Pension providers said careful consideration should be given to the withdrawal of funds for a deposit on a home — warning that to do so could have “significant implications” for retirement.

Despite objections, legislation was passed in the House of Assembly and Senate that will mean people aged 18 to 45 could take out up to 30 per cent of their retirement funds, while people between 46 and 64 could access 15 per cent.

The policy was designed for first-time homeowners and, according to Jaché Adams, the Junior Minister of Finance, strikes a balance between “supporting homeownership and protecting retirement security”.

A spokeswoman for CG said that the company always advised its clients to “carefully consider all factors before making decisions about withdrawing from their pension funds”.

She explained: “While purchasing a home can be a worthwhile investment, it’s essential to evaluate how early withdrawals may impact long-term retirement savings.

“Each individual’s financial situation is unique, and we encourage our clients to seek comprehensive financial advice to ensure they make informed decisions that align with their overall financial goals.”

Asked how difficult it would be to make up the amount if a 45-year-old withdrew 30 per cent of their funds, the spokeswoman said it could have “significant implications for retirement savings by age 65”.

“To recover that amount, individuals would need to focus on consistently achieving strong investment returns over the following 20 years, and beyond,” she said.

The spokeswoman added: “Generally speaking, many individuals contribute the minimum amount required by law to their pension funds.

“This can potentially lead to insufficient savings for retirement, emphasising the importance of considering personal financial goals and making informed decisions about contributions.

“Regularly reviewing and potentially increasing pension contributions can significantly enhance long-term financial security.”

The spokeswoman said CG had “not been directly consulted on this specific public policy decision”, although she said the company was “aware of similar provisions implemented in other jurisdictions”.

In a statement, BF&M said that although homeownership was a worthwhile goal, “individuals should carefully weigh the immediate advantages of accessing their pension against the long-term financial impact this decision can create”.

A spokeswoman added: “Taking money out early reduces the benefits of compounding, which is crucial for growing your pension fund over time.

“It would require increased pension contributions and potentially higher investment returns to make up for the withdrawn amount.

“We recommend clients evaluate their unique circumstances carefully before making such decisions. We further emphasise the importance of starting early and making regular contributions to build a sufficient retirement fund.”

An Argus spokeswoman said: “For most people, taking a large withdrawal from their pension plan can significantly affect their future retirement readiness.

“This is particularly true for younger individuals, as the loss of compound growth over time can make it difficult to recover the withdrawn amount.

“Without a concerted effort to make additional voluntary contributions, there could be a considerable shortfall in retirement income.”

She added: “We take our role within Bermuda’s pension industry seriously and regularly provide feedback to the Pension Commission to help ensure the financial wellbeing of our community.

“We encourage anyone considering this option to seek financial advice to fully understand the potential short and long-term impacts of their decision.

“We are always here to guide our clients through important financial decisions and help them plan for retirement.”

Announcing the scheme, Mr Adams told the House last month: “A key feature of this initiative is that the individual can use the refund not only for their own first home but also can use the refund towards a home for their children or spouse.

“This means a parent who may not have sufficient cashflow can still assist their child in purchasing their first home.

“Imagine the possibilities this creates: a family coming together to ensure the next generation secures their place in the Bermuda housing market.“

During a debate later, former finance minister Curtis Dickinson voted against the National Pension Scheme (Occupational Pensions) Amendment Act 2024.

Regulations linked to the legislation would allow a member or former member of a defined contribution pension plan, or “a member or policy holder of a local retirement product” to make withdrawals — but specifically excluded defined benefit pension plans.

Mr Dickinson told MPs that he “unequivocally” took the view that “we can ill afford to be engaging in policy decisions that are designed to allow individuals to reduce their pension balances before their retirement age”.

He added: “Instead, we should be doing more to strongly encourage them to contribute more.”

Mr Adams highlighted the steep down payments faced by first-time homeowners and said: “We are simply providing Bermudians with the flexibility to suit their particular financial circumstances.”

In March 2022, to help people suffering from financial hardship because of the coronavirus pandemic, MPs passed the National Pension Scheme (Occupational Pensions) Amendment and Validation Act 2022 allowing those under the age of 65 to withdraw up to $6,000 from their pension plans.

Presenting the Bill to MPs, David Burt, the Premier and finance minister, said the legislation reflected the “Government’s commitment to provide an additional avenue of relief to those Bermudians who really need it”.