Extended retirement leave; businesses get a break in their payments

Government extends retirement leave period, companies get break

On Friday June 24, 2022 Cabinet extended the retirement leave period to September 30, 2022. This follows comments from the Leader of the Opposition on the benefits of doing so in order to ease the financial burden faced stakeholders from various sectors.

What does the extension mean?

The extension of the retirement leave period means that employees and employers are not required to contribute to the superannuation fund of a pension plan during the retirement leave period.

If a self-employed person is a member of a registered pension plan or holds an Individual Retirement Account, the self-employed person is not required to contribute to the account during the retirement leave period.

While retirement leave is “good” in the short term by allowing employees to have less deductions from their wages during the period of retirement leave, the practice is probably not a good idea in the long term because employees and employers will not contribute to the long-term security of employee retirement plans, which may have unintended consequences later. For example, if the retirement leave period extends for several years, some employees may not have invested enough in their pension plan to enjoy their retirement.

The Cabinet has the power to make further extensions

The Cabinet has the power to make further extensions in the future should the need arise.

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