National Commercial Bank Insurance Company (NCBIC) last week became the latest company to launch an individual retirement account (IRA), becoming the seventh major financial house to launch the product within the last 18 months.

At a launch event at the LIME Golf Academy on Tuesday, NCBIC officially rolled out its “SMART Retirement Plan”. The SMART Retirement Plan is a personalised pension plan that provides contributors with a monthly income on retirement and contributions are accumulated tax-free.

NCB Group Managing Director, Patrick Hylton stated that “The NCB Group has a long history of pension fund management through its subsidiary West Indies Trust Company Limited (WITCO) which was transferred to NCB Insurance Company in 2007, making NCBIC the industry leader among Pension Fund Managers in Jamaica with over 40 years of service in the industry. NCBIC is the largest segregated pension funds manager in Jamaica with dedicated client relationship officers who are experts in pension regulations and pension administration.”

NCBIC said the SMART — an acronym for Secure Money At Retirement — is open to Jamaican residents between the ages 18-69 years who are not contributing to any other approved pension plan, saying that it’s ideal for the self-employed, employees of small and medium-sized enterprises and individuals who were terminated from an approved plan.

SMART offers tax free benefits such as lump sum payments of up to 25 per cent of the accumulated value paid to members upon retirement. There is also a tax exemption for investment income earned through the years of participation. The Plan provides immediate pension benefits in the event of permanent disability before retirement. Should a member of the plan die before retirement, the plan refunds the total accumulated value to your named beneficiary.

NCBIC provides flexible payment options which allow you to pay your contributions monthly, quarterly, semi-annually or annually. Payments can be made by salary deduction, pre-authorised payments, via telephone, at any NCB branch or via the internet through NCB eLink.

Indeed, the market has been inundated with IRAs — officially known as approved retirement schemes by the Financial Services Commission – since 2008. Mayberry, Sagicor Life Jamaica, Scotia Jamaica Life, Prime Asset Management, Capital & Credit and Jamaica Money Market Brokers have all launched the product over that period.

Interest in the market was heightened in March 2008, when amendments to the Income Tax Act were effected. A major objective of the ammendment was to lift the ceiling to which self-employed persons and persons not currently contributing to a pension plan can contribute to retirement schemes. Those persons can now contribute up to 20 per cent of annual salary each year to a scheme with the same tax incentives as allowed under a company pension plan. Prior to this, the ceiling was $6,000 a year, making such schemes unattractive. Against this background, retirement schemes became more attractive as an investment instrument for individuals and as a way to penetrate an underserviced market for financial institutions, who note that only 10 per cent of the local working population were in a pension plan up to the middle of last year.