More than $35 million in pension arrears is owed to the public purse from delinquent employers — $20 million more than in 2008 when tougher penalties were brought in for those breaking the law.

A Ministry of Finance spokesman admitted yesterday that better enforcement of the Contributory Pensions Act and “more creative tactics” were needed to recover the missing money, which could be earning investment income for the overstretched public purse.

Harsher fines for delinquent employers and self-employed people introduced six years ago appear to have done nothing to deter companies and individuals from breaking the law.

Rather, the size of the debt has risen by almost 140 percent since 2008 and the number of lawbreakers has increased from 1,703 to 2,565.

Figures provided by the spokesman suggest that 45 percent of the Island’s employers and self-employed individuals are delinquent.

Meanwhile, the number of state pension claimants — whose benefits are paid out of the Contributory Pension Fund — is rising dramatically.

In 2010, the number of people turning 65 and claiming their state pension was 276. The following year it jumped 150 percent to about 700 residents.

According to the Finance spokesman, that figure has risen again to 2,256 residents turning 65 this year — an eightfold or 717 percent increase over the course of four years.

Finance Minister Bob Richards declined to respond directly to questions yesterday but the Ministry spokesman confirmed that the employers presently listed as delinquent — ie in arrears with their contributions for more than 120 days — owed a total of $35,443,653.

In 2008, when the law was amended to introduce stiffer penalties, the total amount owing was $14,875,828.

The spokesman said: “There is no doubt employers who were previously in good standing, now find themselves in the position of being delinquent.”

He said only two criminal prosecutions had been brought against delinquent employers since 2002 and in both cases a judge “fined them just $250 without the understanding that it was $250 per offence”.

The spokesman said that the Debt Enforcement Unit (DEU) within the Attorney General’s Chambers was currently dealing with 164 cases involving civil proceedings but didn’t provide details of those cases by press time.

We asked for a list of all delinquent employers and self-employed individuals but the Ministry did not share the information.

The Royal Gazette asked Government questions about the amount of arrears after the Finance Minister told seniors they would not be getting a rise in their state pensions because “money doesn’t grow on trees”.

We asked if Mr Richards was concerned that more than $35 million was missing from the massively underfunded Contributory Pension Fund, where it could be earning investment income, and whether further legislative changes or better enforcement were needed.

The spokesman replied: “Better enforcement of the Act and more creative tactics to collect are needed.”

The Contributory Pensions Act 1970 requires every employer to pay $32.07 a week into the Contributory Pension Fund for each of their employees. Employees pay the same amount. The self-employed must pay $64.14 a week to the fund.

The pot of money is used to pay out pensions to those aged 65 and above, as well as other social insurance benefits.

A 2006 amendment to the law allowed for civil debt proceedings to be undertaken by the Director of Social Insurance to recover any delinquent contributions from directors and officers of a company.

Just a few cases were tried under that provision, according to the Ministry of Finance, including Total Fitness, Prince Deli and three companies connected to convicted fraudster Andre Curtis.

The law was also amended in 2008 to increase the fine for failing to pay contributions from $250 to $1,000 for each offence.

Then Premier and Finance Minister Paula Cox said at the time that the arrears of almost $15 million had a negative effect on the Government’s finances and reduced the amount available for state pensions.

She said it raised concerns that many of the delinquent companies were deducting contributions from their employees’ pay cheques and using them for personal or working capital purposes — also an offence under the Act.

The Ministry of Finance spokesman confirmed yesterday that: “Employers have been found to deduct social insurance contributions and not remit them to the Department of Social Insurance.

“We are not in a position to comment on what the deducted money is used for.”

Asked why so few criminal cases had been brought against employers who failed to pay their own or their employees’ contributions, the spokesman said: “All cases lie with the DEU. In most cases, employers deduct and do not pay.”

Grant Gibbons, who is now Economic Development Minister but was then an Opposition MP, said in 2008 it was a real concern that pensioners were being left without their promised funds because of delinquent employers and that the Attorney General’s Chambers should make it a priority to go after non-paying employers.

Last month, Mr Richards told the annual general meeting of Age Concern that the state pension fund was hugely underfunded due to a growing number of retirees and a dwindling number of young earners funding the pot.

The Finance spokesman said 11,738 pensioners received a benefit from the fund this month. The figure represents about 20 percent of Bermuda’s population.

The last available audited financials for the Contributory Pension Fund are from 11 years ago — for the financial year 2003/4.