House: pay cuts will save nearly $500,000
Temporary changes to Parliamentarians’ salaries and pension contributions equated to a reduction in pay, the Minister of Finance insisted.
Curtis Dickinson dismissed a notion put forward by Patricia Gordon-Pamplin, the shadow finance minister, last Friday that the cut was “make believe”.
He told the House of Assembly: “Over the course of the last several weeks I have brought before this honourable House several pieces of legislation to make amendments to our pensions scheme as a way of providing relief to our citizens.
“I have for the most part ignored the references to ‘the pay cut that’s not a pay cut’.
“This time I’m not going to do that, I’m going to tackle the bull by the horns and address the — what I would say is — somewhat misleading characterisation of what it is we’re trying to do.”
Mr Dickinson said the projected cost saving from a year-long salary reduction of 12.5 per cent for members and non-ministerial officers, as well as 15 per cent of the ministerial portion of salaries, was $480,000.
The suspension of pensions contributions for members of the legislature was expected to deliver a $500,000 saving.
Mr Dickinson added that a reduction in benefits was “equivalent in my mind, in most people’s minds, to their pay”.
His remarks came during a debate on the Ministers and Members of the Legislature (Salaries and Pensions) Amendment Act 2020, which would allow members to continue making payments to the Ministers and Members of the Legislature Pensions Fund over the course of the suspension period.
Ms Gordon-Pamplin told the House: “This is effectively giving rise to what I call our make-believe pay reduction because what it says is that we’ve actually taken a reduction in salary in order for the Government to try to meet some of its savings within the budget.
“But in order for members to not take home any less pay than they were taking before the reduction in the gross amount of salary there has been a suspension of the payments, the permission to suspend contributions to pensions so that the net amount of money is not impacted.”
She added: “I don’t know the extent to which members of the legislature will find themselves in the situation of being able to, but I would suggest that if there is any possibility that they do not need to have access to the liquid funds that they would be saving by not contributing, it’s probably better to contribute.”
Ms Gordon-Pamplin said: “I think that when we are in the situation where we have to go down a dangerous slope and are fiddling with pensions, it’s always a bad thing from my perspective.”
The One Bermuda Alliance MP added that she supported the legislation and recognised the difficult financial circumstances brought on by the Covid-19 pandemic.
But she said that a “lack of stimulation of the economy” before the coronavirus crisis exacerbated the situation.
Ms Gordon-Pamplin explained that she believed Mr Dickinson was “trying to do the best he can” under the circumstances “with the little bit he has”.
Mr Dickinson told MPs that the amendment, which was passed by the House, would also provide further security to financial dependents in the case of the death of a serving legislator.
He explained: “The death benefit will provide a lump-sum payment to a member’s nominee equivalent to one year’s basic salary. Each member will be required to nominate in writing a person or persons to whom the benefit will be paid.
“I can also confirm that the actuary has considered this benefit and can advise that there will be very little financial impact, if any, on the fund by adding the capital sum benefit.”
Mr Dickinson said that at March 31 this year the fund had net assets of over $10.8 million, which represented about 6.6 times the annual value of pensions paid in the 2019-20 fiscal year.
He explained: “The effect is that if the MMLPF received no further contributions it could still continue to pay out pensions at the prevailing rate for almost seven years.”
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