Pensions holiday continues for three more months
(CNS): The Cayman Islands Government has extended the mandatory payment of pension contributions in the private sector for another three months, despite concerns that this long-running holiday will present the country with a significant problem in the coming years. While the opposition had been pressing for an extension of the pension payment freeze until the year-end in the face of galloping inflation, in his recent statement to Parliament, Premier Wayne Panton said he was not ruling it out but it gave him cause for concern.
It’s now been more than two years since the previous PPM-led government allowed people to withdraw lump sums from their pension funds and then implemented the holiday on enforced payments by both employers and workers to help people through the pandemic. But the economic situation for many people remains challenging as a result of the border closure and the general fallout from the pandemic. These difficulties have been compounded by inflation, and a return to the mandatory monthly payments would have been very difficult for small businesses and low-paid workers.
The CIG had to weigh this immediate relief for thousands of people against concerns about the long-term impact on future retirement and the likely increase in support that pensioners will need in the future.
On 9 June, Panton said the government was considering extending the holiday, but this had to be balanced against other proposals, noting that more than CI$450 million has been taken out of pension funds. He said it had helped and he believed it was the right decision at that time.
However, by trying to address “the current situation” this way, they were “creating long-term pain for our people” when other approaches were available to tackle inflation, the uncertain economic landscape and the potential for a recession.
Speaking on social media Wednesday evening, Panton said the government was struggling with the decision as it would help some people in the immediate short term but the national pension system already is not fit for purpose. He said the holiday had already had a negative effect on the pensions and this was kicking the can down the road.
He said the pension system needed reform and this was on PACT’s agenda. Nevertheless, he said that government would likely extend the holiday for just three more months to get people through the hard hot summer months.
The amended regulations were published Friday evening, confirming the three-month extension of the suspension of mandatory pension payments by both employers and employees.
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In a normal economy where pension providers were not provided with a protective carter arrangement by government where you are compelled to use them even though their administration fees chew up most of your contribution, and free to limit the pension they pay to $1000 a month, withdrawing your pension money would have a very negative impact on ling term pension cover. Here ironically you are better off being able to not pay into these blackholes, and put your money into things that actually make a return. The idea that forcing people and employers to make pension contributions to the local pension mafia will actually help protect anyones pension income is an illusion. Either cancel the requirement or make it compulsory but allow people to put it into credible international pension operators.
Jeez thanks for continued pay cut PACT…you really dont give a shit about the people do you.
no-plan-pact keep kicking the can down the road….spend/borrow is all they know.
Scrap it all together or make it all voluntary.
Agreed. If voluntary then the pension management companies might actually have to work for our money instead of feeling entitled to it.
The chickens always come home to roost and this is no different.
The near 3 year pension holiday will undoubtedly set most people back a decade, and make retirement an illusion. Tough times don’t last, tough people do, and we cannot pander to these softened stances in hopes that a short-term pat on the back will make us better in the long run.. it won’t.
I’m 32 and retirement is already something I will never achieve at this rate, despite me making an above average salary. Inflation over the years and decisions made my people in control of my money who I can’t influence are already making my 5% and 7% raises each year a pay cut.
So I understand where you might be coming from, but also lets not pretend like the pensions of those who did what you say are being taken care of. Less and less people want to take part in a system where companies gamble with your money, pocket the reward and dish you out all the risks.
In 20 years when these people have no funds in their accounts because this has all fallen apart, will Cry’n Bryan still be making videos of the poor people he kept under thumb then? People need this money for thier futures. Stop this nonsense. Who are you helping? The companies? Sad.
Pensions are worth zilch anyway
That’s funny. Mine (Chamber) is worth substantially more than I have paid into it. I really wish I had been able to pay into it over the last two years.
I believe you could have. My understanding was that the pension holiday was voluntary.
It is indeed voluntary
Wouldn’t have been as effective since the employer does not have to match the contributions. Either the employee or the employer may opt to pay voluntary pension contributions, however, the other party is not required to contribute as well. This makes the contribution not worth it over just investing it into a mutual fund or other investment that can be withdrawn at any time.
Yeah. The employers banked the cash instead of matching employees
I still don’t understand why there wasn’t a carve out of the additional holiday for financial services firms.
These firms aren’t hurting like the tourism businesses were. I l’m only aware of 1 accounting firm voluntarily contributing.
Nope. My employer cut it!!!
I’ve been paying into mine for the last 2 years, with a matching contribution from my employer (who wanted to stop payments but I told them our business had no reason to stop contributing).
Thank the leader of the opposition for this!
More horrible news from this government. Robbing the working population of retirement savings. It sure would be great to be buying shares at these levels but no. Government is swayed by special interest. Shameful, just shameful.
It’s voluntary and always has been
Put it simply it lets employers off the hook and intended to save them expenses. It is a gift to businesses but not the people.
No, some bad employers used this to their advantage. Most good employers did not.
Uninsured mandatory investment is only good for those who are administrating them.
What good is having a large investment that crashes with the market and then only being allowed access to $1000 a month when needed later in life.
It’s a crime
But PACT are ensuring that contributions are not mandatory for the Caymanian business owners to pay the pension benefits due to their employees. It’s allowing them (many of them civil servants with side hustles) to short-change other Caymanians. A protectionist policy that doesn’t apply equally to all voting Caymanians, or even hold to a promise of a better future for individual retirees or diminish government subsidy outlook. PACT should just cancel the program and return adults their investments to self-direct. Let them sign a waiver.
No one is stopping you from continuing to pay in your side of the pension..
Call the Guinness Book, this has got to be the world’s longest game of kick the can ever.
Just let us take it all out so we can invest in something that’s makes money.
Like what 5:15? New car?
Bitcoins
how about can spend it on anything we want because its ours? lol idk why people pocket watch as if you care what ill be doing when im 70. If you want to leave it in there then great! go ahead. if you want to remove it early or anytime great! go ahead.
idk why you care if someone buys a new car or not. Watch your own pocket friend.
I get it, but it is a real shame. Now would be a GREAT time to by buying shares for the long term.
Right. Say that 6 months from now.
The other problem with doing this is that all of the people still invested in private pensions are now losing their retirement funds as the pot is smaller and the administration costs remain the same. Apparently, the Government Pension Plans are the best ones to have if you are lucky enough to be a civil servant.
And…there are private companies out there, who force the pension holiday on their employees. Many of these companies are making record breaking profits.
How can this be allowed?
The pension holiday should be on a means tested basis, specific to each company.
To deprive an employee of their rightful pension contributions, if their employee is financially able, is plainly morally bankrupt.
I pay a 10% bonus while the pension holiday is in effect. It costs the same as what I had budgeted anyway.
Don’t blame the government for shoddy employers.
Well, you are most generous seeing as the legislated minimum is 5% from the employer.
As a matter of interest, do you tell your employees that your bonus is in lieu of pension, or do they just think they are truly blessed?
Oh, I think we can blame both.
Government regulation is there to protect people from shoddy companies. Whether it health insurance requirements, pension requirements, or OfReg fuel handling standards (see other CNS article ‘today’). We can, and should, pillory both the company, and the government, when the wrong things are done and allowed to be done.
#brettwasright
So, the Pension Holiday is now a Stagflation Event, and no longer a COVID-19 Pandemic Event? Just great!
Agreed, BUT with zero enforcement from the Pensions Board this just might be the time to do a wholesale review of the law and see what needs to be changed.