Pension providers react to plan for cap on fees
Pension providers have said they will work with the Government to ensure fees comply with new government regulations.
Earlier this month, the Premier announced in the House of Assembly that pension administration fees will be reduced and then capped.
David Burt, who is also the Minister of Finance, said that from April 1 next year a new fee structure would be put in place with limits “so they do not increase in the future”.
Simon Giffen, chief investment officer and global head of wealth at Argus, said: “As one of the island’s major private pension providers, we have led an industry-wide engagement with key stakeholders and the Pension Commission on the retirement savings gap.
“With an ageing demographic and a widening funding gap, there is a clear need for better retirement readiness among Bermudians.
“Retirement readiness is a key community concern that we take very seriously. We are dedicated to addressing these challenges and continually strive to offer solutions that benefit our clients and the broader community.”
BF&M also said it had been working with the commission “regarding upcoming legislation to cap pension administration fees”.
“Together with representatives from the four leading pension administrators, we have provided comprehensive feedback both in writing and verbally,” a spokeswoman said.
“Following the approval of the legislation and receipt of the final guidelines, we will collaborate closely with the Government and regulators to ensure all our fees comply with the new regulations.”
Under the proposed new schedule, for those in defined contribution employer pension plans, also known as group retirement plans, the fees should not exceed:
• 1.25 per cent per year for members with balances above $50,000
• 0.75 per cent per year for those with balances between $25,000 and $50,000
• 0.5 per cent per year for those with balances of less than $25,000
For those in individual local retirement plans, the fees should not exceed:
• 1 per cent per year for members with balances of more than $50,000
• 0.75 per cent per year for those with balances between $25,000 and $50,000
• 0.5 per cent per year for those with balances of less than $25,000
A spokeswoman for CG said: “We are committed to working with the Government to support policies that ensure positive retirement outcomes for all residents of Bermuda.
“CG, as a part of an industry grouping, participated in discussions with Government and the Pension Commission.
“As a people-first company, our primary focus is on providing comprehensive pension services and support that prioritise the best interests of our clients, ensuring their financial security and peace of mind.”
Announcing the cap, Mr Burt said: “Following a comprehensive review by the Pension Commission in 2021, and with the assistance of a leading Canadian pension consultancy firm, it has become clear that there is a significant variability in the fees paid by plan members, in defined contribution pension plans, with some fees as high as 4.2 per cent.
“Recognising the significant impact that higher fees can have on the final pension balances accumulated by Bermudians, we have taken steps to address this issue.
“Therefore, as of April 1, 2025, the Ministry of Finance will implement limitations, or caps, on plan administration fees, which will result in substantial benefits for pension plan members, leading to larger amounts that Bermudians will have to support their retirement.”
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