75 Front Street, Hamilton HM 12 - Phone: +1 441 2963600 - Fax: +1 441 2956209 - E-mail: info@fmgroup.bm - Mailing Address: P.O. Box HM 836, Hamilton HM CX, Bermuda

Click here to apply online for a Temporary Pension Refund of Money from an Occupational Pension Plan and/or Local Retirement Product under the National Pension Scheme (Refund) (Temporary) Regulations 2020.

July 2020 Amendment to Pension Legislation

A recent announcement was made by the Government of Bermuda, introducing the National Pension Scheme (Occupational Pensions) Temporary Amendment Act 2020

Temporary Suspensions of Contributions for Defined Contributions and Defined Benefit pension plans only

Please be advised that an amendment to pension legislation has been introduced, allowing pensions members and/or employers to elect to temporarily suspend mandatory (5%) contributions between July 1st 2020 to June 30th 2021.

The legislation only applies to National Pension Scheme defined benefit and defined contributions pension plans, for all non-registered pension plans, employers will need to file a plan amendment.

The information below is specific to Defined Contribution Pension Plans

  1.  The suspension relates to the 5% mandatory member contribution and the 5% matching mandatory employer contribution only.a. The Temporary Amendment Act 2020 relates to a full suspension of the 5% – no partial suspensions under this Act.
  2. Employers cannot suspend employer contributions if the employer is in arrearsa. However, if the employer brings their contributions up to date then upon agreement with the member, the employer may suspend contributions.b. Alternatively, if the member wishes to suspend their contributions, regardless of the employer’s delinquent contribution status, the member can still elect to suspend their contributions, upon agreement with the employer.
  3. If the member wishes to suspend their 5% – they must have the agreement of the employer.a. If the member suspends, however the employer wishes to continue contributing their 5% contribution, those funds are deemed to be locked in.b. However, if the employer continues to contribute and their standard benefit exceeds the mandatory 5% contribution – only the mandatory 5% employer contribution will be locked and the remainder will be deemed voluntary (i.e. – 8% standard employer contribution – the first 5% will be locked in but the remaining 3% contribution would be deemed voluntary).
  4. If the employer wishes to suspend their 5% – they must have the agreement of the member.a. If the employer suspends, however the member wishes to continue contributing their 5% contribution, those funds are deemed to be locked in.b. However, if the member continues to contribute greater than the mandatory 5% contribution – only the mandatory 5% member contribution will be locked, and the remainder will be deemed voluntary (i.e. – 8% member contribution – the first 5% will be locked in but the remaining 3% contribution would be deemed voluntary).
  5. If the employer contributes both the employer and member mandatory contributions and wishes to suspend – they must have the agreement of the member.a. However, if the employer suspends the employer portion (5%) and continues to contribute the 5% on behalf of the member – that 5% will be deemed locked (and vice versa).
  6. While The Temporary Amendment Act 2020 legislation does not specifically detail the suspension being a onetime request, we would strongly encourage members and / or employers who elected for the suspension to remain suspended for the remaining duration of the Temporary Amendment 2020 Act, opposed to opting in and out when convenient as this could lead to long-term payroll and administrational errors.

How do you apply?

  1. Contact your HR and / or manager directly to get more information if you are the pension member.
  2. As an employer if you are thinking of applying for the suspension of employer contributions, make sure all your employees are aware of your intent to ensure there are no misunderstandings.

For more information, please contact Freisenbruch-Meyer at 296-3600 or email fmpension@fmgroup.bm

Click here to learn more about our Pension products.

Website & content Copyright © Freisenbruch-Meyer Group. All rights reserved. Terms and Conditions