Finance Ministry: Pensions To Increase By 1.4%

December 10, 2018 | 7 Comments

Pensions will increase by 1.4%  after Minister of Finance Curtis Dickinson put forward an Order in the House of Assembly that increases Contributory Pension benefits.

“Benefits under the Contributory Pension Fund [CPF] were last increased in 2016 by 3% and in 2017 by 1.7%,” said Minister Dickinson.

“In the Government’s 2017 Election Platform, it was declared that we would put our seniors first and institute annual cost of living increases for social insurance pensions that will be linked to the rate of inflation to help lessen the hardships that too many of our seniors now endure.

“Accordingly, the Ministry will increase CPF benefits by 1.4% in January 2019, backed dated to August 2018 when benefits are typically increased.

“Based on the Consumer Price Index, the cost of living has increased by 1.4% from July 2017 to July 2018, when the last increase was granted. This benefit increase fully covers the prevailing rate of inflation; therefore, the Ministry is of the view that the increase should meet the policy objective to assist our seniors.

“Since payments are made in arrears, the increase in the benefits rate would be made effective on August 16, 2018 on the Order, which means that all beneficiaries would see the increase and back pay to August 2018, reflected in their payment in the January 15, 2019 benefits payment. The 1.4% increase in benefits would represent an additional cost of $2.3 million per year to the fund, with the retroactive pay costing $955,420.”

The Ministry said, “The 2018 increase in benefits would normally be accompanied by a corresponding increase in contributions by an actuarially recommended rate of 3.9%. However, in the 2018 Throne Speech, Government announced that Bermuda’s social insurance system will be changed from a fixed-rate contribution to one based on a percentage of income.

“Therefore, contribution increases will be delayed until the actuary completes the modelling to effect this policy objective. The actuary is currently working on the 2017 actuary report for the CPF and it is anticipated that this report will be completed in the second quarter of 2019 at the latest. It is noted that contributions were last increased in August 2018 by 4.2%.

“As at 30 September 2018, the Fund had total assets of over $1.9 billion, representing approximately 11.7 times the annual value of benefits paid in the 2017/18 fiscal year. Considering the relatively strong position of the Fund, it is anticipated that the Fund can withstand the one year delay in contribution increases. However it is critical that the increased contributions come into force in August 2019.

“It was noted that the 1.4 per cent increase marked the twelfth pension increase that the Progressive Labour Party Government has put through in its time in Government.

“The former Government made seniors wait five years for a pension increase, which is the longest period of time between increases since the UBP was in office when pensions were increased every two years. Since taking office back in November 1998 and now, this Government has put through twelfth increases:

  • August 2000 when we increased pensions by 3 per cent;
  • August 2002 when we increased pensions by 3 per cent;
  • August 2003 when we increased pensions by 3 per cent;
  • August 2004 when we increased pensions by an extraordinary 9 per cent;
  • August 2005 with an increase of 3.5 per cent;
  • August 2006 with an increase of 4.0 per cent;
  • August 2007 with an increase of 4.5 per cent;
  • August 2008 with an increase of 5.0 per cent;
  • August 2009 with an increase of 5.0 per cent;
  • August 2011 with an increase of 3.0 per cent.
  • August 2017 with an increase of 1.7 per cent.
  • And now August 2018 with an increase of 1.4 per cent.”

Minister Dickinson noted: “In every case, the benefit increase has either exceeded the prevailing rate of inflation or has been in line with the underlying trend rate, thereby placing seniors’ pensions under the CPI in good stead.”

Share via email

Read More About

Category: All, News

Comments (7)

Trackback URL | Comments RSS Feed

  1. Double S says:

    “The 2018 increase in benefits would normally be accompanied by a corresponding increase in contributions by an actuarially recommended rate of 3.9%. However, in the 2018 Throne Speech, Government announced that Bermuda’s social insurance system will be changed from a fixed-rate contribution to one based on a percentage of income.”

    So will the people that end up paying more receive a higher pension payment upon retirement? If not, this is basically ‘redistributing’ ones pension funds to another which is not fair at all.

    The attack on the middle class continues by the PLP.

    • Joe Bloggs says:

      Well, given that I have already contributed for 35 years, I will not see any greater benefit from my continuing contributions. I wish I could afford to retire before I am taxed to death with the new income tax the government is introducing.

  2. Guy Carri says:

    Never seen a gov brag so much of lending such a significant helping hand toward running the pension fund out in the next couple of decades. Nothing on how they plan to combat the fact that it is underfunded but shouting about how they are increasing the amount coming out.

  3. Politricks says:

    PLP, it is quite easy to give away monies. The hard part, as you are finding out now (but should’ve known from your previous stint as Government) is to create viable revenue streams to sustain your giveaways. And no, taxing the disposable income out of the population is not the way to do it either.

  4. knowyourhistory says:

    This is so dumb!!! The Government has no money we have no money!!! No money means no increases, its called sacrifice, and something we all have to do at this point!!! Shame on the PLP and a very terrible decision!!

  5. fillibusted says:

    I find it sad that the people I see walking around wearing their PLP t-shirts are the ones who are going to be so screwed when they retire, only by that stage it will be too late for them.

  6. Jimbo says:

    Isn’t the newly provided method of calculating social insurance payments rather socialist?? Unless of course the people who pay more will end up with a higher pension when they retire….

Leave a Reply