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Locked in: planned changes are expected to ensure the sustainability of the public sector pension pot<\/p>\n
A series of proposed reforms designed to bring security to public sector pensions include increasing the maximum retirement age for most civil servants to 70 and raising the age at which they can receive a full pension from 60 to 65.<\/p>\n
David Burt outlined the changes in the House of Assembly yesterday, when he told MPs that the amendments would be phased in and that they came after years of consultation.<\/p>\n
The Premier and Minister of Finance said: \u201cThe Public Service Superannuation Fund, which pays the pensions of our teachers, police officers, nurses, prison officers, firefighters and the many other public officers who serve this country, is not on a sustainable footing.<\/p>\n
\u201cThe most recent actuarial valuation, as of March 2023, shows an actuarial deficit of just over $1 billion.<\/p>\n
\u201cThe fund is only 37 per cent funded. Without reform, the fund is projected to deplete its assets by 2045. That is within the working lifetime of many Bermudians now in the Public Service.\u201d<\/p>\n
He explained: \u201cA funding ratio of 37 per cent means that for every dollar owed in pensions, the fund has only 37 cents in assets.<\/p>\n
\u201cA deficit of $1 billion means that unless changes are made, taxpayers will be required to cover the shortfall, leading to increased taxes for residents and businesses. And depletion in 2045 means that a Bermudian in the Public Service today could reach retirement only to find the fund exhausted.\u201d<\/p>\n
Mr Burt said: \u201cThe maths is clear. The contributions going into the fund are not enough to cover the benefits being paid out.<\/p>\n
\u201cAs people live longer, the number of retirees grows and the pressure on the fund increases.<\/p>\n
\u201cUnless changes are made, taxpayers will face an ever-increasing liability that could jeopardise both pensions and Bermuda\u2019s wider economy, putting credit ratings under pressure and leading to increase interest rates for all.<\/p>\n
\u201cThe path is unsustainable and to do nothing would be irresponsible.\u201d<\/p>\n
MPs heard that the \u201cmost important change\u201d related to the earliest unreduced pension age.<\/p>\n<\/p>\n
Mr Burt said: \u201cAt present, non-special group members, which are the broad majority of public officers, can receive an unreduced pension at age 60; and special group members, which are our uniformed services, at age 50.<\/p>\n
\u201cUnder these reforms, those thresholds will rise gradually to 65 and 55 respectively, phased between 2027 and 2035.<\/p>\n
\u201cThis is effectively the retirement age for most public officers because it is the point at which they can retire without penalty.<\/p>\n
\u201cThe change from 60 to 65 for most public officers is significant. However, even at 65, Bermuda\u2019s effective retirement age remains well below the benchmarks in most developed countries, where retirement ages are 67 or higher.<\/p>\n
\u201cThis change is about aligning with demographic realities while still providing our public officers with one of the more generous public pension systems globally.\u201d<\/p>\n
Most public officers contribute 8 per cent of their salary to the fund, but the amendments mean that portion would increase to 10 per cent over three years.<\/p>\n
For uniformed services, contributions would rise from 9.5 per cent to 11.5 per cent over the same period.<\/p>\n
\u201cImportantly, these increases will be offset by negotiated salary uplifts, meaning that public officers will not see their take-home pay reduced,\u201d the Premier said.<\/p>\n
\u201cThis approach balances the need to strengthen the fund with fairness to workers.\u201d<\/p>\n
Instead of calculating pensions based on an employee\u2019s final-year salary, the planned changes would result in calculations based on the average of the final ten years of work, phased in over a decade.<\/p>\n
<\/p>\n
David Burt, the Premier (File photograph by Blaire Simmons)<\/p>\n
Mr Burt said: \u201cThe maximum age at which a public officer must retire is 65 for teachers, 68 for other non-special group members and 55 for uniformed services.<\/p>\n
\u201cThese will gradually increase to 70 and 60, respectively, by 2035.<\/p>\n
\u201cIt is important for Honourable Members and public officers to note, this is not the earliest age at which someone can retire, but the latest age at which they must retire.<\/p>\n
\u201cThese changes reflect longer life expectancy and modern working realities.\u201d<\/p>\n
He added that pension fund members can commute part of their pension into a lump sum based on a fixed factor of 11.5 per cent.<\/p>\n
\u201cThis provision has proven costly to the fund,\u201d the Premier said.<\/p>\n
\u201cGoing forward, this conversion factor will be actuarially assessed at each valuation, ensuring that lump sums are properly funded and do not weaken the fund\u2019s long-term sustainability.\u201d<\/p>\n
Governance of the PSSF would also be strengthened in the amendments, with the Public Service Superannuation Board expected to have \u201ca more formal role in reviewing actuarial valuations and advising on future reforms\u201d.<\/p>\n
Mr Burt said: \u201cTaken together, these reforms will transform the trajectory of the fund.<\/p>\n
\u201cActuarial modelling indicates that instead of depleting by 2045, the fund can achieve fully funded status by 2060.<\/p>\n
\u201cIn practical terms, that means that pensions will be secure not only for today\u2019s retirees but for generations to come.\u201d<\/p>\n
He added: \u201cI also want to speak directly to our retirees.<\/p>\n
\u201cOne of the most difficult consequences of the fund\u2019s financial challenges has been the freeze on pension increases since 2014.<\/p>\n
\u201cThis has placed increasing pressure on many of our retirees as the cost of living has risen.<\/p>\n
\u201cThe reforms we are bringing forward today are not only about securing pensions for those still in service, they are also about creating the financial capacity to advance benefit increases for those already retired and for those who will retire in the future.\u201d<\/p>\n
The Public Service Superannuation (PSSF Stability) Amendment Act 2025 was tabled in the House.<\/p>\n
\u2022 To view the ministerial statement in full, see Related Media<\/p>\n
![](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/06\/1749852018_410_pdf.png\"\/)
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