Extra pension plan withdrawals backed by insurance firms
Insurance firms yesterday backed the finance minister’s move to allow people struggling to make ends meet to take an extra $6,000 from eligible pension plans.
But the adminstrator of a hospitality industry pension scheme said said hotel workers who have a plan that does not qualify for the programme are still having to use alternative hardship withdrawals from their pensions.
Lisa Jackson, the vice president of operations for Argus Bermuda, said the firm was “keenly aware” of the hardship suffered by sectors of the public.
She added: “In most cases, a one-time withdrawal of $6,000 is not going to be detrimental to one’s long-term savings.
“In fact, for families who may not have an emergency fund, this is a lifesaver.”
Ms Jackson said: “While contributory pensions are locked in until retirement, this amount can be unlocked, reinvested as a voluntary contribution and can then continue to grow alongside your pension investment while remaining accessible.
“For the second time, Government has had to make the difficult choice between short-term financial support and the long-term financial sustainability of all stakeholders.
“Naturally, the option to withdraw continues to draw considerable interest and we have received quite a few calls and e-mails from enquiring members.”
Ms Jackson said the firm had specialists to help guide pension holders.
Michelle Jackson, of BF&M’s life and health department said the firm supported the “difficult decision” to draw on private pensions from July 1.
But she added: “However, as the Minister of Finance has stated, this decision should be taken with caution as there are consequences to withdrawing pension funds prematurely.”
She said it could mean missing out on the chance to grow the funds for retirement.
Martha Myron, a financial columnist for The Royal Gazette, said it was “a tough decision but the right decision”.
She added: “Everybody has to have hope.
“There are people who can’t pay their bills for basic necessities.
“Bermuda is having a terrible challenging time for money people but I do believe better days are ahead.”
Ms Myron credited Mr Dickinson for “giving out-of-work persons hope for the future”.
She said: “In the meantime, with the latest pension withdrawal lifeline they will still be able to connect to find jobs, upskill, refine current skills, rebrand themselves and be ready for the lift in the economy that will happen.”
Dennis Tucker, the administrator of the Hotel Pension Plan, said he had had “scores” of phone calls from workers seeking hardship withdrawals since last year.
Mr Tucker added workers who could demonstrate hardship could draw on 20 per cent of their accounts, although the HPP plan did not qualify for the Government’s withdrawal scheme.
But he said: “Whatever funds are taken out of the plan doesn’t help it. It does add to what you could call the undermining of the fund.”
A laid-off hotel chambermaid who contacted the Gazette said she failed to qualify for Financial Assistance and was surviving off housecleaning “hustles“.
The woman, who asked not to be named, said she had worked in the industry for 34 years.
She added: “Since the pandemic struck, we’ve been out here suffering, just like restaurant workers. People have been giving me gift cards to get groceries – I’m just waiting for a cleaning business to call.”
She said she had two children and had been surviving off “savings and my family”.
Mr Tucker added the situation remained grim for the industry, and it was “hugely important that we get hotels up and running again”.
But he emphasised it was “not at all” possible to open up the HPP to the withdrawals outlined on Monday by Mr Dickinson.
The Government introduced a benefits package in the latest lockdown against the coronavirus pandemic, including special payments for bar and restaurant workers, which covered some hotel staff.
It also covered mandatory business closures and workers left jobless by the second round of stay at home orders.
Stephen Todd, the chief executive officer of the Bermuda Hotel Association, said the majority of hotels were in operation but with “significantly reduced occupancy levels” because of travel restrictions.
He added: “Canada and the UK come to mind. The coming summer months will hopefully begin to reverse this trend.”
Mr Todd said the HSA counted more than 2,200 employees in the industry at the start of the Covid-19 crisis last March.
He added a survey at the start of April showed more than 1,200 back at work.
Mr Todd added: “Those that are in the workforce have guarded optimism that we will be seeing a gradual extended return of a level of normalcy once additional airlift from our primary gateway cities begins to pick up, and the pent-up demand for international travel is being acted upon especially by those future visitors who are fully immunised, and are seeking to travel to destinations such as that of Bermuda.
“This will in turn permit the hotels to bring back to our industry additional workers who seek to join us in providing optimum levels of service to our guests.”