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Commission says details to come on pension opt-out offer

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Pension administrators are “anxious” to learn the details of a plan outlined in the budget last week to allow the suspension of contributions for a year.

According to the Budget statement, the Government is proposing a voluntary one-year contribution holiday for employees and employers in hope of providing relief to individuals and businesses, and stimulating the economy.

Pension administrators, however, have a host of questions ranging from when the rules come into play, whether one party can continue paying while the other opts out, whether parties can pay less than the required five percent, and how they report their data to the Pension Commission.

“It’s a wait-and-see attitude for us” said John Wight, CEO of BF&M, one of the largest pension administrators in Bermuda. “There are provisions of this that have yet to be ironed out that are important to the insurance industry.”

Argus, another top pension administrator in Bermuda, said it was still accessing the situation and declined to speak about specifics.

William Madeiros, general manager and vice president of Freisenbruch-Meyer Group, said: “We’re just watching to see what it looks like. We’re very anxious to see what the details are.”

According to Peter Sousa, CEO of the Pension Commission, it is “business as usual” stating employers and employees must continue paying until legislation is passed.

At this point, a start date for the voluntary opt-out is not known but according to Mr Sousa, it will likely be “as soon as possible”, soon thereafter legislation is passed on April 1.

Mr Sousa also said that he is looking for the paperwork to be “as simple as possible to benefit all concerned including the administrators”, so the option of whether people can pay less than the required five percent will likely not occur.

“It would seem to me that it would be an accounting nightmare to track varying percentages and to whom it belongs,” he said. “The ideal situation would be to have it as an all-or-nothing situation.”

The question of whether an employee can opt out and the employer opt in, and vice versa, is a key area of discussion, said Mr Sousa.

“We don’t want to prevent any party from making a contribution, if they can,” he said.

Mr Sousa said the Pension Commission has already started to receive input from insurers and said he encouraged more feedback.

“We will take their feedback when working with the Ministry in coming up with how this all can be implemented as efficiently as possible,” he said. “Pension administrators see a side of it on a day-to-day basis that we don’t as a regulatory body.”

William Madeiros of Freisenbruch Meyer
Seeking clarity: John Wight of BF&M

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Published March 01, 2012 at 1:00 am (Updated March 01, 2012 at 7:46 am)

Commission says details to come on pension opt-out offer

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