Local pension providers are in ‘wait and see’ mode when it to comes law changes that have paved the way for the latest withdrawal on pension funds for mortgage and home loan assistance.
Randall Fisher, chairman of the Cayman Islands Pension Administrators’ Association (CIPAA), told the Cayman Compass that since the legislation has not been gazetted yet, providers are not clear on what changes were made to the law.
“I am at the Chamber Pension Plan and the CIPAA just met with the Chief Officer [of the Ministry of Labour] and [Department of Labour and Pensions] so we are all waiting on the official gazetting and then we can determine the documentation necessary. Also, the Banks will need to provide their input, as letters from financial institutions, with account balances, etc. will need to be obtained,” Fisher said in an emailed response to the Compass last week.
Fisher said a key concern for pension providers is that those applying under this new legislation will need to have their employer confirm their salary.
This, he said, is needed in order for the pension providers to ensure the 3% of withdrawal repayment is correct.
“Some employers are reluctant to disclose salaries,” he said.
Legislators, late last month, unanimously approved changes to the National Pensions Act which increase withdrawal limits from private pension funds for mortgage payoffs, home purchase or construction.
The law was passed with 10 amendments that were made during committee stage.
The amendments to the bill include increasing the maximum withdrawal allowed for home purchase or construction from $35,000 to $50,000, allowing a maximum of $50,000 for a reduction payment on an existing mortgage or residential land loan, and increasing the withdrawal amount to pay off an existing mortgage from $35,000 to $100,000.
The paperwork for the withdrawals, he said, has yet to be established.
“Most plans are waiting for the official Act as well as the Guidance Notes that are to be provided by the Department of Labour and Pensions,” he said.
When it comes to those who have already withdrawn from their pension funds under the current legislation, he said, “if they now wish to make a paydown or payoff of a mortgage, they will need to provide evidence that they have been making the required 1% repayment”.
Fisher said it is difficult to say how the pension withdrawals will affect the plans.
“Most Caymanians do not have $50K in their pension plan to withdraw so we need to see who will be applying under this new legislation,” he added.
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