Recent amendments to Bermuda’s National Pension Scheme (Occupational Pensions) Act 1998 and National Pension Scheme (General) Regulations 1999 have overhauled the way that private sector pension plans are registered, administered, and funded. The amendments are embodied in the National Pension Scheme (Occupational Pensions) Amendment Act 2019 and National Pension Scheme (Occupational Pensions) Temporary Amendment Act 2019.

Until now, employers have only been required to provide pension plans for eligible employees over the age of 23 and under retirement age who are Bermudian or spouses of Bermudians. The Act requires contributions of 10 percent of the employee’s pensionable earnings (the employee and employer each contributing 5 percent respectively).

“Pensionable earnings” include wages, salary, leave pay, fees, commissions, bonuses, and profit share payments up to a maximum of $200,000 annually. As of January 1, 2020, contributions must be paid on all bonuses/profit share payments, even if they total less than 10 percent of the employee’s base salary.

Effective March 2, 2020, employers are required to provide pension plans for all eligible employees regardless of immigration status. (Excluded from this requirement are (i) employees holding a work permit for a period of less than 12 aggregate months, and (ii) U.S. citizen work permit holders who participate in a U.S. tax-qualified 401(k) retirement plan.) Self-employed expatriates and Permanent Resident Certificate (PRC) holders are also required to register for pension plans. Employers may follow a transitional contribution rate schedule for newly affected employees over the next 5 years (i.e., 1 percent matching contributions in the first year, after which the match increases by 1 percent each year up to 5 percent in the fifth year).

Other significant changes include:

Written by Juliana M. Snelling and Gambrill Robinson of Canterbury Law Limited and Roger James of Ogletree Deakins

© 2020 Canterbury Law Limited and Ogletree, Deakins, Nash, Smoak and Stewart, P.C.