Column: Tucker On Pensions, Funding & More
[Opinion column written by Opposition Senate Leader Robin Tucker]
Politicians need to be transparent and honest about the problems that we face. One example of where transparency is needed is the funding of our pensions. With the delivery of promised annual increases, taxpayers need to know that pensions are properly funded and how they will be affected in the future, because as we know, the funding pots are running low.
An Actuarial Review of Contributory Pension Fund [CPF aka Social Insurance] report is provided over a three-year cycle. In 2022, when reporting on the 2020 report findings, the former Finance Minister, Curtis Dickinson told us that the CPF financials were below expectations as there were fewer people paying into the Fund, the pension contributions needed to sustain it declined.
The CPF is projected to decline steadily until it is depleted in 2044, three years earlier than predicted in the 2017 review. It is already known that we need to increase our working population to help bolster pension contributions.
But the Government has yet to provide an update on securing the 1,684 additional workers, or 5% annual increase of additional workers needed over a five-year period.
With current economic conditions and an expanding pension fund liability, where exactly is the money currently coming from to fund the annual pension increases? We also need to know how these promised increases will be sustained on an annual basis given that there are fewer contributions, and a growing number of pensioners with larger payouts being made?
Knowing that the CPF will dry up in just 20 years begs the question of what is the Government doing today to ensure that adequate funding will be available to pensioners in 2044, people in today’s workforce, in mid-career, and those about to enter the workforce? The 2020 CPF report highlighted various recommendations by the Actuary that included increasing contribution rates and increasing the retirement age to extend the life of the Fund beyond 2070. What advancements have been made to the suggestions made or plans to extend the life of the Fund?
Two years ago, Premier Burt said, “[t]he work to reform the Contributory Pension Fund is at an advanced stage..[i]t is this Government’s intention to introduce the full suite of changes during the Budget Session of 2023 to make sure Social Insurance is well secure into the future.” What has become of the promised pension reform as nothing has been presented by the Premier as yet. Will it include seniors and government employee pensions as the superannuation fund [Public Servants’ pension] also has a considerable unfunded liability?
In addition, the latest Actuarial report for the years 2020-2023 has been received by the Government but they have not committed to when it will be shared. Based on population trends and pension payouts, this report is expected to show an even more dire situation for the pension funds than currently understood.
Pension accounts are in a worrisome state. To allay genuine concerns from Bermudians who are worried about the CPF drying up the Premier needs to tell Bermudians in practical terms how he intends to ensure that there will be pension funds available. What will be done to offset annual pension increases that will help extend the life of the Fund and shore up the future of pension funding for all of us?
Today’s pensioners need funding now, and those of us who will be looking for our pension funds in the future need assurance that this Government is not spending tomorrow’s money today as that would be a seriously irresponsible thing to do. The number of Bermudians reaching retirement age is increasing daily, the Fund is shrinking, and the clock is ticking.
Robin Tucker is the Opposition Senate Leader and OBA candidate for constituency 7, Hamilton South.
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