The Senate passed a Bill on Monday aimed at keeping the Public Service’s pension fund from collapsing within 20 years.

The Public Service Superannuation Amendment Act has brought comprehensive change to the structure of pensions for government workers.

Kim Wilkerson, the Attorney-General and Minister of Justice, called the amendments a “serious Bill for a serious moment in Bermuda’s history”.

She added: “It rests on a simple idea with a profound meaning — a pension promised to public officers must be a pension paid to public officers.

“A pension promise is only as strong as the fund that pays it. If the fund is weak, the promise is weak. If the fund is secure, the promise is secure.”

The amendment raises the retirement age for uniformed services to collect full pensions from 50 to 55 and most civil servants from 60 to 65.

Salary contributions were also raised, with uniformed service contributions growing from 9 per cent to 11.5 per cent and most other civil servants from 8 per cent to 10 per cent.

The fund will further offer 37 cents in assets for every dollar owed in pensions.

Those who retire earlier will also receive a lower monthly pension, and benefits will be measured across the final ten years of a person’s career.

Retirees would also be able to commute no more than a quarter of their pension into a lump sum determined by actuarial advice after each valuation.

These changes will happen in stages, with the retirement age increasing by one year every two years, between 2027 and 2035.

Ms Wilkerson said that the effective retirement age, which she said would still be below the retirement age of many developed countries, was moved to account for lengthening lifespans.

She added that about 37 per cent of the Public Service Superannuation Fund had been funded, with an unfunded liability of more than $1 billion.

Ms Wilkerson explained that if nothing changed, the fund’s assets would be depleted by 2034 — well within the lives of most working Bermudians.

She said: “If we look away from that reality, the liability doesn’t disappear — it only migrates on to the consolidated fund and ultimately on to the taxpayer.

“That would be unfair to retirees, reckless for workers and irresponsible for the country’s finances.

“The best course, therefore, is to fix the structure now.”

“The choice before this Senate today is not change or no change — it is managed reform today, or unmanaged crisis tomorrow.

“This Bill is necessary and managed reform.”

“This is not about taking something from you — this is about protecting what is yours.”

Ms Wilkerson said the changes had been planned for more than a decade, with the problem being noted with a pension benefit increase freeze in 2014 and a systematic review in 2019.

She explained that the Government had gone through “years” of actuarial analysis, Cabinet consideration and discussions with unions and staff associates.

Ms Wilkerson added that the amendment fell in line with the Government’s work towards fiscal responsibility.

She said: “This is a government that has acted and will continue to act with fiscal credibility.

“Since returning to office, this Progressive Labour Party government has restored fiscal balance after years of deficits, delivering Bermuda’s first budget surplus in 23 years.

“This Bill is just one more step in ensuring that the country’s fiscal affairs are in order by securing the pension promise in a way that protects workers and protects the country’s finances.”

One Bermuda Alliance senator Victoria Cunningham questioned what effect a later retirement might have on promoting younger workers.

She also asked if the change would keep pace with inflation and if the Government had calculated the new benefits model for all government workers.

Ms Wilkerson clarified that the effect of new benefit scheme had been broadly calculated, but admitted that doing so for every government worker would be “impossible” because people’s careers could change.

She added that the changes had been calculated to keep up with inflation up to 2028.

Ms Wilkerson further said that although the workforce would have more labourers, older workers would have a chance to offer more skills to their younger counterparts.