As the economic impact of the COVID-19 global pandemic rages on, Finance Minister Curtis Dickinson announced that people suffering hardship can dip back into their pensions again to withdraw a maximum of $6,000.
Speaking at a news conference on Monday (May 24), the Minister said withdrawals could be made from July 1 through to June 30 next year.
But he “strongly cautioned” that only those with a critical need should apply and that it would be difficult for people to make up for lost ground as the impact of this pandemic continues.
“An important consideration in such a decision is that the future consequences of withdrawing money now from your pension fund could be material, as, even if it is replaced in the future, it is likely to reduce what is available when one is no longer generating work-related income,” said the Minister.
“Persons should therefore carefully consider their options.”
In the first round of the scheme, thousands of people applied to withdraw as much as $12,000 to the tune of $120 million.
“It’s reasonable to assume most of that money was spent in the local economy, so it does have a stimulative effect,” said Mr Dickinson.
“We recognise there are still people finding it extremely difficult to make ends meet.”
Highlights of the Minister’s full statement:
For more than a year now we have been in an intense battle with the COVID-19 pandemic. As a result of this destructive virus, countries including Bermuda, have faced unprecedented health and economic challenges.
This pandemic has not only impacted the health and welfare of individuals, but it also has had a significant financial and economic impact. To address the fallout in Bermuda, a great deal of work has taken place in the Ministry of Finance and across Government to assist people and businesses.
The details of the program will be as follows:
- Withdrawals only pertain to vested contributions up to $6,000
- The program only pertains to defined contribution plans registered under the National Pension Scheme (Occupational Pensions) Act 1999. Eligibility cannot be extended to members of defined benefit or annuity plans, due to the nature of such plans; and
- Applications can be made from July 1, 2021 to June 30, 2022
Although this initiative is being made available to all who meet the eligibility criteria, we strongly caution that only those who have a critical need for access to emergency funding should take advantage of this withdrawal option.
An important consideration in such a decision is that the future consequences of withdrawing money now from your pension fund could be material, as even if it is replaced in the future, it is likely to reduce what is available when one is no longer generating work related income.
Persons should, therefore, carefully consider their options. Factors that should be considered in making such a decision should include the number of years to retirement, current financial situation and even health factors.
The Ministry has also taken actions to assist the country and its people as we look beyond the pandemic. The finalisation of the Economic Recovery Plan was an important part of that work. This plan highlighted 31 key initiatives, and the Ministry of Finance will work with other government departments and the private sector, as appropriate, in the development and implementation of these initiatives.
The work of the Ministry will include the provision of appropriate incentives and concessions to facilitate investment in needed projects; assessing various options for achieving the best outcome for Bermuda, and supporting industry in their work to attract additional quality business to Bermuda.
To further aid in economic recovery, the Government has made infrastructure spending a priority. As mentioned recently in the House of Assembly, the Government guaranteed a $30 million Bermuda Land Development Corporation (BLDC) loan with local banking institution.
The funding was for the work being undertaken by the BLDC in relation to the installation of a sewer main, a drinking water main, a reclaimed water main and a spare main in St. George’s. This infrastructure project is important for the Town of St George’s (the Town) and the new St Regis Hotel.
When all is completed, it will remedy the failing sewage infrastructure within the Town; increase water production to service the Town as well as residents of St George’s and St David’s; and it will introduce a new resource of non-potable water available for flushing, irrigation and service to the new hotel.
The aim of this project is to provide future services to residents, and to ensure that first class infrastructure is available for the hotel, which is seen as a much needed tourism boost for the Town. It will also provide opportunities for employment as contractors execute the works, while also serving as a blueprint for similar projects in other parts of the island.
A total of approximately $1.3 million has been spent on Stimulus Projects to date and include projects such as a Solar project for the Government Administration, General Post Office, TCD and Fort Langton Bus Depot buildings; the construction of a Molecular Diagnostic Lab; structural work on the Coney Island bridge and Darrell’s Wharf repair work.
The Ministry of Public Works is currently partnering with the Department of Workforce Development (DWD) and will encourage contractors to reach out to DWD if they need to hire any labor for Stimulus Projects. The Government believes these Stimulus Projects will not only help to stimulate economic and job growth, but will also create and enhance its valuable assets.
In order to help invigorate the Tourism Industry, an industry hit particularly hard by the pandemic; the Ministry has worked closely with the Ministry of Tourism and the Bermuda Tourism Authority on enabling Bermuda to home port cruise ship vessels. The Ministry of Finance has provided customs concessions to make home porting an attractive proposition for the cruise lines.
It is expected that this program will benefit the City of Hamilton, Dockyard and St George’s [as well as other parts of the island, as we start to see a steady flow of tourists dining in restaurants and bars, buying gifts and exploring our beautiful island home.
The Ministry has provided home porting passenger ships with duty relief on fuel; equipment, furnishings and fixture; and a wide range of supplies.
The Viking Orion, as a result of the collaboration with the Government, has therefore chosen Bermuda as one of three countries along with the UK and Iceland] that it will work with on its “Welcome Back” restart sailing program.
Also, on the tourism front, hotels have been given a six-month payroll tax exemption for both the employers’ portion and the employees’ portion, which began as of April 1, 2021. Further, certain concessions for bars and restaurants have been extended from April 1, 2021, to March 31, 2022. These relate to payroll tax exemptions for the employers’ portion and will help provide needed support for this sector that has also been significantly affected by the pandemic.
Along with all of these initiatives, we have continually highlighted our commitment to continued prudent management of Bermuda’s finances.
Our economic recovery plans, as well as the protocols that we have established for effective and appropriate fiscal management, have already been evaluated by one of our major rating agencies. They have reaffirmed Bermuda’s previous strong sovereign ratings and assessed the outlook to be stable. This is a significant endorsement of Bermuda’s fiscal and economic program and its plans for recovery and growth.
As the Government has demonstrated, we have a clear and defined path out of this pandemic. We believe the future is bright and is full of hope and opportunity for all. With everyone’s help and support, the Government will bring us all out far stronger than when the pandemic first began.