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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 Even if the withdrawn money were used to buy land, Mr.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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Source: The Caymanian Compass, 27th of August 2010
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