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Public sector pension increase widens gap amongst seniors

Economist Robert Stewart says proposed pension increases for retired public sector workers, MPs and senators simply leave the average senior even further behind.The Royal Gazette yesterday.

The average benefit for retired civil servants, police, firemen and teachers will go up $705 to $18,352 a year, or $1,529 a month, under a four percent increase outlined in orders tabled by Premier Paula Cox last Friday.

Meanwhile, the average benefit for retired MPs and Ministers will go up $1,379 to $35,857 a year, or $2,988 a month.

However, retired non-public service workers, will continue to lag behind and remain on $8,095 a year, or $674 a month.

Mr Stewart said it's particularly unfair that former legislators will now get an even greater portion than the person off the street.

“The guys who do all the hard work and heavy lifting continue to get the same pension benefits but the drones help themselves to even more,” he told

“The legislators get more than anyone else anyway. It's the usual case. They ask everybody to sacrifice and then help themselves to the biggest slice of the cake.

“If there's enough ruckus we may see seniors across the board get a rise, but unless people make a fuss this will just be forgotten.”

The above figures are based on the most recent Actuary reports for the Civil Service Pension Fund, Social Security Fund and Legislators' Pension Fund from 2008.

According to those reports, 2,094 people get their pensions from the Civil Service Pension Fund, meaning its annual cost will now go up from $36.9 million to $38.4 million; and the cost of the 30 former legislators goes up from $1.0 million to $1.2 million.

The increases come under the Pensions (Increase) Order, and Pensions (Public Service Superannuation Act 1981) (Increase) Order, which were tabled by the Premier and Finance Minister last Friday. They will be backdated to July 1.

The four percent increase is for retired civil servants, police, prison and fire officers, Ministers and MPs and people receive ex gratia payments, whose pensions began before 2009.

A three percent rise will go to those whose pensions began in 2009; with one percent for those whose pensions began in the first half of this year.

Ms Cox's press secretary Beverle Lottimore has explained those increases must be handed out if the cost of living rises by half a percent or more, because of the Pensions Increase Act 1972.

However, seniors who didn't work in the public sector have been warned there will be no rise for them in 2010 for the first time in nine years.

Ms Cox has said a rise is likely next year, but that their pensions will be in good shape for many years to come thanks to a near 50 percent increase in pension benefits put through by the Progressive Labour Party Government.

She has also indicated Government will assess both public and private pensions and consider closing the gap between pensions received by Bermudians and non-Bermudians.

Mr Stewart, author of business handbook ‘A Guide to the Economy of Bermuda', is a keen critic of Government's handling of pensions, saying that from his research the Social Security Pension Fund deficit is $2.8 billion, Civil Service Pension Fund deficit is $760 million and MPs Pension Fund deficit is $8 million.

He says added to official Budget debt of $990 million, this leaves total Government debt at $4.5 billion.

“If we don't provide for it now, someone in the future is going to have to. We are stealing from our children,” he said.

“I'm just surprised that members of the clergy have not come out and said something about it. It might be done by an Act of Parliament but it's still theft. If you put a gun to someone's head and stole their wallet, you would go to prison.”

Economist: Robert Stewart

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Published December 01, 2010 at 1:00 am (Updated December 10, 2010 at 3:40 am)

Public sector pension increase widens gap amongst seniors

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