Pension withdrawal for home purchases suggested

A motion filed with the Legislative
Assembly asks the government to allow Caymanians to make a withdrawal of up to
CI$35,000 from their pension for the purpose of providing a deposit to a bank
for the purchase of a home.

The one-time withdrawal could also
be used to buy an apartment or a piece of land, or for the construction of a
new residence.

The Private Members Motion was
filed Monday by back-bench legislator Ellio Solomon, who said he wanted the
government to consider amending legislation for all pension plans.

“I’m hoping it would be something
everyone could take advantage of,” he said, referring to both civil servants
and private sector employees.

Mr. Solomon said that part of the
reason for the motion was to ensure Caymanians were able to achieve home
ownership, something that was in the government’s best interest to see happen.

“What are we having you save
pensions for?” he asked, noting that shelter was one of the most critical
aspects of saving for retirement. “If you are renting all your life and you
reach 65, that is not the position you want to be in.”

Mr. Solomon also noted that real
estate has historically been a sound investment in the Cayman Islands, so
people would not be losing their invested assets.

“I have been talking about
reinvesting pensions back into the country for a long time,” he said.

If adopted, the scheme could also
stimulate the economy by encouraging construction activities. Even if the
withdrawn money were used to buy land, Mr. Solomon said most people want to
build on that land as soon as they can.

Mr. Solomon said he chose the
figure of CI$35,000 because it would generally provide a sufficient down
payment for buying or building a home in the $200,000 to $300,000 range, which
he said was the value of a typical house in Cayman today.

The measure wouldn’t necessarily be
permanent.

“I don’t think this could go on in
perpetuity,” he said, adding that he saw this as a short- to medium-term
measure.

Mr. Solomon said expatriates could
also be included in the scheme, even though the motion specifies Caymanians.

“I don’t think anything would rule
that out,” he said, noting that expatriates who receive permanent residence are
on the track to becoming Caymanians so it would be prudent for government to
consider their circumstances at retirement as well.

“The whole idea of pensions is to
ensure that whoever is living in this country when they retire won’t be a
strain on the country,” he said.

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3 COMMENTS

  1. Actually this is a very good idea. I have always wondered why expats are not allowed to take their pensions with them when they are rolled over. Supposed they get rolled over and decide that they are not coming back, now they have to wait 2 years before they get their money back. During this time lots of things can happen. I would be in agreement with this particular motion as it would indeed stimulate the economy as people would have money to invest in the country. I hope it receives support.

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  2. I am one who is not too happy that we have taken the route of touching our pensions for the purpose of providing a deposit to the bank. With all due respect to Mr. Solomon, I feel there are other ways on how we can provide a down payment for buying or building a home. A pension is a savings that should not be touched; it ensures retirees have something to fall on like medical treatment… WE NEED A GOVERNMENT THAT WILL BETTER OUR ECONOMY – NOT STRETCH IT!

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  3. You need to remember that a pension is a huge ponzi scheme… money being taken out today is from those who are making deposits now. Paying Peter with Paul’s money.

    If there is a large amount of withdrawal’s from the plan it could affect the ones that leave there money in there and hope they will get it in the future.

    What they need to do is borrow the money from the Pension Plan. The money needs to be paid back over a certain amount of time or penalties will incur or liens against the property.

    Two scenarios:
    The money is there for retirement so it needs to be replaced… if the housing market goes in the toilet, then so does their retirement.

    If the housing market takes off, then the new home owner can take out a second mortgage and pay back pension.

    If I was in the situation I would take the money and buy a place… you have to pay rent anyways so might as well pay a mortgage, and make sure that I’m saving for retirement at the sametime… you should never just rely on a gov’t pension… Buying real-estate is a great way to build equity.

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