Dear Sir,

Let’s talk about government pensions. Again.

For some time, many countries have been facing challenging times with the sustainability of their mandatory public pension schemes and Bermuda certainly is no exception.

In July 2023, David Burt the Premier and Minister of Finance, said: “The Progressive Labour Party reveres its seniors which is why, unlike the OBA which granted one pension increase in 55 months, we are proud to keep our promise of increasing pension benefits, every year, by the rate of inflation.”

However, he also warned that both the Contributory Pension Fund and the Public Service Superannuation Fund are underfunded and if there are no changes made, they will run into difficulty if reforms are not urgently undertaken. He said the Government is taking action and increases to pension contribution levels will form one part of the reforms to ensure this fund is sustainable.

Sounds noble, right?

Here are things the people should know:

Both the CPF and the PSSF have not produced financial statements or been audited since 2012. Both funds are 12 years behind in examination and “sign-off” by the Auditor-General, who is our watchdog for the people’s purse.

This means we do not have an accurate picture of the current 'state' of these funds. Our present Auditor-General, Heather Thomas, wrote in her latest 2023 report: “It is inexcusable that the CPF has not produced financial statements since 2012. Government should take immediate steps to ensure that the Accountant-General has the financial resources to recruit staff to bring the CPF financial statements up to date. To not bring the financial statements up to date should not be an option.”

The CPF is a mandatory government contributory scheme for employers and their employees, which upon their retirement, yields an old age pension for the private sector.

This fund does not have a legitimate access to the Government’s Consolidated Fund – our general chequing account – to top up its funding, that is, no safety net. However, both the government employee PSSF and the Ministers and Members of the Legislation Public Fund have ultimate recourse to that Consolidated Fund to meet any unfunded or urgent obligations. How fortunate for those working in the public sector.

What this means for the “average Joe”, who is not working for the Government, is that the Consolidated Fund cannot be relied on as a safety net to meet any CPF pension obligations and therefore it is imperative that it be well managed.

So how do we know if it is being well managed when there are 12 years worth of missing financial statements detailing all of your (mandatory) pension contributions?

In the private sector there are company compliance rules. The Registrar of Companies requires all Bermudian-registered entities to maintain records which include annual financial statements, accounts, deeds and minutes.

The 2017 Registrar of Companies Compliance Measures Act requires them to produce such documents at the request of ROC and failure to do so will result in them being struck off the register.

Our unions, quangos, municipalities, and all government-funded departments similarly have mandatory audit and reporting requirements, yet, as I have written many times in this newspaper, the Government often does not adhere to its own financial reporting rules.

It's all very well crowing about giving pension rises to our seniors, but it comes with a cost. The existing private-sector working population will have to contribute more to the CPF just so that the current retirees can receive those increased pensions.

As a worker, right now your public pension contribution is not “earmarked” in a pension account reserved just for you, it is briefly landing in the CPF’s account and then promptly being paid back out to retirees.

While we have been given guesstimates, nobody really knows how long this fund is going to last. Will these funds still be viable when you retire?

Remember, we have lost 8,000 filled jobs in the private sector over the past decade or so, and those jobs contribute to the CPF fund pool. Our population of seniors and retirees is rising and the working population has fallen.

For decades, we have had economists, consultants and financial advisers warning about the unsustainability of our government pension funds. We keep hearing warnings from business leaders about Bermuda’s estimated “unfunded liabilities”.

Well, this is exactly what they are talking about. The Government is rapidly running out of our pension money — more money is being paid out than paid in and no one really knows how dire the situation is because the mandatory, financial record-keeping of those funds is 12 years in arrears, which flies in the face of best practice.

It also shows how completely irresponsible the Government is when accounting for the money that they force you to pay for their unsustainable pension scheme.

Ten years ago, the 2014 Government Actuarial Review of the CPF predicted that in a best-case scenario, the money would run out in 2049. Then the subsequent 2017 review of the CPF expected the fund to be exhausted in 2047. Three years later, the 2020 review stated the fund is projected to steadily decline and to be depleted in 2044, under even the best scenarios. I wonder what the projections are now?

Anyone who is receiving a public pension right now, be thankful. For those of you still working in the private sector who are counting on a government pension in about 15 years time? Don’t.

BEVERLEY CONNELL

Pembroke