New laws on private pensions
Legislation that will allow employees to take out a quarter of their private pensions as a lump sum on retirement was passed by MPs last Friday.
The National Pension Scheme (Occupational Pensions) Amendment Act 2019 will now require non-Bermudian workers to pay into their occupational pension, along with self-employed workers.
Curtis Dickinson, the Minister of Finance, told the House of Assembly that there was concern that the need to make pension contributions for Bermudian but not for non-Bermudian workers had affected employment opportunities for Bermudians because the situation made it cheaper to employ overseas workers.
Mr Dickinson said: “We have tried to, in our work here, be very balanced in our approach to ensure that we are not causing undue stress on employers while, at the same time, being mindful that we want to promote the culture of self-sufficiency and so encouraging people to provide for themselves in their later years by saving during the years they are earning income.”
Scott Pearman, the Shadow Minister for Legal Affairs, said that the One Bermuda Alliance supported the drawdown part of the Bill.
But he feared that the ability to do so could deprive people of a “rainy day fund later”.
Mr Pearman said: “That risk will fall upon the community as a whole. So we need to map out what happens when that happens.”
He said that a requirement for non-Bermudians to pay into an occupational pension fund was “thorny” and would “increase the cost of doing business in Bermuda”.
He added: “Making Bermuda more expensive is not a good idea because it will lead to job losses.”
Mr Pearman said that small and medium-sized businesses would be hit hardest by the change.
He added: “It is those Bermudian employers who are now going to have to dig into their pockets.”
David Burt, the Premier, said the legislation would not be popular among companies that had a majority of non-Bermudian staff.
He added: “It’s not only the right change, but it makes sense to put Bermudians on an equal playing field with non-Bermudians.”
Mr Burt also reiterated that the Government hoped to bring some of the $3 billion invested into the pension scheme back into Bermuda by allowing employees to access a portion of their funds for specific investments.
He said: “We believe that people should be trusted with their money. If you like it where it is, leave it where it is.”
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