Hard on the heels of the announcement that residents will face a 4.2 percent hike in social insurance contributions as of August 1, Premier Burt said Government will move away from charging a flat rate to create a fairer tax system.
The end goal he said, will be to lessen the burden on Bermuda’s vulnerable residents of sustaining the island’s pension scheme under a “more progressive system”, set to be introduced next year.
In a statement issued today, Mr Burt also noted that seniors received a pension benefits increase of 1.7 percent last December, which was backdated to the previous August.
“To maintain the long-term viability of the Social Insurance Plan, whenever benefits are increased, contributions are increased as well.
“However in 2017 the Ministry of Finance was sensitive to the fact that contribution rates had already been set by employers for the current fiscal year, therefore, the increase in contributions was delayed until August 2018,” he said.
“Government will keep our pledge to our seniors by ensuring their pension benefits keep up with the increase in Bermuda’s cost of living.
Minister of Government Reform Lovitta Foggo at SCC“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,” he added.
At this point in time, the current combined rate per week for both the employer and the employee is $68.94 or $34.47 each.
As of August 1, the new rate will see the combined rate increase from $71.84 to $35.92 respectively.
In his opening remarks, the Premier also stated: “After one pension increase for seniors in six years, this Government pledged to increase pension benefits for seniors every year by the rate of inflation.”
And on that note he said his administration is “delivering on that promise”.
He concluded: “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.”
