Consequences of changes to pension law
‘Equal rights for some’ writes: Want to know the true cost of this pensions raid on us, to me? To you, as an expat? I’m a real estate professional with decades of experience and whilst commonly not respected or listened to here (when is advice listened to here?) you are going to want to listen now.
My current pension pot here is around CI$50,000. I expect it to be around CI$60k after the two more years I had planned on staying and the further two years of growth after I leave but before I can get the money.
I’m British and if I invest my CI$60,000 pension in a UK property as a 20% deposit, I could buy something for CI$300,000.
If that provides returns of even 6% pa (UK property has returned more like 15% per year when including repaid mortgage, paid for by the tenants’ rent, net rents and rental growth and mortgages being paid off and capital/price growth), then by retirement my CI$300,000 property would be worth CI$1,081,061. That is simply the compound interest effect on CI$300k.
At 10% pa growth (absolutely not unreasonable to assume) those total returns produce an end value of CI$2,442,082 and that is my real opportunity cost, that I fully expect I could have made my CI$60,000 by the time I retire in just over 20 years. And bear in mind that by that time net rents will be unrecognisably more than CI$1,000 a month — the maximum amount a Cayman pension will pay you irrespective of the amounts you are forced to pay in. The net rents would be more than that now on that $300,000 hypothetical property. And remember compound growth?
And what will my Cayman Islands-domiciled and (mis-)managed pension be worth in around 20 years time? Well, it’s CI$50,000 now. Without any further contributions (as per the UK property examples) I expect it might grow to CI$100,000, if I’m very very lucky. And bear in mind, when my pension was with Silver Thatch for four years, it actually decreased year on year, excluding the payments I made into it.
So, in addition to a surprise change of circumstances, loss of control, loss of choice, being forced to retain a major investment in an over-charging, often mismanaged fund and massively deferred receipts for me, this represents a real financial loss by retirement of somewhere in the region of CI$981,061 to CI$2,342,082 depending upon the future returns of other investments like UK or other property markets.
It also represents the loss of my ability to buy a home when I return to my country. This is something that expats here have been factoring into their calculations and relying on — basing their decisions on for many years — just so Cayman can pay for its lack of planning and terrible decisions, enforcement and administration.
People have worked here for additional years based on this planning. They have stayed away from family because of this. People have based their livelihood on this, based their children’s school or college fees on this, taken out mortgages and based repayments on this. You can’t simply confiscate this money, communist Cuba-style, to pander to your voters and make yourself look good, Tara.
And in case you think I’m being sensationalist, I have a friend that did buy a UK property in 2014 which has more than doubled in value since then, so in the above example that’s CI$300,000 already accounted for. So it’s easy to see how end values of over CI$1 million+ are very achievable. And a property that I bought in 1995, 21 years ago for £25,000 (and with hindsight, stupidly, sold three years later) is now worth over £300,000, which demonstrates very nearly exactly why my estimates above are accurate. That’s a 1,100% increase — a twelve-fold increase) in UK property prices, without considering mortgages paid off (relatively minimal by comparison) and rental returns — which by now would have been totally cash (i.e. The mortgage would have been totally paid off) and be around £1,100 per month on the above example.
That CI$300,000 property in my first and very realistic example, multiplied by 1,100%, will be CI$3,600,000 by the time I retire. So even by very conservative estimates, expats are losing more than a million each, more in most cases if, like most expats I have spoken to, they planned on using their CI pension to use as a property down payment/deposit.
This is why this is so bloody serious.
And of course in typically discriminatory fashion, Caymanians can withdraw their pension to buy a property … which they can then sell and buy a property in London too if they wished, because with further lopsided lack of fairness and rampant pandering entitlement, they are immediately given UK, and therefore effectively European/Schengen, citizenship, whereas expats jump through eight years of hoops only to have their legal entitlement to stay further illegally sat on for two years (in my case). And if I am successful in getting PR, I then only have the right to continue begging at the Caymanians’ door for another 4 years … and so on.
Pass this law and there will be a serious change of direction for Cayman and there will be lawsuits.
CNS: This comment was posted in response to Rivers steers through imperfect pension bill
Category: Government Finance, Politics
My question is if some one has not contributed in his pension company for more then 3 years and change his pension company. Can he use his pension money from the previous pension company to buy a house in
Cayman if he is a non caymanian?
I went in few banks to get a home loan they said I can use that amount towards the down payment but pension company says I can’t use it because I am not caymanian!!please advise
Tara Rivers XXXXX has no regards to human rights of expats for their hard earned money. This is not correct for in my case the pension refund after 2 yrs is the only thing that I can rely onto to build my business in the Philippines. This is a communist style of legislation. ??
This issue here is simple. For years the CIG has had lousy enforcement and many people were not paying into the pot when they should have been. Now someone noticed that the pot is too low and will not be enough to cover people down the road. So what do they do? They find a way to punish those of us who have followed the law for years and done their share to contribute.
For nine years I operated under one set of rules which said that I had to leave at my rollover date but that I could take my pension with me. Now that I’m within 2 months of actually being able to withdraw my pension (having left almost two years ago) the CIG wants to change the rules of the game. For 11 years I’ve been working and waiting and planning to use that money to get my first home. Now I’m within 2 months of that goal and find out that I might not be able to achieve it because the CIG is rigging the game.
All people’s arguments about what a pension should be or how I don’t deserve any sympathy because I planned to leave from the beginning are moot. Of course I planned to leave from the beginning. It’s called rollover. I was told from the beginning that I would have to leave. If you want me to stay then tell me that. The PR rules of the game were also changed just as I reached it making it impossible for me to qualify. The deck is stacked. CI doesn’t want me to stay. What do they care about my retirement? The concern that I will withdraw my pension then return to Cayman is downright silly. I can only return if immigration gives me a work permit. I can only retire there if I can prove to them that I have the money to do so. There is no risk. Let me repeat that. There is ZERO risk that an expat will end up retiring in Cayman without any money. All it takes is a denial of a work permit and/or PR to prevent that.
No. This isn’t about a concern for my retirement. Not at all. This is the first step towards the theft of my pension money. Pure and simple. It’s my money. For 9 years that I worked on island I was told that I would have access to it two years after I left. Now I want my access so that I can finally own the home I have worked so hard for over the past 11 years.
Find another way to plug the pension hole other than to penalized those of us who followed the law for the past decade. How about going after those who broke the law over the past decade and leave my money alone.
-Isme
You should have planned better for your rollover.
How does one plan better when the information upon which the plans are based can be changed on a whim by a government?
How does one plan for PR when even the immigration department doesn’t understand the points system and it changes all the time?
How does one plan for anything in Cayman when your own government has an education minister writing pension law and then admitting that it’s flawed right out of the gate?
So you are suggesting I should have planned for the CIG to be corrupt and inept? Okay. I suppose I should have figured out a way to not pay into the pension and just break the law like everyone else? Keep the money from the beginning. Would that be better?
I welcome your detailed suggestions for how one plans for rollover better.
-Isme
Even the simplest of plans here in Cayman get turned into a cake and ass party!
Your pension isn’t a defined benefit pension. It is a defined contribution pension. So the money is yours. There is no worry about this pot being “too low”. That is only the case for the Government defined benefit plan which ended in 1999.
And if you hope to retire some day, the best plan is to always contribute 10% of your income to some sort of retirement planning. Using that money now to buy a home is not sound financial planning. Don’t touch it. How are you going to fund your retirement?
Really? Real estate is not a sound investment? Have you seen what the markets are doing in Canada?
The rate of return is better than the average Cayman based pension.
-Isme
My pension is only 9% up on contributions after 12 years, that is one of the worst rate of returns I have seen.
I’ll never be able to afford to retire here. When I do go, I’m afraid there will be no pension left for me to take with me anywhere anytime. In 2 years or 10 years!
This is why the MLA’s have been taking theirs now because they already knew this. And lastly, if the Civil Servants are not having to pay into it, how is it supposed to get funded and have enough for them when they retire??? And then they get free money???????
I don’t get it.
Someone is laughing. All the way to the bank.
Is that you Mac?
I’m a Nurse and my pension money refund was factored in to my plans when I accepted the job in Cayman, like many other expat medical staff, we are not wealthy enough to build a cash fund, to soften the enormous costs of returning home at the end of our time here.
We have been very unfairly treated by this legislation and without wanting to point fingers, someone in Government has not thought through this very carefully. It is targeting those who have no say or representation in Cayman and will impact most directly on people like myself, who earn lower than average wages…some might suggest that in fact, this is discriminatory…
What ever you call it, I feel that its a cheap trick and a lousy way to treat those, who have served Cayman with such dedication.
You should learn to budget yourself and factor in a savings plan. Look for another job prior to your rollover. Effectively you get one year vacation. Of course if that is if you decide to return. Otherwise, you now get to travel to another country of your choice and work there.
It is poor planning on your part. Cry foul and unfair, but a pension is ultimately for retirement, it is not a savings account to be used at a whim.
It’s poor planning on the part of pension enforcement that lead to this problem. Not poor planning on the part of those of us who relied on getting back what we were told we would get back for the past decade.
You may want to explain the poor planning part to the government here.
Why not just allow the employee/employer to choose an international pension plan and allow them to subscribe to it? The employee would still have a pension, possibly one that doesn’t lose as much money…
Oh wait, it is so the government can get money. Right, forgot about that, this is not about ensuring people have money in their old age it is about funding government insanity.
I seriously doubt the authenticity and motive behind this.
Kick us off the islands after 9 years and dont care what happens to us or where we go and how we survive, but you keep our monies and guard how we invest it!
It is a pension. It is meant for when you retire at 65 (55 early retirement). If you aren’t 65 (or 55) yet, then you can transfer it to another pension plan of your choice.
Yet “Caymanians” can withdraw from it and they ARE going to retire here
Not a UK tax expert, but if you cashed in your Cayman Pension under the old rules and got paid $60k cash, 2 years after you left Cayman, that would probably count as income and be iiable to UK tax at 40%. You might want to get some advice first. I don’t think the scenario you described is likely….that you would get to keep all the money paid out.
Actually it is not taxable, only any profits the pension has made since you left.
The income was earned while resident in Cayman.
On the other hand,if you transfer into another pension fund or keep it in Cayman, the payments made when retired would be subject to taxes
A Ponzi scheme is a scam investment designed to “separate investors from their money.” They will often try to minimize withdrawals by offering “new plans” to investors, often where money is frozen for a longer period of time.
For example, leaving the investor 5000 miles between the scheme with a limited withdrawal of only 1000 kyd per month leading to a maximum of 12000 kyd per year?
Or you could always transfer your pension fund to your current scheme in whatever country you are in after 2 years, no need to leave the fund in Cayman.
Yep, you would love that. Devolve all responsibility to somewhere else so that they have to explain that my fund has ran out of money!
Actually the investment regs require local pensions to be invested on international markets – again please dont let your complete ignorance of this subject stop you from chiming in with as much outrage as you can muster.
Ok, so I tell you that now, your pension will be held in Nigeria and you won’t be able to get it until you are 65, then it will be a limited amount.
This is due to a hastily made, imperfect law by a government that has announced that the pension money is running out and decided on by people who do not represent the two thirds of the population who are affected by this proposed break in existing contracts.
But hey, it’s ok, it is invested on international markets and you can transfer it to a recognized pension scheme overseas or leave it here where we may change the rules again.
I bet you will be stampeding to the front of the line. Not.
You can spin this all you like, you ain’t selling it!
The investment regs are quite stringent to the point that it has been a serious bone of contention with many Caymanians who would like to see private pension funds invested locally. Private pension plans are 100% funded and produce audited annual statements (i.e. the money is not running out). They are only allowed to invest in Prime rated securities which need to be publicly traded (this allows for liquidity). You seem to be suggesting that your pension plan is invested in something dodgy (Nigeria reference) – this just isn’t the case. Also you will be able to take the fund with you by transferring it to a pension in your home country once you get settled.
I 100% agree that the removal of the cash out after 2 years is a huge change of direction which is unfair. Their should be a grandfathering clause that allows for those who are already in the fund to participate under the old rules however, making random, emotive and untrue statements diminishes this argument by making several commenters look very ill-informed and those people are much easier to dismiss as cranks.
“You seem to be suggesting that your pension plan is invested in something dodgy”
Ok, turn up in Toronto and ask people for a chunk of savings that you are going to invest as a pension in a small Caribbean island with a history of financial mismanagement, losing millions, corruption and non transparency.
Should any of this not happen, it may run the risk of being squandered in slot machines.
Then tell the investor that they cannot have it until they are 65 but then only a thousand dollars of that Caribbean Islands currency.
Then let them know that it is common knowledge that the pension money is running out.
Come back to me when you have signed your first investor up. I want to photograph this person for a Darwin Award.
Look it’s a pension, there is no requirement to keep the funds in a Cayman, after 2 years you can transfer it wherever you want, just not cashed out. It is transferred to your then current pension scheme, wherever that is, UK, Canada, UK, wherever doesn’t matter. It then becomes subject to the country’s rules on pensions of where you live. It’s not locked up in Cayman until you are 65, unless you can’t be bothered to transfer it.
No, that wasn’t the terms I commenced with. If you are going to change things just to cover up mismanagement, there is a high likelihood that other laws get changed on a a whim. What next, dormant accounts, roll over, expat taxes, PR?
What little trust I had has gone!
Thanks, I won’t.
I think that this pension law is done wrong and is unfair to the expatriate workers with forcing them to pay in to the pension funds , and not giving the expatriate any viable option with their own hard earned money.
I wonder what would happen when every expat on the Island don’t show up to work one day and tell the government to do the law their way . The Government should remember that all expats on the Island are not CAYMANIANS .
The problem occurs when an expat transistions to Caymanian through PR/Status, if they were opted out of a pension scheme for the 12/14 years it takes, what happens when they get status and have no pension? The basic premise is that everyone should be saving towards their retirement.
but the majority of expats have no hope of getting PR, so why is government making it so hard for those leaving, yet happily let Caymanians withdraw their money, even though they know they will retire here.
That’s your argument out of the window.
Can we aim for the first week in August?
Leave it to Cayman to figure out a way to steal money from the workers on the island legally. Time to start planning an exit.
Who is stealing money? It is still your money. Just locked into a pension fund. Happens everywhere in the world in lots of industries. Stop the scaremongering.
Keep telling yourself that Darlin. Your the only one listening.
What kind of trust would you put in a Minister (of Education), who allows a draft Bill to go out with a spelling mistake in the title?! What a complete joke, Cayman deserves better then this bullsh!t
“TO EXTABLISH THE DEPARTMENT OF
LABOUR AND PENSIONS;”
*than*
and your ‘better then’ is a mistake. Is it not?
Troll, there is a difference between a draft law and somebody making a quick comment on an internet site. I hope a reasonable person can differentiate between the two. But by all means continue on with your internet proofreading duties…you might be awhile.
Couple of points, Caymanian’s can withdraw up to 35k to fund a house purchase but it has to be repaid. The 60k you have in the fund is made up of 30k from you and 30k from your employer, without the law you would have 30k which you could have used to fund a downpayment. Finally using a leveraged borrowing investment (300k) to calculate total returns vs not using a leveraged return isn’t comparable. It has always been a pension fund, irrespective of your intentions to spend it. After 2 years you can transfer it to a Pension fund, in the UK you should look at a Self Invested Personal Pension (SIPP), you can’t buy a house with it but you can invest in commercial rental, if that’s your intention. It’s not 100% what you wanted, to cash in your pension, but getting there. What happens if house prices fall? Happy to lose 7 years of retirement income? Maybe you aren’t old enough to have experienced a property crash, I’ve been through 2 so far. No guarantees in life, including property.
Dey toucha my money, I breaka der faces.
As a Caymanian…if I don’t plan on living in Cayman anymore, can I leave and after some period get my full pension? If so, how long do I have to be gone? Thanks.
Under the new law yes you can transfer it to a registered pension plan abroad or receive your pension once you are at retirement age.
How much can you receive?
It depends on how much is in your fund and what age you retire. For example with $1m if you retire at 65 you could prob purchase an annuity that would pay around 6k per month. You need to do some research – find a retirement calculator online.
Any money or financial instruments entering a country may be subject to tax
As a Caymanian…if I am not at retirement age and will be leaving the islands in my mid 30’s. Under this new law, Will I be able to get any money from the pension or will I have to transfer it to the country I am moving to? Thanks.
US persons also have a problem because ANY funds in a foreign pension automatically decrease their Social Security payments. So between poorly managed funds here losing money, they get less social security – there is no way to be able to send Cayman pensions to a properly managed US pension fund anymore where I won’t be penalized by Social Security and where I will get increasing profitability on my pension as I have done throughout my time here.
No need to worry. Trumpty will build the wall and you won’t be able to get back in and the IRS won’t be able to get out.
That is your issue that you need to consider, not the Cayman Islands government
If I have two houses and want to borrow against my pension to pay the mortgage on one and use on the other, how much can I get?
The pension law allows Caymanians who have no property to withdraw up to 35k to put towards a one-time property purchase. If you already own a property you could withdraw 35k to pay towards it – but only if that 35k would completely pay off your mortgage. If you jointly own a property and your mortgage is less than 70k you could both withdraw up to 35k to completely pay off the mortgage.
So the people that will retire in Cayman can withdraw funds from their pension, but the great majority of expats that won’t retire here cannot.
The only reason for this is in a couple of years expats won’t be able to transfer any of their pensions from Cayman, and then it won’t be long until they start to dip into it, as Caymanians haven’t saved for their future.
Expect capital restrictions soon on your bank account, time to get all your money out of Cayman expats.
This is more proof, first an expat tax, when they do not use any of the services.
Slippery road.
Your true intentions really came to light with this sentence:
It also represents the loss of my ability to buy a home when I return to my country. This is something that expats here have been factoring into their calculations and relying on — basing their decisions on for many years — just so Cayman can pay for its lack of planning and terrible decisions, enforcement and administration.
So in other words, you wanted to come, possibly row about not getting PR and Cayman Status fast enough, earn a tax free salary all these years but then when time comes you cash out, move your funds you earned tax free elsewhere all along with no intentions to make Cayman truly your “home”. How does this benefit the Cayman Islands when you move your cash and the only tax you will have to pay is in your home country?
You admitted completely that your only intentions were to get out of your stay in Cayman what you can………and then people are surprised that they are not integrated into the community and not listened to. Really now?!?!
Get your head around this – it is a PENSION fund, not a savings account for your real estate purchase.
What he (we) do with OUR money is real no concern of YOURS.
Cayman is entitled to make money off is by fees, profit to a Caymanian company that employs us and our purchasing things while we live here.
The rest is really and truly and certainly none of your damn business.
Get your head around this: it’s my pension fund, not you or your family’s.
You are absolutely correct, it is not anyone’s business but yours what you do with your pension money, but you have to also understand that those who saved for their retirement and the government won’t be helping you out when all of your pension money is gone and you have a house but can’t pay the food bill after you retire.
You have to be able to manage to do both, save for retirement and buy that house.
Relax, whatever he wants to do with his money and life is none of your business or your Governments’ business. MYOB in short. And read 09/05/2016 at 11:05 am comment.
An obviously underfunded pension plan if after 8 years combined employer and member contributions (assuming zero growth) amount to only $50,000. Kasparov has made payroll contributions of only $3k/year, and intends to reduce these to $2500/year over next 2 years…and expects to retire on that. Better make some other plans fella!
Doesn’t matter about the plan or value or how many financial wizards suddenly appear out of the wings.
What matters is that the rules have been changed hastily and without consent.
If the government can do this to your pension, it will be done with healthcare and could be done with existing permanent residency grants.
I do not trust them one bit.
My thoughts on this is to get rid of pension entirely as it is not working. Loop holes to the law is what made this practice happen in the first place and now it will cause too much uproar to change/fix what has been broken. For those who are believers in this pension scam, let them leave their funds in it. For the expats/wp holders and Caymanians who would like their $$$, let them have the same option along with a withdrawal for any reason with a 10% fine OR anybody can have the option to withdraw up to 50% as a one time option for any reason. To me, this will keep everybody happy as those in agreement can stay in it and those who want out, can do so as well by paying a fine.
Having lost thousands in my pension fund, I’d like to manage (or mismanage) my own dollars. What I have put aside myself in other accounts far outweighs the “profit” (HA!) of the pension fund. But, as a Caymanian business owner, I am required to pay it.
Not just any real estate purchase: this was earmarked for the fabled 35,000 quid London flat set to appreciate at 50% per year forever, and the forgone theoretical Premier League 5000/1 outsider bets, and lottery bollocks that would otherwise (and reliably) secure financial freedom! Curses you, Cayman Pension Law!
I love the way the writer is so convinced that property bubbles are a really good thing and is also really peed off that his pension underperformed for a while during the global fiscal crisis which was caused by real estate bubbles and loose lending practices. I guess this is why “Real estate professionals” should never be taken too seriously.
I love the way it is written period. The main reason is that the writer has decided that enough is enough and Cayman needs to be told no for once!
There is only so much that can be taken.
Tell me about it. I’m Caymanian, retired and want all my pension fund to invest but I can only get $1k per month. Did the old or new Law help me?
Is a pension fund that YOU made mandatory, I did not ask for it, but now that i have it I cant “have it”? what i do with my hard earned money is my business, not yours. you forced me, for many years, to give 5 % of my salary and promised me that i will have it when I’m leaving. now you just changed the rules in the middle of the game.
Yep and the same rules made your company pay the other 5%, the rules haven’t changed, the pension law was always clear, you could cash out if you had 5k or less, or transfer out to a suitable fund, cashing out for more than that was always discretionary and shouldn’t have been permitted, it however became common practice to do so.
Seems like a whole lot of laws and policy is discretionary round here.
I don’t want discretionary as that only seems to work for others.
I want a level playing field and people to abide by existing contracts.
If others can borrow against their pension for a “one time” house then so should I.
Even if it is in Fort Lauderdale.
If not then I will just stick to what I signed up for and a check will be fine.
Strange how it is ok for you to use it locally against a mortgage for property but when it is the other way round you become a little bit of a whining b@tch!
Yep you can use it towards a property but it has to be repaid and a lien registered against that property, not so easy to administer if the property is overseas,
“Get your head around this – it is a PENSION fund, not a savings account for your real estate purchase.”
You may want to tell the government this!
They are the people who have borrowed against it, gambled it, bought votes with it and generally appeased the trough feeders, friends and families.
It is a home grown problem without anyone else to blame, hence there are suddenly a lot of armchair financial experts defending it.
My advice, don’t waste your time trying to justify why someone, who clearly has his head screwed on right, should not get their pension owed.
Your time and expertise would be better spent helping your government out of shit creek. I would volunteer your time at no cost as there may be some difficulty paying you. One last thing, don’t expect this to be pensionable or at least honoured if it is.
Run along now, your government needs you.
I think you will find that people will admit openly to you that their intention is to leave here. Certainly now more than ever.
You don’t have to play Colombo and try and “reveal” those persons and their true intentions. That will become quite evident next month across the island for sure.
Many people came here with good intentions, it is sad to see people leave here bitter with a less than favourable view of their experience. We were not given the choice with the pension, it has been forced on us by a group of people who we didn’t vote for, as we cannot, and never will. This proposed change is now being forced on us by the same circus troupe to pay for mismanagement of funds by a government we have no say in.
Meanwhile, we cannot stay and we have to leave despite owning property or anything else!
And you have the nerve to criticize us for not integrating? The odds are stacked against us from the start!
“You don’t have to play Colombo and try and “reveal” those persons and their true intentions” Hahahaha Exactly what I was thinking.
I wish I could upvote this more than once.
Perfectly stated and exactly how I feel after 26 years here.
Take a basic economics course and you’ll learn how it benefits the Cayman Islands. 9 years of contributions to the GDP. That’s how. Next question.
If you would like people to stay then the CIG needs to make it more attractive to do so. Right now the barriers send a clear message. The message is “get out” once your nine years is us.
This is all about greed. no benefit whatsoever to contributors.
Actually their is a benefit and its to do with economy of scale – the larger the fund the lower the fees.
You is funny
I wasn’t trying to be – why don’t you go on either chamber or commerce or Silver Thatch websites and look at the financial statements? The fees the service providers charge are on sliding scales – the larger the fund the lower the fees proportionally. Its pretty standard for pension funds.
How does that help people who move and want to take it with them? The fees charged are extortionate and I’d much rather roll it into a retirement account at home and pay lower fees to a current provider, than 2 mode years of fees to ST or CoC and their managers.
Good news then because that is exactly what you will be able to do. You can transfer to another provider you just cant recieve it in cash.
“And of course in typically discriminatory fashion, Caymanians can withdraw their pension to buy a property … which they can then sell and buy a property in London too if they wished” – Actually that is completely false – Caymanians, (once in their life provided they do not own a property) can use up to $35k from their pension to purchase land or a property but if they sell it before they retire they have to repay their pension.
As they say “a little bit of knowledge is a dangerous thing”. This poster is not an investment expert, a retirement planner and hasn’t even bothered to read the pension law – but they are certainly not going to let that stop them from jumping up on their soap box.
Read which pension law? The one that I agreed to work under or the new and improved less than perfect pension law?
When laws are amended by over 50 per cent, rushed through and then described by the person delivering it as “less than perfect” then I would keep quiet about it’s availability and for others to read it. I would say that it is a trifle embarrassing for all those involved.
True, a little bit of knowledge is a dangerous thing. You failed to mention the other avenues open to Caymanians, the preferred mortgage rate, the unsecured government loans, the development loans, the “hep” given and the whole sale of family votes!
To be honest, the government and some commenters have already shown and played their hand and revealed their true colours. The contract that was mandatory to pay into a pension has now been broken. It is not the fact that other countries do this, they are getting that, etc. It is that the trust has gone and many of us have been proved right. The pension money has ran out and probably the health insurance has gone too.
The money has been mismanaged, the signs were there to be honest. A million missin here, a billion missing there, 1.8 billion missing or unclaimed and no up to date books to even try and reconcile it. But hey, that is your governments money, who am I to tell them how to mispend it. If only it worked the other way round!
So, blame it on whoever you want, it is your problem and homegrown.
Don’t try and break existing conditions that we all accepted and planned around, just to screw some money out of an unrepresented majority.
Even if this does not go through, the writing is out there on the wall and all expats know that this could happen again, which it will when the Cayman bullet bond comes up for payment. If you were not sure about staying, google that and see when it is due.
Enough is enough to be honest. Shame really as it could have been so good.
Why is it only Caymanians can do that?
More evidence, were any needed, that realtors are idiots. Take your pension and plough it into a single asset class. Yes, that is sensible.
Take your pension, be forced to invest it into a limited number of pensions the choice of which is based entirely on their being Caymanian in order to protect the local pension industry, rather than investing it on the international markets. Yes that is sensible, too – nothing to do with protectionism, no siree.
Well i have some good news for you buddy – the investment regs require the local pensions to invest on international markets. I am glad i could clear that one up for you – i bet you are really happy now.
Not when the choice of Investments is made by firms who have a terrible track record and whose ratio of administrative costs to returns is way out of whack. International markets = free choice of pension provider, not just what they invest in, buddy.
You can’t do that anywhere else either!
Imagine if Cayman Gov was in charge 100% . How could they govern themsleeves ?
With laws like this clearly shows the mentality of certain Mla towards expat.
The imigration law had to be amended real quick when they heard law suit being filed.
Expats not like Caymanians (passive land crabs) their pockets are deep and guest which country the Governor is from.
Watch them start to back pedal soon.
Let’s see if Alden can hang with the real big boys Us, UK.eu.
Every day the bucket a go a well one day it will drop out! .
What happens if we want to take an early retirement and retire at say 55 Is that allowed? Dp we get our money then? Does anyone know the answer
Yes the new law will raise early retirement to age 55 and normal retirement to 65.
Good. I will take early retirement, get my pension and come back to work on a contract for my former employer.
I bet no one has ever thought of that!
Now they did. Thanks a lot eediot!!
Hmm, this whole tax free sham is now coming home to roost. For years Cayman has lived off the backs of the criminally super rich who have avoided paying taxes to their home domicile, years and years of politically sanctioned money laundering, crooked property dealings, drug money and unidentifiable shell companies. Well now it’s all coming to a mighty crash, now start stealing the savings of those who made you rich in the first place and the sky will simply fall in.
As we expats are often told, this is your island, so hey, now take responsibility for your own people and create a social welfare system based on fair taxation and distribution of wealth.
If not, all that will happen is that expat labour will up and leave earlier than planned, the property market will flood and devalue, pensions will be pulled before new laws forbid it, businesses will lose through lack of customer share, investors will shy away from an unstable marketplace and multi nationals will simply relocate to friendlier hosts.
The U.K. Is under enormous pressure to reign in its one third share of the worlds tax havens, don’t think your amateur politicians are any match for the UK, EU and the US, you will tow the line and when the time comes Cayman will take an enormous hit on its financial services sector. Then throw some very disgruntled expat employees, (who have had their future finances stolen from them) into the mix and life will suddenly become very hard indeed.
Law suits will follow, human rights claims will be high on the agenda and the brain drain will begin.
Cayman is at a crossroads, it needs to consider really carefully how it plans to progress, if not it will simply implode.
And to top it all, when the fine detail is finally exposed, how many Cayman interests and well known local figures will be noted in the Panama papers, probably enough to stir a whole hornets nest of trouble for Cayman.
Good luck, I’m off.
Excellent comment!
They need to abolish the entire pension scheme altogether. Pay EVERYBODY who has contributed, what they have due to them. Government should only concern themselves with holding on to the “missing” pensions of Civil Service workers as theirs is paid 100% by the government. CI Gov’t stay the f*%@ out of my finances. I have never been to NAU or worked for Government. I don’t owe the Government a dime!! My pension is my money that I pay towards. That Tara sealed her fate a long time ago as a one hit wonder. This obviously is not solely her decision/planning but I will hope and pray the ppl of West Bay are smart enough to X her out!!!
Instead of worrying about the future of Cayman, you should worry about yourselves when you return to your own countries which you had to run from because you could not make a living there.
09/05/2016 at 12:15 pm
since when you became his Mama?
Which country in the world that forces their citizens to pay the high tax is in any better off financial position than places lwith no tax or low tax regimes. This whole EU/ British pushback will effect all the EU/ countries and not positively I might add.
Made money here, made money at home and will make money at home again or somewhere else. It’s simple: show up, smile, do your job well. $$$
I’m an expat and I disagree with your view point. The whole point of a pension plan is that no one should be able to withdraw before they reach the retirement age. Allowing anyone to withdraw screws everyone else left in the scheme over. I have a pension plan in Canada that I contributed to for 3 years before I moved to Cayman and guess what, I have to leave the money in it until I’m 65. The Canadian government allows no withdrawals on private pension plans, at all. This law has existed for many many years and everyone knows the rules.
In addition, you shouldn’t be relying on your pension plan to fund your downpayment! Your pension plan is there for your as a cushion in your old age when you can’t work anymore. It’s not meant to be used as an investment (sorry, that’s why the returns are so low – it’s supposed to be very conservative). Unfortunately, the pension plan alone won’t fund your needs in retirement so for that reason you should save extra money and make more aggressive investments to build your nest egg.
PS i’m not a professional adviser by any stretch but I’ve been in the workforce and various pension plans throughout my career so I have a pretty good idea of how it all works
Please stfu. Thanking you in advance.
You might want to take professional advice, as Canadian RRSPs can put used against a home purchase.
How about you look up the rule differences between an RRSP and a RPP and report back? The poster obviously was not discussing a self directed RRSP hence the “private pension plan” comment. Learn to read please.
Your not Canadian !!!!
Withdrawals by individuals does not, in principal, affect those left in the pension fund. The monthly contributions made by you and your employer, immediately vest in you absolutely. They are only combined with other contributions for the purpose of investment, but remain as a segregated account in your name. If withdrawals ever made a particular pension fund no longer a viable investment vehicle, then much of the blame would lie with the CIG for allowing so many different pension providers, with the pension market inevitably being cut into too many, and smaller, slices.
Dear Rothschild: Why reside here, and bring your decades of professional real estate experience, if you assume that UK property values will double every 2 years, or as you assume, “conservatively” appreciate at >10% per annum? If you really believe that is the sustainable forecast, why scrape-by in this stagnant and limited market so far from your dear family? Do you truly think that your mandated UK Pension Plan would outperform your underfunded Cayman Islands-based pension on an absolute return basis, or even after-tax basis? Not likely. Suggest you order a mudslide, take a deep breath, and transfer pension manager locally if you don’t like the asset-allocation or historical performance. Anyone can do this (and many should) – forms are all online. If your PR application is denied and you move elsewhere, the Pensions Law allows the whole lump sum to be paid out after prescribed six month waiting period.
Those return statistics are correct. As for what will happen in the future – nobody knows. But there are predictions of continued growth on London property pries due to excess demand, an ever growing population, very limited land, restrictive planning laws and international interest, as the UK and London are stable places in times of uncertainty.
Yes, it would be great to do as you are suggesting – take my pension six months after leaving. I would love to plan for that, particularly with a PR application hanging in the balance. However, the six month waiting period only applies after a total non contribution period of two years. And you appear to actually agree with the point made – many people do want to do as you are suggesting and get the whole lump sum after they leave.
You over-simplify. If property returns are what you say, move, there is nothing else to consider. Really? That’s it. Well then the entire world population should just hop from place to place en mass, right?
Let’s be really honest: despite your self-ascribed real estate prowess you’re hardly contributing to a pension plan as it is. Average $3k per year over 8 years leading to PR app, and expecting to contribute merely $2500 per year for next two years (regardless of PR outcome)? These seem to be the input numbers you posted (assumes matching employer contribution and zero growth).
Yes, that seems to support the writers comments. Glad you see the point.
If people want deposits for a future property they can save for the deposit and convert it into the appropriate currencies, but that saving pot is not their pension fund. That is not what a pension pot is for. Take the UK example, pension pots cannot be used to fund a purchase of a property to be occupied by the saver. Much better for someone returning to take the pension pot in due course an make a series of maximum annual contributions to their UK pension pot with the sums obtain the immediate effective 40% return on their existing Cayman pot through pension contribution relief. A diversified pension fund is a far more sensible strategy than ploughing monies into a single, volatile market such as UK residential property. Just because the CIG introduced the stupid local rule to allow people to access pension funds as a pathetic vote buying measure does not mean that it is a good idea to do it.
But allowing it gives people the flexibility of choice, in particular, where they might have special expertise, knowledge and connections and allows them to better manage their affairs.
True, but you could argue that with any Pension fund, would you expect that you should be able access anything paid into a UK fund just because you left, like when coming to Cayman? You could look at it another way, the 60k in the example is made up of employee contributions of 30k, so that should be your starting point for ‘lost oportunity’. I guarantee without the pensions law that businesses wouldn’t have volunteered the extra 30k of pensions benefit. Worst case is that you are ‘forced’ to transfer it into a UK pension after 2 years, which may, or may not beat his desire to invest everything into property. The real reason his returns are decreased in the example is the desire to leverage the initial investment by borrowing, total net gains would be much closer if he compared 300k investment into a fund vs borrowing 300k and investing into a house. Apples and oranges.
Like gun ownership and driving skill, people over estimate their own ability.
Caymanians are the only people in this world who don’t support each other.
Look at our next door neighbors Jamaica they would die depending and supporting each other.
Look at the Americans. If some injustice happens they burning the place down in unity.
In cayman we have a crab like mentality can’t stand to see the other make it. In stead of supporting we would rather kill them , good old Cayman Kind at its best.
To be honest with a mentality like that most caymanians wouldn’t servive no where else in this beautiful world with out harm coming to them.
Here in the states when people asked me where am I from I simply just say Jamaica.
When investors and expat leave because of that toxic behavior only then will those bed mind caymanians realize things are turning back to the island that time has forgot again.
Shame to cayman my self a Caymanian our parents would be a shame.
Thanks Tara Rivers. !!!!
Your knowledge of Jamaica and the world in general seems limited
You lost me the moment you called yourself a real-estate professional.
That is what we are referred to as members of the RICS, a professional body/association with stringent entry requirements and process continued training, ethical standards and disciplinary procedures and processes, insurance-backed professional indemnity scheme and liability for billions/trillions of dollars of property. You cheap joke just strengthens my point, thank you.
Then you are a Chartered Surveyor – not a real estate professional.
Roll me over, tell me to leave, I’m not welcome here, then effectively steal my money. Caymankind my ass!
Wait what? Who is stealing your money? You were required to pay into a pension plan that you can take with you by transferring into an overseas plan or can leave here to use in your retirement. Also you knew the immigration deal when you came so why so peeved about it now?
It is called an entitlement mentality.
Actually immigration keeps changing and has done in the many years ive been here, so mute point! And I’ll repeat. It’s my money and should be allowed to do with it what I want. It’s not yours. If you don’t want me here then I’m damned if I’m gonna let you have my money! You can’t have it both ways. Want us gone? Write me a cheque and I’ll be on the plane today!
This will be challenged in court, no doubt about it. What will be left of the Pension Fund in 20-40 years is anyone’s wild guess. Good chance that you would lose all your money, it would be appropriated by the Government, Pension Fund will not maintain proper records, you will have hard time communication with the Pension Plan administrator etc.
If they have Dormant Accounts Law (2010), who knows what kind of Laws they would enacted in the future to get hold of YOUR money.
The Grandfather Clause must apply to all current Pension Fund account holders.
Because of this we are leaving as soon as possible. This is the beginning of the end and I don’t want to invest here any longer. Expats are becoming attacked more and more here on so many levels and this is a nail in coffin for us. We were going to buy a house and invest – not now.PR changes already made us question our commitment but this is straw that broke the camel’s back. Bye bye Cayman.
I don’t get it. If you are planning to get PR (and maybe eventually status) and buy a house, weren’t you going to stay here then long term? Maybe this law prevents people from coming, earning tax free and taking the majority of their tax free funds and invest elsewhere while Cayman looks on without getting anything? Would it be easier if they charge a penalty of a certain percentage for “breaking” the plan earlier how it is done with other “saving” plans?
From my recollection, other countries don’t allow any access to any pension funds until folks reached their retirement age as otherwise the concept of the funds wouldn’t work.
I know expats who did all the above, bought property, worked hard 20/30 years and now cannot afford the medical bills and had to leave…they were reasonably well paid-not outrageously rich, just like many Caymanians. Retiring here is not an option unless you are filthy rich.
Rhett…you need the expat to fuel this ever burning fire of corruption in CIG. So don’t fire the deckhands.
So this is a real question.
What can we as expats do. And is this scheme retro-active?
when does this actually come into effect
You get your money after two years but Caymanians don’t. We get only $1000 per month – no down payment with that. Shame on all Pension providers but especially Govt. for allowing these people to do this to Caymanians. Shame on Chamber of Commerce. Your managers should stay out of politics. Expats can get their money to invest but Caymanians can’t. Racist it is!
It isn’t racism. There are many races of Caymanians. Race relates to ethnic history.
I believe (and correct me if I am wrong) that Caymanians do have the right to withdraw from their pension and put it into a property (purchase or pay off mortgage).
However, it is unfair. There should be one system for all. Why, if something is a good idea for one group of people, should it be a bad idea, or unfairly thrust upon/withheld for another group of people. That is Donald Trump’s viewpoint!
You can write to the Minister of Finance’s (Marco Archer) Office (fecd@gov.ky) and/or the Finance Secretary (Kenneth Jefferson) (fsoffice@gov.ky) and start a petition and send it to the minister and Governor’s office.
You can transfer your fund to an overseas pension fund – you just wont be able to receive it in cash as has been the case to now. The OP is NOT an investment professional. We could pick plenty of exampled of investments which have made huge returns – I can also cite a fair few where you would have lost your shirt. The point of a pension is to have a well diversified portfolio of conservative investments which makes steady returns over very long periods of time – this is only 5% of your income you are free to use the other 95% to buy UK property (lol!)
And the MLA’s are still double dipping…
An example of why to hire Caymanians! Monies should stay in this Country! I find it difficult to feel sorry for you when you express how you already plan on leaving the Country with all funds accrued.
I wonder who benefits from these changes. Clearly the managers of the Pension Plans with the fees they charge.
But why would the lawmakers see any benefit to the Caymanian people with these changes? What are the benefits?
the benefit to Caymanians is that their pension schemes will start to experience greater economies of scale – the larger the fund gets the cheaper it is to run and hence larger returns to those who are invested. Service providers charge fees on sliding scales.
The benefit to Cayman can only be three things, in my view:
1) That the pensions scheme, like a giant Ponsi scheme, requires new “investors” at the bottom, to continue to provide the returns expected/required/promised, at the top – for retirees (and Ministers). It’s a deck of cards when new money inputs stall, or money is removed/cashed-in. I believe this to be the prime reason for Tara’s suggested change. Where it is a real Ponsi scheme people are jailed, in other countries.
2) The second reason relates to the low historical returns on some (not all) local pension schemes – that fees are non-transparent and probably too high. If you read advice on pensions and investments, the level of fees is critical and can very dramatically affect the long term returns of any investment/pension – catastrophically so. It has been suggested by many people, including our own local Ministers in the LA debate, that local pension schemes are a profiteering free-for-all. But hey, if that’s what you’re defending, you are either insanely imprudent, or work in the pensions sector.
3) As the originating CNS article suggests, if local pension payments to the retired are limited to CI$1,000 per month, then those with proportionally larger pension pots will ultimately lose. Once your pension contributions exceed an amount necessary to generate income of CI$1,000 per month (CI$12,000 a year) the remainder is effectively wasted – wasted contributions and a tax on your income, for re-distribution to the less well off (which might be fine, but lets call it what it is…a tax, and be open and honest about it).
No – funds are not limited to payments of CI1k per month. As you may be aware these pension plans have only been around for quite a short period of time and have caps on investments at max 6k per year. As a result the maximum anyone has in their scheme is around $150k. If you retire at 60 you have aprox 20years to fund from that $150k. As an interim solution the government have put in place a schedule of payments which gives you access to CI1k per month. Any voluntary contributions in your account you are free to access on retirement or alternatively you can use the fund to purchase an annuity.
The point being that you don’t have enough ‘Caymanians’ to support yourselves in any quarter. You must rely on expats to service almost all of your employment sector and so make the largest contribution to your inept pension system.
If this law does become enacted I hope that there are enough expats with the balls to cause major havoc on these islands. A full general strike of one days labour a week by all expats will soon focus minds, especially on a cruise ship day, in say February.
Every hotel, every bar, every restaurant, almost every shop and store, every dive operation and every security guard, (especially at the airport) would grind to an immediate stop.
Perhaps then the little islanders will see just how vital we expats are to their Lillput world and the wealth that would flow out if they push us too far.
If not, then lawsuits will definitely follow causing a serious financial crisis in government and in the public sector.
You’re here for your benefit not mine. You can leave for better benefits elsewhere. Your country must be superior.
Mount Trashmore has grown out of proportion due to the influx ….. and lack of infrastructure planning so expect other negatives on these islands.
Caymanians are also victimised in many instances. No perfect country. That’s why you were here.
No, but whilst I am here and supporting this small minded collection of ingrates I will decide what is best for my life and my money.
And just for your information, without us you are nothing, no industry, no service sector, no financial services and no investment. So no my little islander friend, I am here for your benefit as well as mine because who do you think keeps this place running.
There must be a nicer way to say that.
But oh so true
It’s NOT your money!
Rhett, why should the monies stay in this country? Why do you find it difficult to feel sorry for someone leaving with THEIR money? You have no sympathy for someone being told they may not be able to afford a house they previously thought they could afford? You seem to resent people leaving, yet that is what is forced on expats. You seem to resent everything: stay = resent. Go = resent, if one takes their wealth with them.
Those monies are not anyone’s but the petitioner. This is a persons pension! It is all they may have to live on in later life.
And why shouldn’t I, or anyone else be able to withdraw that, for specific purchases, like property, as you Caymanians can, as Canadians in Canada can, as British people in the UK can.
What do you not understand about the above article?
Sorry …. are you broken?
We cannot stay in this country!!
So we have no other option to plan to leave with all funds accrued!
So what do you want now .. we can stay for only a certain time but any funds accrued we have to hand over just because you don’t feel sorry for us!
And you wonder why the system is broken?
By all means go ahead and hire Caymanians, after this, you may not have a choice!
well you wont let us stay – what else are we to do??
why do you find it difficult, when everyday you here expats should not stay, so now you expats to leave and them to leave the money they spent 8 years of hardwork and saving.
If you don’t want expats to stay, or course they will want their money
If the people aren’t allowed to stay then why on earth should the money be required to stay? Forced to save for a retirement that will not happen in your country. Unequal treatment of the pensions under the law. How is that right? No sympathy when we overtly plan to leave? What reasonable person would NOT plan to leave given the instability of the country. You can’t even interpret your own PR laws. Who wants to hang out in limbo forever? If you want people to commit to your country then make the laws conducive to doing so. The Cayman Islands needs immigration to function and prosper. The sooner the CIG faces that reality and starts talking sense instead of just pandering to the voters the better the economy will be for everyone involved.
Sure, hire Caymanians, let’s see how that works out for you when the total pension pot is cut by two thirds. How do you think it works dumbass, where do you think the money comes from, a few thousand Caymanians or several thousand expats?
No wonder this country is in such a mess with idiotic financial theories such as that.
I would consider this theft of my money and should be legally challenged if made law!!!
It is still your money – you just have to use it for its intended purpose – YOUR RETIREMENT!
09/05/2016 at 10:34 am You are so astute!
It is MY money, I am allowed to have them in the US anytime (paying 10% penalty).
OK. So they can transfer it to a pension scheme in their home jurisdiction? Oh you want the money to stay here even though they are are retiring here? No injustice there you are just looking at their better interests. Nothing about cross subsidizing Caymans pension industry!
Yes you will be able to transfer to to a pension scheme in a home jurisdiction and yes the CIG is also looking out for the better interests of those who are going to retire here by making it more attractive for ex-pats to leave their funds in the local pension funds once they have gone.
This due is sooo funny. Event though you keep telling him the money will be transferred to a pension of his choosing he still insist that he wants his stolen money. If i was to read between the lines i am inclined to think that you want that money to survive somewhere until your year is over then come back.
If you do get PR and status hopefully the pension you are crying for will be sufficient to keep you from getting social service assistance when you retire.
Or trying to cover financial holes with other people’s money!
I worked in the UK for many years and I wasn’t permitted to cash my pension in after 2 years. I have also received a letter stating I have to wait until I’m 65 to receive my pension.
I’m not sure at this point how much my pension has increased, if it was properly managed, would I have benefited greatly if I’d been permitted to cash it in and invest in property in the UK or even Cayman.
It remains there and it is truly a pension.
What has been offered here is nothing more than a glorified savings plan that was cashed in by all after 2 years away. We have to see both sides of the coin, some squandered it and some invested it for good returns which in a way adds to their overall pension investment and perhaps much more than if left.
Some squandered the savings and will return here and start another pension that may not be worth much if they remain here and retire. At that time they will be rushing to the NAU for assistance on their meager pension.
Should we consider allowing those with good investments scheme to take their pensions knowing that the return will be multiplied 100 or 1000 fold?