Dear Members,
Date: 1 February 2025
On behalf of the Board of Trustees (the “Board”) of the Cayman Islands Chamber of Commerce Pension Plan (“CPP”), we want to start by reaffirming our deep commitment to you, our valued members. We believe that the CPP has been the preferred pension plan of choice in the Islands, and our ethos has always centered on supporting you our members since the Plan’s inception. We remain fully dedicated to helping ensure your financial security and peace of mind.
As we take a moment to reflect on the current state of private pension savings within the Cayman Islands, we feel it is important to share some insights with you. While the CPP remains in strong financial health and has performed well for the fiscal year ending 30 June 2024, a closer examination of the data reveals important trends regarding the readiness of many pension holders for their retirement years.
Snapshot of the Cayman Islands Chamber of Commerce Pension Plan as of 31 December 2024:
We have taken a snapshot of the current state of pension funds based on available data from the CPP, and we believe that these figures may reflect broader trends across the Islands. This snapshot data reveals that the average pension balance for CPP members is currently CI$20,742, and the average age of account holders is 45 years old. Of particular concern is the fact that those over 60 years of age have an average balance of only CI$31,701. Given that pension entitlement benefits are typically paid out at an annual rate of approximately CI$15,000, the average balance could be depleted in just two years or less for someone in their 60’s. That is highly concerning. The figures highlight a growing need for immediate action to secure our financial futures.
The Board is deeply concerned about these figures. Without significant changes, too many individuals may face real financial hardship in their later years. This is why we feel it is critical to act now.
The CPP is actively working with the Cayman Islands Pension Administrators' Association to advocate for reform and secure the future of pensions for our members. However, we cannot make the changes we need without your engagement and support. It is crucial that each member remains fully engaged in their own retirement future and is actively involved in the conversation about improving pension provision.
We encourage you to reach out to your District Representatives to voice your concerns about the state of pensions and to advocate for the reforms necessary to secure a stable future for all members. By collaborating and raising our collective voice, we can drive the changes needed to ensure that all members of the CPP are positioned for long-term financial stability in retirement. Enclosed, you will find a list of key challenges currently facing the pension industry in the Cayman Islands. For the avoidance of doubt, the CPP does not support any political candidate or party. Our focus is solely on promoting open discussion and debate about the need for private pension reform and the ongoing vigilance of private pension funds. The best way to achieve this is for our members to bring these issues to the attention of their District Representatives.
Thank you for your attention to this critical matter. Together, we can make a difference in securing a brighter future for all our members.
Sincerely,
Giosino Colaiacovo, Chairperson of the Board Cayman Islands Chamber of Commerce Pension Plan
T: 345-745-7630
E: admin@pensions.ky
W: chamberpension.ky
Here is a list of key challenges related to private pensions in the Cayman Islands for advocacy:
• Aging Population
The Cayman Islands has a growing elderly population and relatively fewer young workers entering the workforce. This demographic trend, which is seen in many parts of the world, means that over time, an increasing number of individuals will depend on their pensions for financial support throughout their retirement. This demographic shift could create additional strain on the Department of Financial Assistance, if it is left unaddressed.
• Low Contribution Rates
While contributions to pension plans are mandatory for both employees and employers, the current contribution rates may not be adequate to support a comfortable retirement. The current system often results in members being underfunded for retirement.
• Insufficient Pension Balances
Many pension accounts, especially for those 60 and older, have low balances that are unlikely to provide a sufficient income for retirement. The average pension balance for those 60 and older for the Plan is currently around CI$31,700, which is not enough to ensure long-term financial security for members.
• Withdrawals
The ability to withdraw pension funds whether for property withdrawals, additional voluntary contributions, COVID-19 withdrawals has led to many members depleting their pension savings before reaching retirement age. This can have long-term negative impacts on their financial security.
• Pension Holidays
Some employers and employees have taken “pension holidays,” opting to stop contributing to pension plans for a period. While this provides short-term relief, it severely undermines the long-term growth of retirement savings.
• Investment Restrictions
Pension plans in the Cayman Islands face strict investment regulations, which can limit the potential for growth. There should be a discussion about whether adjustments to the current framework are necessary.
• Key Differences Between the Public Service Pension Board of the Cayman Islands (PSPB) and Private Pensions:
The PSPB has higher contribution levels compared to private pensions, with no cap on pensionable earnings. It also does not permit premature access to pensions for reasons such as property withdrawals or COVID-19-withdrawals. Additionally, there are no “pension holidays.” Investment regulations under the PSPB are guided by a "prudent man" rule, providing more flexibility compared to the more restrictive structure of private pension plans.
Disclaimer:
The challenges listed above reflect current concerns related to private pensions in the Cayman Islands according to the Cayman Islands Chamber of Commerce Pension Plan. These points are intended to provide a general overview and may not encompass all aspects of the private pension system. The situation may vary depending on individual circumstances, and members are encouraged to seek professional financial advice to better understand their specific retirement planning needs. The Board and the Cayman Islands Chamber of Commerce Pension Plan does not endorse any political party or individual candidate and is simply advocating for private pension reform to be a topic for urgent discussion and reform for the benefit of all pension fund holders.
T: 345-745-7630
E: admin@pensions.ky
W: chamberpension.ky