PORT OF SPAIN, Trinidad - The Trinidad and Tobago government Friday announced plans for the exemption from income tax on pension payments received from approved pension fund plans and approved deferred annuity plans.
Prime Minister Kamla Persad-Bissessar announcing new tax initiative in the Parliament on Friday (CMCC Photo)“This is a significant and meaningful step forward. It is about fairness, it is about responsibility, and above all, it is about people. For too long, many persons who did the right thing, those who worked hard, they saved consistently and contributed pension plans or deferred annuities, have found that when the time comes to benefit from those savings, a portion is taken away through taxation,” Prime Minister Kamla Persad-Bissessar told Parliament.
She said that a pension is not a windfall, “it is not a bonus, it is a result of years, sometimes decades of sacrifice, discipline and commitment” ahead of her government’s plan to lay the Finance Bill in Parliament shortly.
“It represents foregone consumption today in order to secure tomorrow. It represents workers choosing to invest in their future rather than spending all in the present. My government believes that such responsibility should be rewarded and not penalised.
“That is why we are removing the tax burden on income derived from approved pension fund plans and approved deferred annuity plans. We are saying clearly to the people of Trinidad and Tobago, if you plan responsibility for your future, this government will stand with you,” she told legislators.
She said that under the proposed changes being introduced, income derived from pension fund plans and deferred annuity plans approved by the Board of Inland Revenue (BIR) will be exempt from income tax.
She said these are structured, regulated arrangements that individuals enter into over the course of their working lives and that the exemption will take effect on income earned on or after January 1, 2026.
“What this means is that any pension payments you receive from these plans from that date onwards, January 1, 2026, from that date onwards will not be subject to tax income. At the same time, the measure applies to plans that already exist. T
“Therefore, individuals who have been contributed to an approved pension plan or deferred annuity plan for years, even decades prior, will benefit from this exemption going forward from January 1, 2026.”
Persad-Bissessar said that in that sense, this measure looks forward by ensuring tax-free treatment of future income whilst at the same time recognising and applying to plans that were established before and after January 1, 2026.
“While we are providing this relief, we are also ensuring the system remains fair, balanced and sustainable. If an approved pension plan or deferred annuity plan is surrendered before the appropriate time, that is to say before retirement opportunity, then those sums received will remain subject to tax.
“So this is clearly for retirement,” she said, adding that the purpose of this measure is to ensure long-term financial security for citizens.
“It is therefore not designed to be a short-term investment vehicle or to be used as an instrument for tax avoidance in the short term. By maintaining taxation and early withdrawals, we preserve the integrity of our tax system and ensure that the benefit is aligned with its true purpose, which is for retirement.”
Persad-Bissessar said that this measure has been developed with the input of the BIR and its technical expertise which has helped to ensure that the policy is “clear, workable and aligned with our broader tax framework.
“We have taken the time to get this right because good policy is not just about intention, it is about execution,’ she said, adding that more than 39,00 people stand to benefit from this initiative.
“This measure will therefore benefit, let’s make it very clear, workers in the private sector who have contributed to approved pension plans, individuals who have invested in approved deferred annuity plans as part of their retirement strategy, middle income earners who rely on these plans as a key source of income after retirement, and future retirees who are currently building their savings and will now do so with greater confidence.”
She said this is about individuals who took personal responsibility for their financial future and that her government “is saying we recognise the effort and we support you”.
