Bill: People Allowed To Draw On Pensions

Premier and Minister of Finance Paula Cox tabled the National Pensions Scheme (Financial Hardship) Regulations 2011, in the House of Assembly this morning [July 1], which effectively allows tenants at risk of being evicted to access their private pension funds.

Premier Cox said, “You will recall that the Government initiated and piloted the enabling legislation for these Regulations in the 2010/11 Budget session. We have now had about a year of monitoring.”

“Based on the need, the Government has responded by amending the National Pension Scheme (Financial Hardship) Regulations with an additional criterion of hardship. The amendment once passed will allow persons to make a request to access their private pension plans where they have significant rental arrears that place them at risk of eviction.”

Currently persons can access their private pension plans for the following purposes:

• Eligible Uncovered Medical Expense
• Threat of Loss of Principal Residence due to Debt Default
• Eligible Fee Payable for Education

The Labour Force Survey conducted by the Department of Statistics in May 2009 produced some sobering facts about unemployment conditions in Bermuda during the recession. Unemployment was pegged at 4.5% per cent and there was data to show that many workers had been unemployed for more than a year. .”

Minister Cox commented that it is “important to continue to help people through one of the most challenging economic downturns in our lifetime and these Regulations will provide temporary assistance to persons by allowing them to gain access to their private sector pension funds if they are faced with the threat of eviction from their home due to rental arrears.”

Minister Cox noted that there are various checks and balances in place to ensure plan members do not abuse this proposal or apply to withdraw the majority of their pension benefit accrual.

For instance, all refunds under the proposed regulations have to be approved by the Pension Commission, who ensures that all applications meet the conditions set out in the regulations. There are also restrictions on the dollar amounts that members can withdraw with each successful application and also a maximum number of applications that a person can make in their lifetime.

The maximum refund is 20% of the account balance on the application date. A person is only allowed to make one application in each five year period and will be limited to two successful applications in the applicant’s lifetime.

Minister Cox also advised that both Canadian and US pension plans permit hardship withdrawals for rent.

In conclusion Minister Cox stated, “This proposal is sensible and strikes the right balance between allowing plan members access to their private sector pension funds under extreme hardship conditions while at the same time providing some protection in ensuring that plan members receive a decent pension when retiring.”

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