Pensioners who are experiencing financial difficulties will now be able to withdraw funds from their pensions under new amendments approved in the House of Assembly.

The National Pension Scheme (Financial Hardships) Regulations 2010 were passed yesterday.

Finance Minister Paula Cox said with unemployment at 4.5 percent, statistics showed many workers had been out of work for up to a year causing them to lose their homes and not be able to afford to educate their children.

"Mr. Speaker in search for a solution, some unemployed persons have approach both the Ministry of Finance and the Pension Commission seeking relief through access to their private sector pension funds.

"While they understand that the fund is for their retirement years, they have argued that they need the help now. Accordingly the Ministry of Finance consulted with the Pension Commission and requested that they research this matter and make recommendations on whether or not hardship withdrawals should be permitted for members in pension plans subject to the Act and, if so, under what circumstances."

Ms Cox said there are three instances where a pensioner can apply for funds:

— Eligible uncovered medical expense

— Threat of loss of principal residence due to debt default

— Eligible fee payable for education

The Minister said the US and Canada also had similar pieces of legislation.

She also said the regulations to the act "provide various checks and balances to ensure plan members do not abuse this proposal or apply to withdraw the majority of their pension benefit accrual".

There are also restrictions as to the amounts members can withdraw and a maximum number of applications.

"The maximum refund is 20 percent of the account balance on the application date. A person will only be allowed to make one application in each five year period and will be limited to two successful applications in the applicant's lifetime."

Shadow Finance Minister Bob Richards supported the amendments and said: "We have had to put this pension system in place and unfortunately in the last decade the return on most of these pension plans and I think most people will look at the return they get on their pension plan and be very disappointed. Let's hope that 2010 to the next decade will go better."

PLP backbencher Terry Lister also supported the amendment and said: "What we are seeing today is a response for need. It's very easy for Bermudians to be owning a house that cost $1 million or $1.5 million.

"If they can't pay it, they can't pay it. This scheme working properly will allow us to retire and retire comfortably."

Shadow Education Minister Grant Gibbons said while he had concerns, he supported the legislation.

"I think we on this side are generally in agreement but I think we have some questions and some concerns. I appreciated the Minister when she introduced this talked a little bit about the current state of play.

"She said there were some 22,000 individual plans out there. When the UBP brought the original legislation into place in 1998 and I remember it quite well there was a little bit of work done before that. What is the goal here. What are we really trying to achieve?"

Shadow Health Minister Louise Jackson spoke on the health care issues related to the pension scheme and wondered how those who needed to take out funds from their pensions would be able to afford prescriptions and fly overseas for treatment if necessary.

Bermuda Democratic Alliance MP Shawn Crockwell said his party also supported the legislation. "We certainly expressed our concerns after the budget but in a perfect world, we wouldn't have to be here. There are individuals who will need to revert to this extreme option. We hope that there will be limited individuals."

Shadow Works Minister Patricia Gordon-Pamplin said people who will "most likely" have financial hardship were people of "meagre means".

Ms Cox concluded the debate by describing the move as a "red letter day" because usually people are predisposed against dipping into their nest eggs; however she said it is appropriate in the current climate.