Premier Alden McLaughlin has said government is not considering allowing any further emergency pension withdrawals past October, but the pension contribution holiday will be extended to December.
“We have not formalised it yet, but we have agreed amongst ourselves that we will extend the pension contribution holiday to the end of the year,” McLaughlin said Wednesday afternoon as he responded to questions from the public at the COVID-19 briefing at the GIS studio.
He dismissed the notion that government will allow workers with private sector pensions to further dip into their pensions past the 31 Oct. deadline.
“We aren’t considering that yet, and we won’t for the rest of this year. That would really be pretty much a last-ditch effort, and the way the economy is moving now, we do not think that we should essentially allow people to take what would amount to or could amount to 50% of their retirement savings,” McLaughlin said.
However, he hastened to add that he is not saying further withdrawals will not happen, “but certainly that is not under consideration”.
Under the emergency pension withdrawal scheme, eligible individuals can take from their private pension accounts up to 100% of the balance up to $10,000. Those with accounts in excess of that maximum can withdraw $10,000 and up to 25% of the remaining balance.
Together with the withdrawals, government implemented a pension holiday from 1 April to 30 Sept., which took effect retroactively.
Both measures were made through amendments to the Pensions Law.
Last week, statistics from the Department of Labour and Pensions, released to the Cayman Compass, show that workers withdrew almost $310 million from their pensions in May using government’s COVID-19 emergency withdrawal measure.
There are a total of more than 73,000 private pensions in the Cayman Islands, and according to DLP officials, more than 34,000 applications were received in May to withdraw money from those pension funds. It takes approximately 45 days for an application to withdraw pension funds to be finalised.
It is those pension-fund withdrawals that been helping keep the domestic economy afloat, but McLaughlin said citizens have to find middle ground when it comes to their pension withdrawals, by spending some and saving some.
“The reason why we are doing as well as we are is because money is being spent in the local economy. I hear, as I am sure everybody has, anecdotal reports [that] lots of money is being spent overseas, which I am not sure is the right thing to do, but it is people’s money,” he said.
The premier added that staycations are working “remarkably well” and people are spending lots of money in bars and restaurants.
“It is not enough to make up for the loss of the tourist dollar. But I have a number of friends who are involved in local bars and restaurants and they have said to me that in terms of the Cayman Islands dollars, because that is how they judge what is a tourist dollar and what is a local dollar spend, August was a better month than they usually see, because traditionally August and September are slow months,” McLaughlin said.
To further assist bars and restaurants, government is waiving liquor licensing fees in Grand Cayman.
With Cayman’s borders closed, McLaughlin said residents cannot go anywhere else on vacation, “so we stay here and we spend money in the local bars and restaurants”.
He added that local development is “charging right ahead” and those involved in the construction sector are doing really well.
“I talked to a number of them,” he said. “Quite frankly, all of us are surprised, more than bit surprised that we, as a country, are doing as well as we are given the fact that we have no tourists here.”