as from 01st July 2000.

Other Benefits Available

Life assurance can be included in a pension scheme which provides some or all of the following benefits :

Before Retirement

A lump sum in case of death of member prior to retirement which is usually a multiple of two years’ salary. A Spouse and children pensions are also provided in case of death of the member within the service of the employer before normal retirement age.

On contributory pension scheme, a return of the employee’s contributions (if any) with or without interest can be considered. Another benefits which is usually available to the employee is in case of complete disability. A Capital sum of two years’ salary or at times 26 monthly salaries is made payable.

After retirement

The pension is guaranteed for a period not less than five years. There is a separate spouse pension which is also available for payment in case of death of the pensioner.

Administration

Mauritian Eagle Insurance Company Limited undertakes to administer the overall Group Pension Scheme in providing the associated relevant services :

Calculation of benefits.
Getting the scheme approved by the Income Tax Authorities.
Actuarial support and advice.
Managing the fund.

Type of Scheme

We usually provide “defined benefits” contracts. The contributions needed to fund for future pensions liabilities are reviewed by the actuaries on a yearly basis and the fund operates on a Deposit Administration basis.

For tax purposes, contributions paid by employers towards this pension scheme are treated as a trading expense and that of the employees’ are tax deductible.

Investment income on pension funds are not taxed and the pension benefits are taxed as an income in the hands of the recipient.

The lump sum at retirement and the death lump sums are tax free.