Listeners to the Government’s leaders in the House of Assembly last week could have been forgiven for thinking that the island’s main pension fund — the $2 billion Contributory Pension Fund — was in great shape.

Both Wayne Furbert, the junior finance minister, and, later, David Burt, the Premier and finance minister, were keen to pat their own backs for the Progressive Labour Party government’s record of increasing pensions in six of the past seven years.

Mr Furbert also delivered the seemingly positive news that the fund had enough money to pay pensions for the next ten years, even if no further contributions were received.

It is possible, on the last day of the parliamentary session, that Mr Furbert and Mr Burt felt entitled to some self-congratulation, and to also use the day to score a political point — namely that the One Bermuda Alliance raised pensions only once in the 4½ years it was in power between December 2012 and July 2017.

So far, so normal. But what was missed was an opportunity to have a real debate on the state of the Contributory Pension Fund and the need for reforms before it goes bust. Mr Burt was in fact much more upfront earlier this month about the state of the Public Service Superannuation Fund — the government workers’ pension fund — which faces a similar crisis.

There, discussions about the need for increased contributions and a rise in the retirement age are already under way.

In fact, Mr Burt elaborated on the state of the CPF in the Budget in May, when he promised changes in 2026 and described some of the urgent challenges it faced.

The problem, in fact, is quite simple.

Despite Mr Furbert’s celebration of the state of the fund and the reasonably good investment returns it has earned in recent years, the fund is projected to run out of money in 18 years’ time, and according to the most recent actuarial report from 2023, will begin to pay out more money in benefits than its takes in from contributions and investment returns as of next year.

At the same time, the island’s ageing population and shrinking workforce mean fewer working people are supporting more and more pensioners. In 2011, there were 10,459 pension recipients; this increased to 14,536 by 2023. According to Mr Furbert, there are 15,086 recipients this year.

At the same time, the number of contributors fell from 35,913 to 33,770 between 2011 and 2023.

Indeed, all of the indicators for the CPF are headed in the wrong direction. The reality is that only good investment returns are ensuring that the fund does not run out of money sooner because, even now, the fund is paying out $203 million a year and taking in just $135 million.

The actuarial report stated: “The CPF is not financially sustainable for the long term: assets are 55.2 per cent of projected accrued liabilities and the fund is projected to be exhausted around 2042.

“While full funding is not required for national pension systems, there should be a viable financing strategy that ensures that future generations will not be overly burdened or forced to receive significantly reduced benefits.

“Expenditure is projected to exceed contributions plus investment income from 2026, meaning that assets will have to be liquidated to help meet expenditure. As more and more assets are sold to meet benefits and expenses, they are projected to be depleted by 2042.”

As Barclay Simmons, the chairman of the Government’s public investment committee said in relation to the PSSF, this is not something that will happen in 20 years. It is effectively starting now.

The solutions to the problem are relatively straightforward, but they are politically difficult — in fact, there are no good choices.

One is to slow or reduce the rate of increase in pension benefits. Given that Mr Burt and Mr Furbert spent a good deal of time last Friday explaining why the PLP was determined to keep its commitment to maintain increases at the rate of inflation, this looks to be a non-starter, and it would be cruel to make pensioners, already reeling from the cost of living, to struggle further.

The next choice is to increase the rate of contribution from working people. This is politically difficult as working people and local businesses struggle under the weight of already-high costs, but there is at least a logic in the idea that the donations will fund the same workers’ future retirement.

The third option, already being implemented for government workers and being put in place elsewhere in the world, is to raise the retirement age so that people do not receive their pensions until they are older.

The logic for this is relatively straightforward. Generally, people today live longer than they did when the retirement age of 65 became commonplace, and they are physically and mentally stronger than their predecessors. Nonetheless, this is not popular for people who have worked for four decades or more and who are ready to enjoy a few years of retirement.

Typically, this is phased in, so that a 60-year-old today might not retire until they were 67, while a 55-year-old might have to wait until they were 69. This at least gives people time to plan to work longer.

There are other options, including using the revenue from the corporate income tax to top up the fund. This is obviously attractive because it is painless. But the amount of revenue to be derived from the CIT is not yet known, and there are likely to be many demands on this revenue, aside from the implicit promise that other government taxes should decline as the CIT comes into effect.

Nor does it solve the fundamental need to make the CPF more self-sustaining.

The final option is to have employees and employers contribute more to their private pension funds. This would mean that they would get more income from these pensions, reducing the need for support from the CPF.

Other countries, including Singapore, require people to put aside as much as 17 per cent of their salary to their pensions, and while this seems like a lot, it also means that people are able to use the fund for things such as down payments on first home purchases.

Mr Burt has stated that the Government will look at reforms to the CPF in 2026 since it is dealing with the PSSF this year. Frankly, the reform process can’t start soon enough.