Restoring seniors’ dignity
No one would compare the Bermuda Census on Population and Housing to a bestseller, but occasionally it produces a statistic that truly jumps off the page.
One such statistic is this: median income for Bermudians aged over 65 is just $27,983. This compares to a median salary of $58,476 in the 55 to 64 age group, meaning that on retirement, most people’s income is cut in half.
It also means roughly 5,000 Bermudian seniors are living on $2,300 or less a month — or around $530 a week. For men, the median salary is somewhat higher, at about $34,000 but for women, it is worse — about $25,000 a year, or slightly more than $2,000 a month.
That’s worrying since women tend to live longer than men and will often end up alone and on a single income if their husbands die first.
So long as both partners are alive, they are in a slightly better situation, as they can pool their incomes, but nonetheless, thousands of Bermuda’s seniors live on a financial knife edge given the cost of rents, food and health insurance where even the “affordable” option of Future Care can cost $500 a month — one quarter or more of the total income for more than half of Bermudian women in their so-called golden years.
Keep in mind that the parliamentary committee looking at a living wage recommended an annual income of $37,000 as a living wage — nearly $10,000 higher than the median income for over-65s.
So it should come as no surprise when senior citizens protest when they are hit with a $300 increase a year in land tax, or when they are made to pay $8 for the card that enables them to get free public transportation. When you are trying to stretch every dollar, even an unexpected $8 fee may result in a missed meal or worse.
And there is worse. In 2016, Bermuda’s elderly were poorer than they were six years earlier when the previous Census was taken — median income actually dropped from $29,000.
So when a person over the age of 65 says life is getting harder, they are right. Not only are their costs going up, their incomes have been falling, with the marginal increases in government pensions since 2016, the latest coming in December 2018, when pensions were increased by 1.4 per cent, failing to keep up.
That decline in incomes, which is directly related to the Bermuda economy’s “Lost Decade”, is now coupled with continued growth of the over-65 age group.
In 2016 there were 10,755 people over 65 and they made up 17 per cent of the population. By 2026 that number is expected to increase by 50 per cent to 15,000 when those over 65 are expected to make up 25 per cent of the population.
Aside from the economic ravages of the last decade, Bermuda has failed to prepare adequately for this dramatic demographic revolution.
Some steps were taken. The late David Saul, as finance minister and premier, laid the groundwork for compulsory private pensions in the 1990s, and the late Eugene Cox, as finance minister from 1998, implemented them. But private pensions are not nearly adequate to provide sufficient income, even when coupled with social insurance, which itself is inadequate.
Ewart Brown drew a good deal of criticism during his time as premier, but deserves credit for the Future Care insurance policy for senior citizens which has enabled many older people to have a decent standard of health insurance without paying major medical costs.
But as noted above, its premiums still take a substantial portion of a seniors’ income.
But those steps were not enough, and all come at their own cost to the community. None of the government-administered pension funds are financially sustainable and Future Care is subsidised by private insurance payers.
As the elderly population grows and the working population expected to support it shrinks, both in numbers and as a proportion of the population, the pressure on both segments of the population will reach boiling point unless real solutions are found.
So far, the Government has promised a few solutions. Healthcare funding is to be reformed, with a reduction in the standard health premium and an increase in the Mutual Reinsurance Fund premium — this effectively shifts the cost of insurance for seniors and others to the private sector.
Government also committed to annually increase pensions by the rate of inflation. That’s praiseworthy, but must be paid for. Government is proposing to base pension contributions on income rather than on a fixed rate.
That change is likely to be far-reaching and potentially controversial, if it means people will be making different contributions but will receive the same pension at the end. Leaving that aside, it is not entirely clear if this will result in greater contributions to the fund, thus stabilising its finances.
Nor does it solve the fundamental problem identified in the Census — how many people can afford to live in Bermuda while earning less than $28,000 a year?
To be sure, seniors do get some benefits. Public transport is free, and they get a break on land tax if they own property. Hospital care is subsidised.
Savvy businesses offer discounts to senior citizens on certain days — even, or perhaps because, living on a fixed income is hard, seniors know a bargain, and businesses know that taken in aggregate, seniors have tremendous buying power.
Indeed, this is where policymakers could learn from the private sector — senior citizens are not and should not be a burden on the state and can help to expand the economy, not least because they buy services for things they are no longer able, or perhaps willing to do.
However, this also makes them vulnerable to dodgy tradespeople and unscrupulous “friends” and relatives.
Painters and tradespeople will take money to buy materials or demand money up front and never return. Professionals entrusted with their clients’ money will steal it.
Seniors, as a vulnerable class, deserve protection from those who would cheat them, and the punishments for those who prey on the weak should be higher as well.
Apart from pensions and health insurance reforms, Government is also rightly looking at extending the retirement age, in the first instance for public servants, but then more broadly for other people.
The proposals made to Government to extend the retirement age from 65 to 68 on a voluntary basis makes sense and will enable people to put more money way for retirement should they need it.
But more needs to be done.
As noted in the series on ageing in this newspaper in January, the best way to help the elderly is to expand the economy. Economic growth means more government revenue which can be used to improve pensions, while a larger workforce will help to restrain increases in health insurance premiums.
Rebuilding the Bermuda economy requires hard choices between protecting Bermudians and encouraging economic growth and investment.
It is increasingly clear that the Government’s policy of “Bermudians first” is conflicting with the need to grow the economy without easing immigration and business ownership restrictions.
In the context of seniors, continuing the lost decade of economic stagnation and contraction that Bermuda has experienced since around 2009 will make life worse — there will be more pressure on a dwindling population of taxpayers to maintain an already inadequate support to people who worked hard all their lives and deserve to be able to live in dignity and security.
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