Last March, we examined rules introduced in 2011 that allow Caymanians to borrow up to $35,000 from their private pension plan savings to buy or build a home, pay off an existing mortgage, or purchase residential land.

Since this option became available, 137 of the 143 applications (95.8%) have been approved by the Department of Labour and Pensions. The total pension savings withdrawn from all Cayman pension plans under the new rules is $2.65-million. Of the approved applications, the borrowed pension loans were used as follows:

While borrowing from pension savings can help you buy your own home, keep in mind that withdrawing from your pension may make sense in the short term, but it may also undermine your pension savings in the long run. By leaving your money in the plan, you benefit from compound growth over time. On the other hand, withdrawing money to use as a down payment can help you meet the minimum needed to buy a home and start building equity sooner. Borrowing from your pension can also reduce the overall size of your mortgage and its cost to you – and in turn allow you to make voluntary contributions to your pension. With a number of factors to consider – including mortgage interest, investment returns, and personal circumstances – there’s no easy way to decide which option is best for you.