Unions take legal action over pension legislation
A lawsuit launched by the organisations that represent several uniformed services claims that an amendment to pension legislation was unconstitutional.
The Bermuda Prison Officers Association, the Bermuda Fire Service Association and the Bermuda Police Association have together challenged the Governor and the Attorney-General in the Supreme Court’s civil jurisdiction.
A copy of the summons, provided to The Royal Gazette, showed that the case relates to the Public Service Superannuation (PSSF Stabilisation) Amendment Act 2025, which made alterations to the Public Service Superannuation Act 1981.
The amendment provided that by April 2035 most workers’ retirement ages would have increased by five years and their pensions would be calculated by an average of the final ten years of salary rather than the final year.
However, the unions argued that the recalculation would reduce their members’ pension rates, since officers were likely to earn more in their final year before retirement than the average of the last decade working in their respective jobs.
They further argued that the amendment was in contrast with Section 91 of the Bermuda Constitution, which was designed to make sure that public officers’ pension rights are not negatively altered by the law once they have started their service.
The summons added: “ … ie, the law that applies to a person’s pension is the law that was in effect on the day they were appointed to their office, and if the law is changed later, the new version only applies if it is more favourable to the officer.”
It was noted that the Section 91 of the constitution was headed “The Public Service”.
“ … the purpose of a separate chapter for the public Service is to insulate public officers from political influence exercised directly upon them by the Government of the day,” the summons added.
The amendment, it was argued, also went against Section 34 of the constitution, which provides that the legislature’s power to create laws was subject to the constitution.
It was claimed that the applicants’ rights to protection of law in line with the constitution were “infringed” by changes to the legislation.
The summons — a copy of which was received by the Gazette last week — noted that the provisions set out in its arguments do not take effect until April 2027.
It added: “The specific amendments identified above are self-evidently less favourable than the pre-amended 1981 Act.
“The retirement age will increase by five years [over a ten-year period] and the rate of pension is likely to reduce since an officer will likely earn more in the final year before retirement that an average over the last ten years before retirement.
“In any event, the amendments are necessarily less favourable as purpose for the amendments is to make the pension fund more ‘sustainable’.”
The plaintiffs, represented by Trott and Duncan, sought declarations that certain sections of the Act were invalid or inoperative as they relate to police, fire and prison officers whose employment began before the law was enacted, as well as any relief deemed justified by the court.
Jeffrey Elkinson, for the respondents, confirmed the parties met on August 6 for a directions hearing.
He added that the unions will be submitting a protective cost order to keep them from paying the cost of opposing counsel in the event that they lose the case.
Counsel is in the process of arranging a date for this hearing.
When contacted, the Governor’s private secretary said: “As this matter is before the courts, it would not be appropriate for us to comment.”
The Attorney-General also declined to comment.
The amendment Act was put forward last September and came into effect in October.
It was part of the Government’s effort to stabilise the Public Service Superannuation Fund and strengthen it for the future.
The amendment raises the age public sector workers can access their unreduced pensions by five years, which would be phased between 2027 and 2035.
For special groups, such as police officers and prison guards, the change gradually shifts their pension age from 50 to 55, while non-special member groups will increase from 60 to 65.
Under the Act, public servants will also increase their pension contributions from 8 per cent to 10 per cent across three years, while uniformed service workers will increase their contributions from 9.5 per cent to 11.5 per cent over the same time frame.
The pension calculation reform will also be phased in across ten years.
David Burt, the Premier and Minister of Finance, said in the House of Assembly last September that the increase would be offset by salary uplifts.
He added that the changes “did not come easily”, explaining: “They are the product of years of consultation.
“The Government has engaged with unions, staff associations and stakeholders across the Public Service.
“Multiple meetings were held. Proposals were revised. Adjustments were made to ensure that what is brought to this House is both fair and workable.”
Mr Burt said: “Unions stressed the importance of gradual implementation and we agreed.
“Workers expressed concern about protecting the value of their pensions and we responded by ensuring that reforms secure the fund for the future.”
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