Minister On National Pension Scheme Update

During the next legislative session a Bill containing amendments to Bermuda’s National Pension Scheme will be tabled in the House, Minister of Finance Curtis Dickinson said in the House of Assembly.

The Minister’s full statement follows below:

Mr. Speaker, I rise today to advise Honourable Members and the general public on recent developments and proposals under consideration relating to Bermuda’s National Pension Scheme.

Honourable Members will be aware that the National Pension Scheme [Occupational Pensions] Act 1998 and related regulations, were introduced to provide for the registration, administration and funding of mandatory occupational pension plans in Bermuda and related matters. This legislation has been amended over the years to better address the needs of the members of pension plans with the most recent relating to financial hardship withdrawals in 2010 and 2011.

Mr. Speaker, the Pension Commission [Commission] as the supervisor and regulator of occupational pension schemes, has undertaken a review of the National Pension Scheme [Occupational Pensions] Act 1998 and regulations made thereunder [Act] and has recommended a number of significant enhancements such as to provide it with more effective regulatory and enforcement powers, introducing regulatory fees and monetary fines for non-compliance, reducing the audit burden on small pension funds, increasing the existing small pension amount that plan members can receive in a lump sum and to provide the Commission with the power to exempt plans from specific requirements under the Act.

The Commission’s Advisory Committee, which is made up of a wide range of private sector representatives, has reviewed and discussed the above recommendations and is broadly supportive of the proposed enhancements.

Mr. Speaker, the Commission has also recommended further amendments to the Act to provide for more withdrawal freedoms for plan members at retirement and extending the scope of financial hardship applications to include funeral expenses, removing the restriction on persons receiving a pension from being able to apply and including off campus housing as an eligible educational expense.

Mr. Speaker, Honourable Members will be aware that the Government’s 2017 Election Platform stated that it would “Address the current structural imbalance of pension benefits that exists between guest workers and Bermudians by requiring equal treatment for Bermudian and expatriate labour. Currently, employers are not required by law to provide the same level of pension benefits to guest workers as they are to Bermudians, thus making it more expensive to employ Bermudians.”

I can report that the Ministry made a request to the Commission to seek industry feedback on this proposal. Accordingly members of the Commission’s Advisory Committee were invited to discuss and provide input on the above proposal. The standing Committee is comprised of representatives of third party plan administrators, law firms, unions, employers, international companies and the accounting profession. In addition, representatives of the Association of Bermuda International Companies, Hotel Employers of Bermuda, Restaurant Association, Construction Association of Bermuda, Landscaping Association, Bermuda Human Resources Association and a former board member of the Human Rights Commission were invited to make representations on the implications of introducing the proposal on their respective industries or areas.

Mr. Speaker, the Commission’s Board considered the Advisory Committee’s comments and provided the following comments and recommendations to the Ministry:

• The Commission supports the international labour principle that pensions are good for all employees;

• The current legislation should be amended to require all non-Bermudians satisfying the eligibility requirements to be enrolled in a registered pension plan;

• Exemptions should be provided for non-Bermudian work permit holders employed for a short-term [i.e. two years and under]. However, upon receiving a renewal of their work permit they would be required to be enrolled;

• Non-Bermudians leaving Bermuda permanently should be able to receive their accumulated pension balances, as is currently the practice;

• The current contribution rates [5% for employers and 5% for employees] should be phased in for non-Bermudians, as was the original practice when the legislation was first introduced for Bermudians and their spouses;

• It could be argued that the current exemption is contrary to the Human Rights Act as it appears to discriminate against non-Bermudians based upon their national origin; and

• The Commission recognized that some employers have a competitive advantage and benefit from a lower cost of operation by their employment of non-Bermudians and the savings that result from not having to make the required pension contributions into a pension plan for these type of employees.

Mr. Speaker, the Ministry is generally in support of the Commission’s comments and recommendations and proposes to amend the Act to give effect to these proposals along with those items mentioned previously. Accordingly, I can confirm that during the next legislative session a Bill containing all of the proposed amendments will be tabled and debated in this Honourable House.

Mr. Speaker, the proposed enhancements will, upon their introduction, represent the most significant legislative change since the Act was first introduced. They are sensible, reflect the needs of the members of pension plans and are in line with pension provisions and regulation in other jurisdictions.

Mr. Speaker, in closing – As this Government continues its time in office, the proposed amendments to the National Pension Scheme [Occupational Pensions] Act 1998 represents just another step in our efforts to establish a better and fairer Bermuda that was promised in our election platform.

Thank you, Mr. Speaker

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