Updated: Jan 19, 2024 07:57 AM
Kevin Grant, the general secretary of the Bermuda Public Services Union, said that all groups involved in pension talks have to be in agreement about any changes (File photograph)
Every group involved in talks over the retirement age must agree to any changes, a union leader stated.
In a live interview this week on the Government’s Facebook page, David Burt said that consultations were continuing about pensions, which was likely to entail a combination of increased contributions and raising the retirement age.
The Premier noted that “the initial proposals we felt were too onerous for the economy” and said that discussions on securing pensions would have to persist.
In response, Kevin Grant, the general secretary of the Bermuda Public Services Union, said: “The consultation aspect is still progressing and, noting the significance of the matters at hand, there certainly will need to be an amenable resolution reached by all stakeholders involved.”
He said both pension funds, the Public Sector Superannuation Fund and the Contributory Pension Fund, were underfunded and forecast to run out of money by 2040.
“That prediction is quickly changing when we consider that by 2026, a quarter of our population will have reached retirement age and the death rate is outpacing the birthrate,” added Mr Grant.
“There should be no doubt in the minds of anyone that there needs to be adjustments made to these funds. However, how we implement these adjustments will be critical.
“All stakeholders must be in agreement with these changes — which just may not be as easy a task.”
The Bermuda Fiscal Responsibility Panel’s annual assessment released last December said: “Similarly, an ageing population undermines the future solvency of the government pension funds: the Contributory Pension Fund and the Public Sector Superannuation Fund.
“On the latter, a package of measures is under discussion to increase contribution rates and raise retirement ages, which should help put the PSSF on a more secure footing.
“However, by 2026, the CPF will be paying over $100 million a year more in benefits than it will be receiving in contributions and on central assumptions it will be exhausted by the mid-2040s.”
The recently published Pre-Budget report also warned about pension, health and other contingent liabilities.
It said: “The Government has significant long-term contingent liabilities which, if crystallised, could imperil future solvency. Chief among these are the Government pension funds: the Contributory Pension Fund and the Public Service Superannuation Fund.
“In response, the Government has consulted with various stakeholders with the primary aim of ensuring the long-term sustainability of these schemes.
“With regard to the PSSF, recommendations have been shared with unions covered by the fund, which have received broad support as the Government works towards a final agreement.
“The recommendations put forth will ensure the PSSF is sustainable into the future. The Government also continues to advance the consultation regarding changes that will make the CPF sustainable and will provide an update following the current round of consultation.”
One Bermudian businessman, who is familiar with the pension problem but who asked not to be named, said the issue of underfunded pensions and pension reform was a problem throughout the West.
“The current system penalises the younger generations for the benefit of the older generations,” he said.
“But this older set benefited enormously from the increased living standards since the 1940s and accumulated substantial wealth. On top of that, they also lucked out with house prices, which in many countries outstripped inflation by a country mile.
“You can think of it like this — most wealth is produced in and around the large cities. The older generation bought properties nearby and gained from the prosperity.
“They either sell up and buy larger houses in rural areas or stay put and force up the price of housing for their successors at work. Bermuda has avoided this in part because of the restrictions on foreigners buying houses.”