Further to the announcement by the Cayman Islands Government that members of private pension plans are permitted to withdraw some funds from their pension plans to assist with financial difficulties experienced as a result of COVID-19, we are providing this guidance sheet so you can make an informed decision on whether you should withdraw funds from your pension at this time.
We recommend that funds should only be withdrawn if you are genuinely in need. For example, if you do not currently have any work or income.
You need to be aware that withdrawal of funds will be detrimental to your retirement savings so you should only do so if absolutely necessary. In addition, if you are not genuinely in need of the funds your application at this stage will delay those that are in need from receiving their money.
Financial experts recommend an income replacement ratio of approximately 70%. It is probable, and even likely, that the average pensioner will not be able to achieve this benchmark with only mandatory contributions. Additionally, withdrawing from your pension prior to market rebounds will lock-in losses and prove difficult to make up losses once the market rebounds. View this helpful resource: How much money will you need when you retire?
Global markets have experienced a record fall and remain volatile which has negatively impacted the value of your plan.
History is on your side! Market volatility is normal, some might say it’s even expected. Pension is intended to be invested for the long term and we will continue to review and evaluate performance, under the advice of Mercer, our global investment consultant, with the goal of maximising long term returns for members.
The Chamber Pension Plan is a low-cost private pension plan and performance has been in line with global markets, so we are an effective and efficient way of saving for your retirement.
If you and your employer continue to make contributions during the suspension of contributions (holiday period) these contributions will be considered Additional Voluntary Contributions (AVCs). Please visit our website on the advantages of AVCs. Also, use our Pension Calculator to determine how much money you will need for retirement, which can impact this decision.
Members can make a one-time election to a more conservative fund. For example, our Income Conservative Fund (our most conservative option) has an investment allocation of 25% Equity and 75% Bonds/Fixed Income. History shows that Equities have outperformed Bonds/Fixed Income over the long-term. Pension is a long-term investment. Pensioners should carefully consider their long-term retirement goals prior to electing a different Lifecycle Fund.
Pension fund assets are managed with the intent to ensure that retirees receive a certain level of retirement income, this is often achieved through investments. In addition, pension plan investments are regulated by the National Pensions (Pension Fund Investments) Regulations (1998 Revision).
Forms and information will be available here on our website, www.chamberpension.ky.
Also, The Chamber Pension Plan’s LinkedIn, Facebook and Instagram channels are being updated regularly with new information and resources designed to help members make informed decisions about their financial future.