Premier sets record straight on pensions

Tuesday, July 10, 2018
Premier and Minister of Finance, the Hon. David Burt

In reply to the Opposition Leader’s statement yesterday on “a progressive pension plan” the Premier and Minister of Finance the Hon. E. David Burt JP MP noted the following:

“The proposal to change employer and employee contributions for the Social Insurance Plan from a fixed rate to a percentage of earnings is nothing new.

“In our 2017/18 budget reply, we proposed to complete a comprehensive examination of the social insurance programme, including the impact of changing employer and employee contributions from a fixed rate to a percentage of earnings, and the appropriate level for the cap on social insurance contributions. The objective of the review will be to increase the take-home pay of low earners.

“Also in the Government’s election platform we proposed to ensure fairness in our tax structure by performing a comprehensive examination of the social insurance programme to increase the take-home pay for low-income earners.

“In keeping with our promise last week I announced that next year, in conjunction with our pledge to create a fairer tax system, Government will begin the process to change pension contributions from a flat rate to a more progressive system ensuring that our most vulnerable Bermudians will carry a lower share of the burden of sustaining our pension system.

“Also the Opposition Leader’s statement that policy announcements by this Government lack any detail is without merit.

“Before any decisions are made, the Government’s actuary will conduct a comprehensive examination on the social insurance programme and make recommendations to the Government so that we can meet our objectives. This work will be performed during the 2017 actuary review of the Fund which is currently underway.

“The Opposition leader’s statement that she has never heard of a progressive contribution into a defined benefit fund shows a clear lack of understanding on the structure of social insurance schemes worldwide.

“Very few currently have flat rate contributions. For example, the contribution rates under the Canadian Pension Plan (CPP) – Canada’s version of the Social Insurance Plan - are based on a percentage of an employee’s earnings.

“Under the CPP there is a basic salary exemption below which contributions are not paid as well as a salary cap above which contributions are not paid.

“Also under the UK State pension plan employers and employees pay National Insurance contributions depending on how much the employee earns.

“This is a Government that keeps its promises made to the people that elected us in July 2017.”