April 25, 2011Dear Sir,Maybe April 25 was a slow news day for The Royal Gazette, because the “news” of Bermuda facing a “pension explosion” is certainly old hat. Having said that, your coverage of the subject of Bermuda's underfunded contributory pension scheme (CPS) was informative, but it omitted a few important facts:Foreign work permit holders and their employers make a disproportionally large contribution to the CPS. Whilst the monthly contribution made by an individual work permit holder is exactly the same as that paid in by a Bermudian employee, the foreigner will hardly ever draw any benefits out of the Bermuda pension scheme in later years. In other words: Foreign workers pay into the government pension pot, but they don't take anything out of it. The contribution basically becomes an additional tax on the foreign worker and his employer.This is not necessarily unusual in an international context. It also applies for the US, Canada and most EU countries. What is, however, unusual is that the number of Bermuda's foreign work permit holders represents a significantly larger percentage of the total working population than that of work permit holders in those overseas countries. Therefore, the reliance of the Bermuda CPS on the pension contributions made by foreign workers who do not or cannot claim pension benefits later is significant, if not vital.Cynically speaking, it is therefore in the interest of the CPS to have as many foreign work permit holders and as few Bermudians as possible on the Island.Government pension schemes are severely underfunded in practically all advanced economies around the world for more or less the same reasons. The total breakdown of these schemes based on current contribution levels and demographic projections is not a question of “if” but “when”. For government pension schemes to even survive the next 25 years, contribution levels will need to rise significantly, especially for double-income earners with no children, the pension age has to be increased to 70 or 72, and pension benefits must not ever be linked to any indices, least of all that of rising inflation.At the tender age of 20 when I first started to work and earn money in my native Germany, I realised that I should not ever have to rely on government to pay me an old age pension. That was the most visionary thing I have managed to come up with to date. There is only one source of income and pension one should really rely on in the long-term: oneself! Ever since I came to this conclusion I have made this recommendation to every youngster who cared to listen: Save to invest at least 15-20 percent of your disposable income for that far away day of reckoning. My recommendation to young Bermudians is exactly the same!JENS ALERSSandys