On August 1st of this year, a pension contribution holiday for both employers and employees went into effect throughout Bermuda. Each group will be given the choice to not contribute their five percent retirement pension plan contribution through July 31st, 2013.
Months before, the country’s Premier Paula Cox stated the decision to enact the ‘holiday’ was in recognition of the fact that “employers are under pressure, and as our economy heads to recovery we must reduce pressures on companies that will cause them to shed jobs.”
Premier Cox was equally quick to point out that “this is a temporary measure that will provide temporary relief to employers and additional income to employees {which} provides stimulus to our economy. Stimulus leads to growth and creates jobs and that is what our economy needs.”
While acknowledging economic realities and the intent behind this pension ‘holiday’, many pension/retirement plan administrators like FMi are concerned about the losses this action will wreak upon plan recipients in the future. While not all companies in Bermuda are expected to participate and discontinue contributions, those working for the ones that do will face consequences later on.
“We certainly understand the argument for the ‘holiday’, and don’t want to see people or businesses lose jobs,” says FMi Vice President Peter Macaluso. “However, there’s really no way to quantify how many would be lost, or the number of companies that would be hurt if it wasn’t enacted. But we can quantify the future earnings lost when these contributions are not made, and that is something we don’t like to see.”
