Finance Minister Bob Richards claimed yesterday that his explanation to seniors for why state pensions can’t be increased was taken out of context, insisting that those who heard him speak would say: “This guy Richards really wasn’t as blunt as he appeared to be.”

Mr Richards told about 100 members of Age Concern at the charity’s annual general meeting that “money does not grow on trees” and if he increased pensions he would “inflict pain and discomfort for people who come after us,” as reported by The Royal Gazette on Tuesday.

The Minister argued yesterday that though his remarks were accurately reported by this newspaper, the context in which they were made was not, giving the wrong impression to readers.

He said his opening comments to the audience at the September 10 event framed the “whole issue of Government’s handling of pension funds and all matters that had to do with retirement” in the context of the imbalance between the growing number of retirees and the dwindling number of young earners funding the state pension pot.

“That imbalance has been doubly difficult for Bermuda for two reasons,” he said, pointing out that the “baby boomer generation” was now older than 65 but had not replicated itself enough to “put that bulge back into the younger generation”.

“Those financing us are smaller in number than they need to be. That’s the first point. The second point ... that’s specific to Bermuda is that we have lost a significant population of Bermuda during the recession.

“Nobody really knows the number for sure — I would say it’s at least 5,000.

“We have lost a number of people from the population and most of them have been in the younger, healthier, well-paid demographic. So we are down on two fronts in terms of financing our retirees’ benefits. This is the context into which you must put any question having to do with pensions or healthcare for seniors.”

He added that the above context was critical and any perception that he was less than diplomatic at the charity’s AGM was “wrong”.

“When you look at that, you say ‘This guy Richards really wasn’t as blunt as he appeared to be’ because I have been explaining this question since the time I got there. It just has to be said over and over again.”

The exodus of expat workers during the recession must be reversed, according to the Minister, who argued that attracting highly-paid foreign exempt company employees to Bermuda would help boost the pension pot.

“If we are successful, then that imbalance can be addressed,” he said. “The Bermuda-specific problem we have is something that the Government is actively prosecuting.”

He said the majority of guest workers did not claim their state pension from Bermuda, either when they left the Island or on turning 65. “A lot of money goes in there that people don’t take out.”

We reported on Tuesday that Mr Richards told the meeting that the Contributory Pension Fund, which pays out state pensions to those 65 and above, was badly underfunded. It was said last year to be underfunded by $2.06 billion, with its resources likely to be exhausted by 2047 if current actuarial assumptions remain unchanged.

The most recent Government budget book shows that the fund is targeted to pay $11.4 million a month in benefits to retirees during this fiscal year, while receiving only $9 million in contributions from the working population.

Mr Richards said: “We have issues that very often aren’t simple or straightforward or obvious and you try to get people to understand them by putting them into context.

“Whether or not you get an increase in pension, the way you feel about it has to do with the context in which that issue exists.”

He said he told the Age Concern meeting that Government was paying out $360,000 a day or $10.8 million a month to service the country’s debt, which while not “strictly germane” to the separate pension pot, highlighted the state of Bermuda’s finances.

Pensioners last got an increase in their contributory pension in August 2011 — a three percent rise described by the then Opposition One Bermuda Alliance as “woefully inadequate”.

Asked why his party made that criticism in 2011 but had not increased pensions since coming to power, Mr Richards said: “What we said at that time was from a position of not being on the inside and what I say now is from a position of having gone ‘under the hood’ for a year-and-a-half.”

He agreed the OBA was well aware of the size of Bermuda’s debt in 2011.

The cost of living in Bermuda has risen by 6.3 percent, according to the Consumer Price Index (CPI), but Mr Richards said inflation shouldn’t automatically lead to increased pensions when “everybody else is taking pay cuts”.

“We are living in a situation where we are trying to correct the excesses of the past,” he said.

“That’s the environment in which the Government and most of Bermuda is operating in. The context is everything.”

He said the state pension was never meant to “provide a standard of living for Bermuda” and anyone relying solely on it was “in real trouble.”

The Minister said he didn’t know how many seniors were in that position, adding: “There’s a lot of things I want to know that I don’t know.”