Cabinet approves extension to pension holiday
(CNS): The suspension of the mandatory requirement for employers and workers in the private sector to pay into a pension scheme has been extended again. In a press release from government on Wednesday, officials said that, in accordance with the National Pensions (Amendment) Act 2020, a Cabinet Order has extended the national pension holiday for an additional three months, until the end of March next year, as part of the continued COVID-19 recovery plan.
Labour Minister Chris Saunders, when in opposition, had predicted that the allowed withdrawal from pension funds last year and the continued freeze on contributions had created a hole that would need to be fixed. But this week he said extending the holiday on payments was essential to the pandemic recovery plans.
In October last year, when still on the opposition benches as an independent member, Saunders, who is now the PACT Government’s deputy premier and finance minister, presented a motion to parliament to establish a committee to examine the pension regime. However, it was rejected by the Unity government, and it is not clear if, as the current minister responsible for the private sector pension regime, he is planning to establish such a committee.
Speaking about the decision this week to extend the holiday, he said it would provide ongoing financial relief for employers and employees.
“This government is of the view that the continued suspension of pension contributions is essential to the recovery process and will continue to provide businesses and workers with the financial relief needed as we continue through the phased implementation of our economic recovery plan,” he added.
However, he had previously said that members of Parliament were “duty bound to fix” the challenges created by both the withdrawal and the freeze, given the hole it was leaving in already inadequate funds. Saunders also said on the campaign trail that he would prioritize addressing the problems surrounding the current pension regime if he was elected.
Last year the Unity government introduced the freeze on mandatory payments and provided a window of opportunity for people in the private sector to withdraw a flat amount of CI$10,000 and then a further 25% of any remaining funds from their pensions to get them through the COVID-19 lockdown and ongoing border closure.
Over CI$400 million was taken out of pensions as a result, with around 71% of people taking the full amount. This is going to create significant problems for future governments in the coming years as they will need to prepare for the retirement of hundreds of people who will have almost no pension provision.
While the suspension of the obligation to pay into the schemes will now continue beyond 31 December for at least three months, voluntary pension contributions can still be be paid by either the employee or the employer. The order extending the pension holiday is confined to the private sector and does not apply to the civil service or government companies and authorities.
Contact the pensions office at dlp@gov.ky for more information.
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Category: Economy, Local News, Politics
why don’t government let people draw at least 30% and not twenty five% because they raise the regiment age from 60 to 65
People should be allowed to save and invest their own money, and have access to it while they leave life.
Hopefully you meant ‘live’ life:)
We need another pension withdraw!
Extension holiday is a good thing. Another pension withdrawal is even better.
Workers continue to mortgage their retirements to fund lunacy.
While I agree some waste their pension. Let’s not act like $12,000 a year somehow can find retirement.
Thank you!
Sure, let’s allow our millionaire business owners to continue to hold labour comp down by 5% and give themselves a nice end of the year ROI bump. Great idea PACT. Super popular. What other ways can we hurt our workers and benefit management? Let’s get creative!
What’s the point of having retirement funds if you can not make ends meet today?
How much was taken out by expats that clearly will not retire in Cayman as most are not allowed.
These funds withdrawn will have no effect on retirement funds in Cayman as thee expats won’t be here and will be another countries issue.
I do wonder about the hidden costs of this massive amount of withdrawls though and whether the pension had to liquidate long term investments at below Fair Value to keep up with the size of the redemptions
Cayman pensions are a drop in the bucket in terms of global capital markets.
If a Cayman plan was managed so poorly and trapped in anything so illiquid that the redemptions caused a disposal “below Fair Value” then the managers should be replaced.
People should have the right — regardless of status — to manage their imposed funds. Myself, I withdrew as much as I could and reinvested in funds that paid higher and never took a loss; I have had losses under the current mandatory “retirement” funds that were profound.
I think CIG should rework these funds, and make the managers of it paid a percentage of their growth, not being paid regardless of their return.
Yes exactly! And many more like me that have the funds but imprisoned to 1000pm which I could use to my advantage and not struggle every month just to pay bills when the money is there!
9.38am If expats are not allowed to retire here why are Caymanians outnumbered? They choose to take the funds which they earned (more than they dreamed before finding this dot on the map) and spend in their home country.
But what about relief to the public purse by placing a pension holiday on contributions for civil servants? You could even give them their additional 6% as take home pay if you wanted…
LOLOLOLOL
Didn’t have the testicular fortitude to do the right thing.
Island has been closed for almost two year Saunders…people have lost jobs, homes, business..how on earth can you even think or say lets raise the pension contribution…groceries utilities rent are sky high and people including employers are struggling…you kept the island shut, caymanians spread the covid we are at an all time high and now yoou decide to open??we should have opened long time ago
Yes. But most in financial services, real estate, and construction, are booming. Why should persons in those industries not be able to save for their retirement while their employers pocket record profits?
Well if you worked for a good company they are still contributing if you wish them to.
yep the sound of the can being kicked down the road by no-plan-pact.
speaking of pensions…what about the huge government pension liabilty crisis facing government down the road…..
oh yes…that will be another issue not addressed in the budget
#brettwasright
So was #Legge.
#firethepact
Stuuuuuuuupid decision! Government better have a huge reserve on hand to bail out all the people that aren’t going to have retirement funds due to this ridiculous pension holiday.
What’s the point of having retirement funds if you can not make ends meet today?
Govt is going to culpable in pension underfunding and will get sued. They should disband the entire apparatus.
None of our locally-administered pension plans are going to get anyone into a comfortable retirement situation. Antiquated pre-2008 asset allocation, lagging performance, fee inefficiency, and appallingly inadequate annuity payments should all be ample reason to allow withdrawals and self direction. I’d sign that release in a second.
Well, you shouldn’t just rely on your pension for retirement. You should have savings and other investments as well. People need to quit looking to government to fix everything for them and also quit pointing fingers. Take some personal responsibility and learn how to save. Others do it and have done it. I know people who came from very poor families that have now retired as millionaires because they scrimped and saved and learned about investments. They worked hard and have now retired comfortably. Yes, all the while paying into a pension plan. Maybe tell the Cayman Government to change the investment laws for the private plans that restrict investments. They were supposed to do that years ago and still no change.
Exactly 9:19am. People don’t actively plan for their retirement. From Day 1 of employment, we should all be putting something away for retirement….from EVERY paycheck.
Private pension need to shut down and start a national pension with government as they know how to make money for pension plans. Private pensions are thieving bastards!
You are joking, right?
You apparently are unlucky when you think. CIG are the same dudes that run Cayman Airways, The Turtle Farm and Cinico and lose millions each year. You’s be better off buying lottery tickets than letting government run you pension plan.
So the government, that over the years have shown themselves to be completely incapable of proper management and self regulation should be in charge of our money that we will need when it’s time to retire???
As a member of the lost generation, millennials who did what we were told and got educated and believed in the system like the elders told us to only to wonder what it was all for as we came back to work our lives away only to barely make ends meet and not afford land or a house, I’m done with putting my trust in any institution.
There are better ways to go about this but old people with no clue about the current reality of the world and the promises technology has on the way we do things, have decided they want to keep the status quo because it serves them and hell with anyone else. This thought of “government will look out for us” is nonsense because no matter who is in charge they always enrich themselves while telling you how to live. I wish Gen X and boomers would get over themselves and just allow us to explore options we want. Instead they are intent on making as much money as possible by selling the island off to people with no ties to the community and I’m 100% positive they will blame us for it in 10 years, shrug their shoulders and say “well it’s your problem now. The financial system, the economy and the environment is now in your hands”
So annoyed.
Same Chris Saunders who used to have all the answers? Or a different one?
He still has all the answers, they just aren’t good answers!
And those drawing pension are still only allowed 1,000 a month!
PaC
People against Caymanians.
The $1000/month withdrawal is criminal! No one can live on $1000/month!
Retirees can’t even buy pet supplies with that. I guess they are supposed to spit-roast Mittens as part of their survival plan?
Allow another Pension withdrawal. It’s does not have to be the same as previously allowed, but it will help the many who continue to struggle.
Literally the worse idea, ever. If people are struggling the last thing ever they should do is withdraw from their pension fund.
If they cant survive with a job, how the F*ck are they gonna survive once retired? With a already depleted pension fund paying them peanuts every month?
It was stupid enough allowing a withdrawal last year when the market bottomed. People took an appriciating asset, sold when down 20% and then bought depreciating assets like cars with it – MADNESS!!!!
And if you’re not employed and can’t make ends meet what do you suggest. And don’t come with the “get a job”BS. People are out there searching, applying and just can’t get a break. What do you say to those persons?
Go abroad? I believe that’s how Caymanians survived and supported their families once upon a time when there was no work for them……?
“Get a job” OR “make a job” is always going to be the best way to lift oneself out of poverty.
Many have done it, so can you.
Stop depending on “the man” or government – make your own way – many opportunities to do so in Cayman, often with no capital outlay, just work.
Well if Immigration enforced the F€{^€|g Law, and Governmentvstopped paying people significant sums while sitting at home, and ignoring opportunities for work, we would not be in this position, would we!
Actually used cars went up 30% due to manf shortages…. Covidnomics
People also withdrew and started or even finished building house/ apartments that they otherwise would have not been able to do.
If they work for government or ever have, they can draw their pension down and reinvest in the Credit Union. It’s the best deal going.
Yes, this makes so much sense with less than 2% annual dividends around Christmas time and extending everyone’s BORROWING potential, which only leads to more DEBT and not FINANCIAL FREEDOM!!! Not one thing learned in these 2 years. Smh!
It’s dead money. Completely inert when compared to market ETFs. The $1000/mo withdrawal isn’t going to support anyone either. Good luck. My registered pension plan is up maybe 20% over last decade. Whereas my withdrawal was up 30% in a few weeks out of their grubby fee-soaked hands. Had I bought TSLA or Bitcoin, it would have tripled. Some of us know what we’re doing. Let us take control. I’ll sign a release.
Long and short of your comment, is that you don’t think people have a right to decide what to do with their own money they worked for because… #reasonsIthinkarecorrect
Even if you disagree with entire withdraw of pensions, you are against people having access to the money they already worked for because you think you know better.
The level of privilege you show is ridiculous.
They do already, silver thatch allow it for school, renovation and unemployment
All the pension plans do – it is the law. They are not special.
Don’t tell me you thought that ONLY Silver Thatch allows this? And further more, if you were not paying into pension for these last 2 years, it is highly unlikely that you had any Additional Voluntary Contributions (AVCs) in order to take from, as that is the only access you have for Tuition, Renovation, Purchase of Home, Unemployment and Medical CO-Pay, as per the law!
At this rate, just give another pension withdrawal and cap it at $10k this time.
Let those that want to, rescue all of it, and set it free into self-directed opportunities, including Cayman Islands businesses and real estate/home equity enhancement. Much better returns than a dopey fee-eroded schemes with a $1000/mo payout at the end of the rainbow. Nobody is saving at the pace necessary to have any security or comfort. Little of it is going into the local economy. It’s just a massive foregone opportunity cost for these hopeful participants chewing through time.
No cap
I do love a good game of kick the can.
Robbing the people of there retirement money.
That’s what these pension companies do, so I rather take my money and spend it while I am alive and well. Tomorrow is not promised. I can even invest my money for better returns on my own. Granted we are not all likeminded when it comes to finances, but who realistically can retire here on $1k per month? You’d have to be an avid savor for many years, born in to wealth or have been earning a very nice salary in your working years.
It’s not an extension to take your money out. It is a holiday for employers to jot contribute.
And have a near six figure pension but have to live on 1,000pm and not allowed to draw any more unless you live off island for two years and then allowed to withdraw all of it. How is it possible to keep any savings when have to dig into that to cover insurance, car and other necessities. Politicians are earning high salaries and drawing their pension too so what do they care!
You do realise that by removing the need to make employer’s contributions, the government is cutting your pay by 5 percent?
Not my employer – still paying his share.
I’m currently just very small employer, but I’m giving a 10% bonus while the pension holiday is active. 🤷♂️
They don’t realize that because as you can tell they are all Financial Advisers. We have arm chair everything now, doctors, lawyers, immunologists. Experts in every area.
my employer said they will continue to pay as long as I pay too.