Employers and employees will not be required to contribute to pension plans through the end of 2020 after Cabinet approved an extension of the pension holiday.
The measure was first introduced in April, in the midst of the coronavirus lockdown, to support businesses and provide workers with additional cash that would otherwise be paid to their pension funds.
It took effect retroactively from 1 April and would have expired 30 Sept., but now will be extended to 31 Dec.
The pension holiday is applied automatically to all employers and employees and requires those who do not want to take advantage of the exemption to make contributions voluntarily.
In a press release, the government said to further aid the rebound of the Cayman economy and to alleviate the financial strain the pandemic has caused, the relevant sections of the National Pensions (Amendment) Law 2020, which enabled the pension holiday, have been extended for an additional three months.
However, the ability of savers to access some of their pension funds through emergency withdrawals will expire as planned on 31 Oct.
Under the emergency withdrawal scheme, eligible individuals are allowed to access up to $10,000 plus 25% of the remaining balance in their pension accounts. According to Department of Labour and Pensions statistics, by May individual savers had made 34,000 withdrawal applications and taken almost $310 million out of their accounts.
Earlier this month, Premier Alden McLaughlin said that an extension of the withdrawal scheme would be “a last-ditch effort” and was “not under consideration”.
Meanwhile, Opposition MLA Christopher Saunders submitted a motion that the Legislative Assembly establish a select committee to review the impact of the changes to the pensions law and make recommendations before 28 Feb. 2021, to ensure the viability of pension funds to meet future retirement needs.
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