Roads almost at gridlock with holiday shoppers, a local drinks store selling out of Bollinger Champagne, brisk sales at Cayman’s local jewellery stores and a Port clogged up with imports all suggest that many Cayman shoppers have been happy to splash some cash at Christmas time.
Last year Customs and Border Control announced that they had received 18,000 individual imports in June, which was 5,000 more than in May, putting a huge strain on its resources, so the Christmas trend of spending follows months of online expenditure on the part of local residents.
Cayman has also seen a boom in its real estate industry, with realtors busier than ever before as new builds in particular are getting snapped up by locals as well as overseas buyers.
This does not come as much of a surprise when viewed against a backdrop of recently released statistics which show that CI$443,464,491.28 had been paid out to pension plan members in Cayman, since the Government amended the Pension Law to allow people to withdraw large sums from their pension.
But while the injection of such a vast sum of money into the economy (even online shopping imports bring in duty for Government) are currently keeping Cayman afloat, experts are fearful that local residents will feel the economic impact in the years to come of frittering away their pension monies on possibly frivolous items.
At the time the law was amended in April, Premier Alden McLaughlin urged caution in withdrawing pension funds, stating that people should only withdraw the funds if they really needed to and that the money would still be there if they chose not to make the withdrawal.
At Public Accounts Committee hearings in June of this year, Fidelity Cayman CEO Brett Hill warned that releasing pension funds into people’s pockets before they retired would cause big problems for Cayman in the future.
“We seem to be kicking a very large can down a very short road,” he stated. “The average pension plan member regards their pension as a tax. They do not want their money locked away until they are 65 years old. They somehow believe that Government will take care of them if they cannot afford to live. This is my grave concern,” Mr Hill said.
Government has also just passed an extension to the pension holiday, which has given employers and employees permission not to contribute to pensions up until the end of June 2021. Given an ever-widening pension shortfall, it is prudent to heed the warnings of the experts and continue paying pension if it is possible to do so.