Column: Simmons-Wade On Seniors & More
[Opinion column written by PLP MP Ianthia Simmons-Wade]
As Bermuda’s population ages and life expectancy increases, securing a stable financial future becomes increasingly important for our seniors and those approaching retirement. The government’s recent announcement regarding private pension plans marks significant progress towards our vision of a better, fairer Bermuda by safeguarding the retirement savings of our people. These changes will directly benefit not only those nearing retirement but also their families, who often bear the responsibility of supporting them.
Starting in April 2025, Bermudians will see a reduction in the administration fees charged on private pensions, along with new limits to ensure these fees remain reasonable in the future. This initiative, resulting from the collaborative efforts of your PLP Government, the Pension Commission, and local pension administrators, is designed to protect every dollar you’ve worked hard to set aside for your golden years.
Currently, pension plan administrators can charge fees without any limits, sometimes as high as 4.2%. This can significantly reduce the amount you have at retirement. The new regulations will cap these fees based on your pension balance, ensuring that more of your money stays in your account, growing for your future needs.
For those in defined contribution employer pension plans or group retirement plans, the fees will be capped as follows:
- 1.25% per year for balances over $50,000
- 0.75% per year for balances between $25,000 and $50,000
- 0.5% per year for balances under $25,000
For those with individual local retirement plans, the fee structure is:
- 1% per year for balances over $50,000
- 0.75% per year for balances between $25,000 and $50,000
- 0.5% per year for balances under $25,000
These caps are expected to result in significant savings. For example, someone with a balance over $50,000 could save an average of $725 annually, potentially adding over $75,000 to their retirement fund over a 40-year career.
Additionally, the government is mandating that pension plans offer lower-cost investment options, such as index funds, and will prohibit administrators from receiving advisory fees on these investments. This ensures that your money works harder for you, maximizing your returns and contributing to a more secure retirement.
The Government has made these changes because we believe in protecting the quality of life and dignity of our seniors whenever we can. We began with ensuring that seniors’ pensions increase every year, and this is another step towards securing a brighter future for every Bermudian in their golden years.
- MP Ianthia Simmons-Wade, Constituency 25 – Warwick North East
This coming from the PLP where the government pension fund has been drying up. What is the current shortfall and what steps have you taken to address that?