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Financial Adviser | The workings and benefits of ‘widows and orphans’ contributions

Published:Sunday | May 15, 2016 | 12:13 AMOran Hall


The article where the person was seeking advice about her pension interests me. I have been working with the Government of Jamaica for more than 20 years and will be applying for my pension when the time comes. My concern is the time it will take as the system there is rather slow and outdated, and a procedure such as this boils down to who knows who. The contribution that I made was ‘widows and orphans’, and it was deducted before tax. Could you be kind enough to say what was this money taken out for and if I will be refused this money? – Melville

FINANCIALADVISER: The widows and orphans benefit is a form of insurance for which 4 per cent of the employee’s current salary is deducted. It is refunded on application, but a refund is only made if the scheme carries no risk in respect of that contributor. No interest is paid on the sum refunded.

The scheme carries a risk whenever there is a person who, if the contributor dies, would be entitled to a pension under the scheme.

In some cases, 100 per cent of the contribution is refunded, but in others, it might be 50 per cent, and in others, nothing. Whether the employee is married or has eligible children at retirement determines if a refund is payable and, if so, how much.

The following scenarios should help you to understand how the scheme works for both male and female contributors.

If a male employee who began to make contributions in 1990, for example, died in 2009, leaving a wife and two children, the wife would have received a widow’s pension and each child would receive an orphan’s pension up to the prescribed age of 19. If, however, a child was enrolled in a recognised school and pursuing a recognised course of study, the benefit would have been extended to age 23.


If another contributor hired in 1990 retired at age 60 in 2016 but had no spouse, because the spouse died in 2010, for example, but had children who qualified for an orphan’s pension, by virtue of age, a 50 per cent refund of contributions would have been due for the period 2010-2016. This is because there would have been no spouse to derive a benefit during that period, only the children.

A full refund would have been due if the employee had no eligible children or was not married at retirement. This could mean that the last child would have been over 19 at that point.

If, in the example cited above, all the children were older than 19 when the other parent died in 2010, a full refund would have been due for the period 2010, when the last risk ended, to 2016.

If an employee resigns before completing ten years’ service, a full refund is made then if the employee is unmarried and has no eligible children. If, however, the employee resigns after completing ten years, the refund would be made after retirement, which is at age 60 under the current rules. The refund would be 50 per cent if there is a spouse or child who would be eligible for a benefit upon the death of the contributor.

There would be no refund at resignation if there is a spouse or children who would qualify for a benefit as the scheme would be carrying a risk in respect of them.

At retirement, the family benefit refund is addressed only after the pension documents have been received and processed. This process may take four to six months.

Among the explanations given by the Ministry of Finance and the Public Service for the process taking that amount of time are the following:

1. Applications are sometimes made at the ministry instead of at the appropriate department or agency. In this case, the ministry has to request documents from the department or agency stating the breakdown of the contributions.

2. Sometimes the response is slow in coming.

3. Sometimes there are errors in the documents, so they have to be returned to the department or agency to be corrected.

4. The process requires the input of several external parties to check the files. This includes the auditors, whose time frame may be quite long.

5. The auditors may disagree with the calculations and return them to the ministry to be corrected.

6. Disbursement of the family benefit can only be made after the Auditor General’s Department issues an authorisation letter.

The widows and orphans contribution is made to help secure the well-being of the beneficiaries of the employee of the Government by way of a monthly pension in the event of the death of the employee. There are provisions in place, though, that allow for the refund of contributions if the scheme is not carrying a risk related to that employee at retirement.

For further information, please see The Pensions (Civil Service Family Benefits) Act at

- Oran A. Hall, principal author of ‘The Handbook of Personal Financial Planning’, offers personal financial planning advice and counsel.