Editorial for August 25: Saving for the future with property

In
a Private Member’s Motion filed in Legislative Assembly this week, back-bench
legislator Ellio Solomon has asked the government to consider amending current
legislation to allow Caymanians to make a one-time withdrawal of up to
CI$35,000 from their pension account to be used specifically for the down
payment toward the purchase of land, a residence, or the construction of a
residence.

Although
we’re sure pension providers, both public and private, will object to such a
measure, we believe the motion has some merit.

In
saving for one’s retirement years, there is probably nothing more important in
the Cayman Islands than owning a home. With rental rates being what they are
here, leasing a residence after retirement would be a huge drain on most
monthly pension payments. People who own their own homes are less likely to
require government assistance to subsist, which really is the purpose of
requiring pensions in the first place.

Another
reason the idea could be good for Cayman is that it takes away some of the
reliance on foreign market-related investments and instead increases investment
here. Real estate has historically been a very good, safe investment in the
Cayman Islands, partially because there is only so much land in this small
country. Even if property prices dip during a recession, the land is always
there and people can make use of it.

Home
ownership also produces a more stable and responsible society and residents who
feel better about themselves and their situations. In addition, residents who
took advantage of this pension withdrawal would not have to wait until
retirement to reap the benefits of their investment, a huge advantage over the
pension plans.

Under
this scheme, people wouldn’t be losing their investments for retirement; they
would merely be putting them into another form. 
To prevent people from taking advantage of the withdrawal and then
quickly selling their properties, the government could put a restriction on any
property bought using pension withdrawals requiring, if the property is sold,
that the money withdrawn, plus interest, be immediately applied to the purchase
of another property or returned to the relevant pension plan.

We hope the government and opposition gives Mr.
Solomon’s idea the due consideration it deserves.

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