In a bid to achieve “a fairer, more equitable society and bring Bermuda’s social insurance system in line with other countries around the world”, Premier David Burt changes are on the way.

In a post Throne Speech briefing, he said: “It is intended that contributions will be changed from the current fixed rate for all persons, regardless of income, to one that mirrors other countries in the world where social insurance contributions are paid as a percentage of earnings.

“The effect of this change would be to increase the take-home pay of low-wage earners while having high-wage earners pay more into the fund. Changes resulting from this work will be revenue accretive to the CPF, which will help to address the underfunded nature of the pension plans.

“It is anticipated that the relevant legislative amendments to address this issue and to address the problem of underfunding these pension funds will be enacted in this legislative session.

“All of this work highlights the priority the Government gives to the protection of consumers, to reducing the cost of financial services to the customer and to the promotion and support of Bermudians in achieving their goal of home ownership,” he added.

He also reiterated the Government’s 2021 Throne Speech pledge, to “look to protect consumers by reducing the fees charged by service providers to residents with private pensions”.

In terms of dollars and cents, the changes will see workers making $18 an hour get an extra $720 a year.

When it comes to a safety net system, he said contributions need to be changed to a sliding-scale model as used in the UK.

Amendments to the Contributory Pensions Act 1970 moving forward, will see payments “based on salary earned and not a uniform contribution irrespective of income”.

“I would say that the social insurance changes are similar to the social insurance changes from… in the United Kingdom which were made many, many years ago,” said Premier Burt.

“Every social insurance system around the world that was set up under the UK model had the same contributions for everyone regardless of however much they made.

“But, in the United Kingdom, I think that was changes in the 1970s or 1980s; Canada was changed a long time ago. It’s just that Bermuda is this outlier.

“The effect of this change would be to increase the take-home pay of low-wage earners while having high-wage earners pay more into the fund. Changes resulting from this work will be revenue accretive to the CPF, which will help to address the underfunded nature of the pension plans.

“The cashier making $40,000 a year at a local store is paying the exact same amount as a person making $400,000 who owns the store.

“That doesn’t happen anywhere else in the world.”

While noting that “this is certainly not something that can be rushed, he added: “What we are taking about is a percentage of income for social insurance.

“Bermuda is just one of the few countries that are left that never changed their initial social insurance system from one that is a fixed rate to contribution to one that is a percentage of income.”

He said: “There was another step promised in September that the Ministry of Finance will deliver in this legislative session — that was a promised review of the sugar tax.

“The Government is reviewing the application of the sugar tax with a view to reducing the goods that are subject to the sugar tax.

“In our discussions with importers and retailers, there was a discussion about the wide range of products that the sugar tax is now applicable to, and the Ministry of Finance is working with the Ministry of Health to narrow the application of the sugar tax to provide additional relief, while not going against the main purpose of the sugar tax — to reduce the consumption of sugary items to enable long-term benefits for healthcare, as we know we have severe issues of chronic disease in Bermuda, specifically those of diabetes.”