A series of proposed reforms designed to bring security to public sector pensions include increasing the maximum retirement age for most civil servants to 70 and raising the age at which they can receive a full pension from 60 to 65.

David Burt outlined the changes in the House of Assembly this morning, when he told MPs that the amendments would be phased in and that they came after years of consultation.

The Premier and Minister of Finance said: “The Public Service Superannuation Fund, which pays the pensions of our teachers, police officers, nurses, prison officers, firefighters and the many other public officers who serve this country, is not on a sustainable footing.

“The most recent actuarial valuation, as of March 2023, shows an actuarial deficit of just over $1 billion.

“The fund is only 37 per cent funded. Without reform, the fund is projected to deplete its assets by 2045. That is within the working lifetime of many Bermudians now in the Public Service.”

He explained: “A funding ratio of 37 per cent means that for every dollar owed in pensions, the fund has only 37 cents in assets.

“A deficit of $1 billion means that unless changes are made, taxpayers will be required to cover the shortfall, leading to increased taxes for residents and businesses. And depletion in 2045 means that a Bermudian in the Public Service today could reach retirement only to find the fund exhausted.”

Mr Burt said: “The maths is clear. The contributions going into the fund are not enough to cover the benefits being paid out.

“As people live longer, the number of retirees grows and the pressure on the fund increases.

“Unless changes are made, taxpayers will face an ever-increasing liability that could jeopardise both pensions and Bermuda’s wider economy, putting credit ratings under pressure and leading to increase interest rates for all.

“The path is unsustainable and to do nothing would be irresponsible.”

MPs heard that the “most important change” related to the earliest unreduced pension age.

Mr Burt said: “At present, non-special group members, which are the broad majority of public officers, can receive an unreduced pension at age 60; and special group members, which are our uniformed services, at age 50.

“Under these reforms, those thresholds will rise gradually to 65 and 55 respectively, phased between 2027 and 2035.

“This is effectively the retirement age for most public officers because it is the point at which they can retire without penalty.

“The change from 60 to 65 for most public officers is significant. However, even at 65, Bermuda’s effective retirement age remains well below the benchmarks in most developed countries, where retirement ages are 67 or higher.

“This change is about aligning with demographic realities while still providing our public officers with one of the more generous public pension systems globally.”

Most public officers contribute 8 per cent of their salary to the fund, but the amendments mean that portion would increase to 10 per cent over three years.

For uniformed services, contributions would rise from 9.5 per cent to 11.5 per cent over the same period.

“Importantly, these increases will be offset by negotiated salary uplifts, meaning that public officers will not see their take-home pay reduced,” the Premier said.

“This approach balances the need to strengthen the fund with fairness to workers.”

Instead of calculating pensions based on an employee’s final-year salary, the planned changes would result in calculations based on the average of the final ten years of work, phased in over a decade.

Mr Burt said: “The maximum age at which a public officer must retire is 65 for teachers, 68 for other non-special group members and 55 for uniformed services.

“These will gradually increase to 70 and 60, respectively, by 2035.

“It is important for Honourable Members and public officers to note, this is not the earliest age at which someone can retire, but the latest age at which they must retire.

“These changes reflect longer life expectancy and modern working realities.”

He added that pension fund members can commute part of their pension into a lump sum based on a fixed factor of 11.5 per cent.

“This provision has proven costly to the fund,” the Premier said.

“Going forward, this conversion factor will be actuarially assessed at each valuation, ensuring that lump sums are properly funded and do not weaken the fund’s long-term sustainability.”

Governance of the PSSF would also be strengthened in the amendments, with the Public Service Superannuation Board expected to have “a more formal role in reviewing actuarial valuations and advising on future reforms”.

Mr Burt said: “Taken together, these reforms will transform the trajectory of the fund.

“Actuarial modelling indicates that instead of depleting by 2045, the fund can achieve fully funded status by 2060.

“In practical terms, that means that pensions will be secure not only for today’s retirees but for generations to come.”

He added: “I also want to speak directly to our retirees.

“One of the most difficult consequences of the fund’s financial challenges has been the freeze on pension increases since 2014.

“This has placed increasing pressure on many of our retirees as the cost of living has risen.

“The reforms we are bringing forward today are not only about securing pensions for those still in service, they are also about creating the financial capacity to advance benefit increases for those already retired and for those who will retire in the future.”

MPs heard that the Public Service Superannuation (PSSF Stability) Amendment Act 2025 will be tabled in the House today.

• To view the ministerial statement in full, see Related Media

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