Sweeping pensions overhaul approved by MPs
MPs from both sides of the aisle welcomed changes to public service pension legislation in the House of Assembly yesterday, warding off a crash in pension funds predicted for 20 years’ time.
The Opposition called on the Government to make similar moves in other pension plans to keep them viable.
The Public Service Superannuation Fund Amendment Act 2025 was read for a second time and passed without objection yesterday in the House.
The amendment, presented by David Burt, the Premier, raises the minimum age for uniformed services to collect full pensions from age 50 to 55, and for most other civil servants from 60 to 65.
This would mean that the former group would need to contribute 11.5 per cent of their salary instead of the present 9 per cent to the fund — which now offers 37 cents in assets for every dollar owed in pensions.
For the latter group, the contribution will go up from 8 per cent to 10 per cent.
MPs heard that these changes are to be implemented between 2027 and 2035.
The Premier, who is also the Minister of Finance, said on September 12: “Without reform, the fund is projected to deplete its assets by 2045.
“And depletion in 2045 means that a Bermudian in the Public Service today could reach retirement only to find the fund exhausted.”
Jason Hayward, the Minister of Economy and Labour, recalled flagging up the need for changes to the fund during his tenure as president of the Bermuda Public Services Union.
He told MPs: “In 2014, after I received the 2013 actuarial report on the state of the PSSF, I led a delegation of union leaders from the Bermuda Trade Union Congress to British Columbia.
“We went to British Columbia because they also had a defined benefit pension plan, but they were able to turn around their pension plan from unfunded to a funded position.
“So we wanted to get a better understanding of what levers they utilised and what framework they put in place to turn around their pensions.”
Mr Hayward also shared his experience with the pension and benefits working group, to which he was appointed in 2014.
He said the former One Bermuda Alliance government had proved unable to enact the recommendations of the group, but that the Progressive Labour Party moved ahead with it.
The National Pension Scheme (Occupational Pensions) Amendment Act 2025 and the National Pension Scheme (Occupational Pensions) (Administration Fees) Regulations 2025 were passed in Parliament without objection.
The pieces of legislation seek to “strengthen oversight, protect planned members and ensure fairness in the administration of pension funds”.
Wayne Furbert, the Junior Minister of Finance, told MPs that the first piece of legislation authorised the Minister of Finance to enact regulations concerning, among other provisions, the maximum fees that may be charged for services related to pension plans, life annuities or pension funds.
Mr Furbert said the National Pension Scheme (Occupational Pensions) (Administration Fees) Regulations 2025 looked to limit the fees charged by pension administrators.
In a ministerial statement in July 2024, David Burt, the Premier and Minister of Finance, said that from 2000 to 2023, it was estimated that planned administrators collectively earned gross administration fees of more than $500 million, based on the typical planned fee of 1.5 per cent of a planned member’s balance.
Mr Furbert said: “The proposed regulations are primarily aimed at assisting those with smaller pension plans by requiring lower administration fees to be charged.”
He said those with a large balance would also benefit from the caps.
“Using the proposed fee limitations in the regulations and the average assets held by planned members, as defined in defined contribution pension plans and local retirement products at the end of 2023, it was calculated that this would equate to an estimated annual savings, on average for each planned member, with balances of over $50,000, of $649, representing $73,000 in total savings over a 37-year employment cycle at an average annual return of 5 per cent.”
The minister said for planned members with small pension plans of up to $50,000, there would be between $17,000 to $20,000 in savings over a 37-year employment cycle. He called it “enormous”.
Mr Furbert said some fees falling outside planned pension administration services will be disallowed under the regulations. There will also be a transitional period before becoming operative in early 2026.
Mr Furbert said the regulations will introduce “clear and enforceable caps on administration fees, prohibit the receipt of investment advisory fees where no service is provided, and establish penalties for violations. Importantly, there will be a transitional period to allow administrators and industry to adjust, ensuring fairness to all parties.”
Mr Hayward explained: “With these changes, we will put the plan on a more sustainable glide path.
“Putting the plan on a more sustainable glide path means we are ensuring post-retirement security for thousands of workers.”
Mr Hayward spoke after Douglas De Couto, the Shadow Minister of Finance, suggested that changes to the PSSF could have been made sooner.
Dr De Couto said: “It has taken six years; someone from the outside might question, ‘Was the timing based around election?’
“Or maybe it was based around a credit ratings agency — I don’t know. But I’m glad we finally got here.”
The opposition MP urged the Government to enact similar reforms for the Social Insurance and Contributory Pension Funds.
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