Hard on the heels of concerns raised by the One Bermuda Alliance that the Premier’s progressive pension plan set to be introduced next year, “raises a list of serious questions which the Government must urgently address”, Premier David Burt moved to set the record straight.
In reply to the Opposition Leader’s statement yesterday, Premier and Finance Minister David Burt today reiterated the fact that “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,” said Premier Burt.
“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,” he added.
“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.”
The Premier concluded: “This is a Government that keeps its promises made to the people that elected us in July 2017.”
Opposition Leader and Shadow Finance Minister Jeanne Atherden had stated: “What the Premier is calling for is essentially a social welfare programme. I have never heard of a progressive contribution into a defined benefit fund.
“As usual, policy announcements by this Government lack any detail. In the absence of a clear picture of what the Premier is suggesting, we can only speculate as to where this is going,” she said.
“The people of Bermuda need to know what actuarial and accounting assumptions are being made in order to appreciate all the effects on the pension fund. Is this a pension fund or is the Premier trying to create a social welfare programme? The Bermudian people deserve answers.
“This announcement, just like their aggressive legislative agenda, sees programmes and proposals being rushed through with limited information and little discussion as to the realities of the situation and the impacts that they may have on Bermudians,” she added.
With regard to any proposed policy change, she said the Government “should be explaining to the people of Bermuda the extent of the problem it is trying to resolve, why it is the best solution, the intended impact and where the funding is coming from” as “this will let people know how this policy will affect them and the bottom line”.
On that note Ms Atherden said the elderly “are vulnerable and need to be protected”.
“The OBA supported helping the Island’s elderly and giving those in need some help. Government’s first job should have been to continue the work of lowering health costs and reducing living expenses for Seniors,” she added.
“Even the Health Minister has admitted that health costs are spiraling despite the Throne Speech and Election promises to bring them down. These increases, all coming under this Government, must be hitting Mr. and Mrs. Bermuda hard and they have not been offset by the creation of jobs and new opportunities promised by the PLP.
“Government’s payroll tax relief, a continuation of an OBA initiative, announced in the Budget has more than been offset by these rises, leaving the average person worse off – and we haven’t even got through the PLP’s first year yet,.
“The PLP promised to be transparent and collaborate on important matters that effect the people of Bermuda. This is one of those matters,” she added.
“The OBA promised it would raise public consciousness about important issues which is why we are speaking out now about the PLP approach to this critical issue that will have a long term effect on the country. This is too important not just for us but our children who will bear the consequences.”
