Employees can no longer rely on the Government to secure their retirement, industry leaders warned at the CFA Society Bermuda’s Pension Breakfast Seminar yesterday.

The event at the Hamilton Princess & Beach Club highlighted a troubling trend: many retirees are taking the maximum 25 per cent withdrawal from their pension funds and “parking it” in low-yield bank accounts, missing out on potential investment growth. Speakers said the behaviour reflected a broader financial literacy crisis that could threaten the island’s long-term financial stability.

Karl Smith, head of pensions, life and investment at Freisenbruch, warned against assuming government deficits would allow the state to guarantee retirements.

“It’s difficult, because the mindset of individuals over the years was that the government’s going to hear you,” he said.

“The reality is the Government has to have the ability to hear you — whether here, in Canada or the US — but they carry such big deficits. That’s the importance of educating individuals that they must manage their pensions themselves.”

Mr Smith also challenged the notion that retirement age is fixed by government policy.

“We have been forced within our minds that it’s an age set by the Government,” he said. “It’s not. It’s a time set on you in regards to what you put in, what plan you put in place, and it’s that planning piece that we’re all missing.”

The panel, which included Larry Gibson of CG, Angela Joell of Argus and Peter Sousa, the chief executive of the Pension Commission — was moderated by Nathan Kowalski, advocacy chair of CFA Society Bermuda.

Panellists agreed that higher pension contributions and longer working lives may be needed to ensure retirees can achieve at least 70 per cent of their pre-retirement income.

They noted that the average pension balance in Bermuda is about $150,000, well below the average American 401(k) balance of $313,000 for those aged 45 to 55. Local factors such as mid-career withdrawals, maternity leave and the gender pay gap make the shortfall more pronounced, they said.

Panellists called for mandatory retirement planning sessions for employees as well as stronger education on diversification and inflation risks. “When is the last time you looked at your pension plan?” one speaker asked, stressing the danger of portfolios concentrated in cash and money market accounts.

The CFA Society Bermuda continues to promote financial education, with its next literacy programme scheduled at Bermuda College from September 17 to October 1.