Approved retirement schemes, convenient pension savings instruments - Business - Jamaica Gleaner - Sunday | December 30, 2012:
There are two features of approved retirement schemes (ARS) which stand out regardless of who is offering them: they are generally unitised and they have multiple funds.
These features make them convenient investment instruments for persons saving for their retirement.
Designed for self-employed persons and employed persons who are not active members of an approved superannuation funds, this relatively new arrangement allows members to contribute up to 20 per cent of their pensionable salary towards a pension but does not exclude employers from contributing on behalf of their employees but limits their contribution to the difference between what the employee contributes and the statutory maximum of 20 per cent of pensionable salary.
Contributions may be made monthly or annually or at other intervals determined by the member as long as the 20 per cent limit is adhered to.
Although the funds are invested and administered by professionals with expertise in the respective areas mentioned, it is prudent for scheme members to take a keen interest in their affairs and to have a say in how their contributions are managed to build their pension fund. Unitisation and multiple funds make it easier for them to do so.
The ARS is a pooled facility whereby the pension contributions of many persons are combined and invested in a variety of investment instruments that the individual contributor would not likely be able to invest in at all or in any meaningful way.
It is possible that the investment portfolio created could be made up of just one type of investment instrument, such as bonds, or of several types, such as bonds, stock and real estate.
It is also possible that several funds could be created, each made up primarily of one type of investment instrument.
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