The FAQ’s and answers to them below are general in nature. Persons that have questions not covered here or wishing to receive additional clarification on any pension matter should contact their plan administrator in the first instance. If the plan administrator is unable to answer a person’s questions, the Commission can be contacted for further assistance.
How much you will receive depends on what type of plan you have. If you have a defined benefit plan, you will be able to know how much you will receive based upon specific factors such as your years of service and final salary. If you are in a defined contribution plan the amount of your pension will depend upon the current market value of the contributions made into the plan. In addition, unless you buy an annuity that pays a fixed amount each month, you will be able to draw down a maximum amount each year that increases as you reach certain age bands. See “Retirement Options” under the “Members” tab in the website’s home page for further details.
If you are in a defined benefit plan, the plan will normally have a survivorship or beneficiary clause that allows the value of your pension to be paid to a spouse or other specified person. If you have purchased an annuity at retirement that has a survivorship provision, the named beneficiary will receive a benefit from your pension. If you are in a defined contribution plan or local retirement product, your named beneficiary will receive the balance remaining in your pension fund account. If no beneficiary is named in writing, the value of your pension will be paid by the plan administrator to your estate.
There is no payroll tax payable on any mandatory contributions made to your pension plan by you or your employer.
Unless you participate in a plan under the National Pension Scheme (Occupational Pensions) Act 1998 (the “Act”) and regulations made thereunder where such refunds are not permitted, you have the ability to make an application for specified financial hardship refunds, small pension refunds at retirement, 25% lump sum refunds at retirement or temporary refunds as may be permitted under the Act from time to time. See “Refunds” under the “Members” tab in the website’s home page for further details.
Yes. A self-employed person between the age of 23 and 65 who has pensionable earnings exceeding $20,000 from self-employment is required to participate in a registered pension plan and make contributions.
Pensionable earnings from self-employment means net earnings from a business (calculated on a consistent basis from year to year using either a cash or accrual method of accounting). Net earnings means a self-employed person’s revenues less expenses (excluding any wages, salary, leave pay, fee, commission, bonus or payments from a profit-sharing scheme paid to a self-employed person) from operating a business in a calendar year.
A self-employed person satisfying the above requirements is not, in any one calendar year, required to contribute an amount which exceeds $10,000.
Yes. Your funds can be transferred to another approved local retirement product for any reason.
If you participate in a defined benefit plan, you should contact your employer’s HR department or plan administrator. If you are in a defined contribution plan or local retirement account, contact your plan administrator.
If an employer wishes to continue to employ an employee that reaches the normal retirement age of 65, the employee has the right to either continue to participate in their employer’s pension plan (in which case contributions must still be made by both the employer and employee) or decide they wish to start receiving their pension while they keep working (in which case no further contributions are required by both the employer and employee).
It is difficult to give a precise answer to this question, as it will depend upon such factors as how long you live, inflation, how much is your pension at retirement and how much you are able to draw down from your pension fund account each month. Generally speaking, you should plan to have your pension last for twenty to twenty-five years after you retire. You should prepare a retirement budget that outlines all of the revenue (pensions plus any other sources of income) you will receive at retirement minus your estimated living expenses. The net position you arrive at will help you in determining what level of income you will need to receive from your monthly pension and, by extension, how long your pension will last.
The Act generally prohibits a pension plan member or former member that retires from receiving all of their pension in a lump sum payment. However, there are some exceptions that are permitted. For example, if a person reaching retirement age 65 has a pension value of $50,000 or less, they can receive the entire amount in a lump sum. Another type of lump sum refund permitted is if a plan member has a mental or physical disability which, in the opinion of a qualified medical practitioner, is likely to reduce their life expectancy to five years or less. In such a case the member or former member can receive the entire amount of their pension in a lump sum.
If a pension plan so provides, a member or former member of a pension plan can receive a refund of any contributions made and earnings thereon in respect of their employment before 1 January, 2000.
Yes, if the overseas retirement product satisfies the various requirements.
Bermudians or a husband or wife of a Bermudian member or former member of a pension plan seeking to transfer their pension fund to an overseas retirement product is required to present their local plan administrator with a copy of the plan rules and related contractual documents of the overseas retirement product to which they wish to transfer their funds to.
This overseas retirement product should have similar requirements as the National Pension Scheme (Occupational Pensions) Act 1998, such as:
- The funds will continue to be locked in.
- The funds will be creditor protected.
- There will be no borrowing permitted.
- There are no lump sum payments beyond 25% at retirement age of 65 years and older.
- The retirement product has to have a normal retirement age of 65 or early retirement age of 55.
An employee required to be enrolled in a pension plan cannot agree with their employer either not to be enrolled or if enrolled, not to make the required contributions.
A member (employee) and their employer are both required at least monthly to each contribute 5% of the pensionable earnings that a member receives. Pensionable earnings are defined as any wages, salary, leave pay, fee, commission, and any bonus, including payments from a profit-sharing scheme, up to a maximum of $200,000 per year.