Major reforms to Bermuda’s public sector pension system will be introduced by the Government to close the growing gap between pension promises and available funds, the Premier announced in the Budget statement today.

The changes, if approved, would affect all civil servants, including police and other uniformed services.

They were designed to place the Public Service Superannuation Fund on a more sustainable path.

David Burt, who is also the finance minister, said: “When implemented, they will eliminate the growing unfunded liability for the PSSF, ensuring that the commitments made to current and future public service retirees can be honoured.”

The PSSF faces major unfunded liabilities, with net assets of $606 million against accrued benefit obligations of $1.63 billion as of March 2023.

Key changes announced included a phased increase in the retirement age, a rise in employee contributions from 8 per cent to 10 per cent — and from 9.5 per cent to 11.5 per cent for uniformed services personnel — and a shift in the retirement benefit calculation from final salary to the average of the last ten years of earnings.

Annual cost-of-living increases for retirees, frozen since 2014, would also be reinstated.

Attention will next turn to the Contributory Pension Fund, which supports more than 14,000 Bermudians.

The CPF is projected to be depleted by 2042 under existing conditions, two years earlier than previously estimated.

Opposition figures have criticised the Government's handling of the issue, particularly the delay in releasing actuarial reports.

The Premier stressed that the fund was well-managed but under demographic pressure, with people living longer and fewer contributors supporting more retirees.

“This is not unique to Bermuda,” he noted, citing similar reform efforts in Britain, the US, Barbados and the Bahamas.

“To ensure our pension system can continue, as a community, we must adjust our expectations,” the Premier said, adding that today’s 45-year-olds deserved to know the fund will be there when they retire.

Changes to the CPF, expected in 2026, will include higher contributions and a phased increase in the retirement age.

Mr Burt said bipartisan support was welcomed, calling pension sustainability “a question of economic security for future generations”.

While acknowledging the political difficulty of such changes, he said the Government would continue to increase pensions in line with inflation.

The Premier pledged: “Our legacy will be one of sound economic management, not only by balancing the books but ensuring that our public pensions are stable and fair.”