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Renee Ming SAGE Presentation
Renee Ming SAGE Presentation
Renee Ming SAGE Presentation
Renee Ming SAGE Presentation
Renee Ming SAGE Presentation
Renee Ming SAGE Presentation
Renee Ming SAGE Presentation
Renee Ming SAGE Presentation
Renee Ming SAGE Presentation
Renee Ming SAGE Presentation
Renee Ming SAGE Presentation
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Renee Ming SAGE Presentation

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  • 1. Senator Renee Ming, JP Senator Spokesperson for Finance
  • 2.  Bermuda Contributory Pension Fund (CPF) ◦ The social insurance scheme into which all Bermudians contribute. Contributions and benefits set by Parliament.  Public Services Superannuation Fund (PSSF) ◦ Pension Plan for employees of Government & Government Quangos. Automatic COLA increase.  Ministers and Members of the Legislature Pension Fund (MMLPF) ◦ Pension plan for Government Ministers, Members of Parliament & Senators. Automatic COLA increase.
  • 3.  Government Employees Pre-Retirement Lump Sum Leave Benefit ◦ Government provides a pre-retirement lump sum leave (GEPLSL) benefit to certain eligible Government and quango employees upon retirement.  Government Employee Health Insurance (GEHI) ◦ Government Employees and dependents are entitled to participate in the GEHI programme upon retirement. The Government pays 50% of the premium
  • 4.  Findings ◦ Underfunded by $2.066 Billion (August 1, 2011) ◦ On course to run out of funds by 2047 ◦ Ratio of working persons to pensioners is decreasing: 5.2 in 2005; 3 in 2021; 1.5 in 2046  Recommendations ◦ Increase contributions by 3% in excess of benefits  $50,000 earner paying 3.3% of income now will pay 6% ◦ Raise age of eligibility (Retirement Age) to 68.  Raise should be phased in over 15 years. ◦ After 15 years raise retirement age to 70
  • 5.  Findings ◦ Underfunded by $973 Million (March 31, 2012) ◦ Unsustainable & on course to exhaust funds by 2043 ◦ Offers better benefits than comparable DB plans  Calculation of Benefit, Early Retirement, Survivors, COLA  Recommendations ◦ ◦ ◦ ◦ Change benefit from final salary to last 5 years Raise retirement age and penalise early retirement Spouse not automatically covered; 10% option No further COLA increases. Benefit is fixed for duration of beneficiary’s life
  • 6.  Findings ◦ Underfunded by $23 Million (March 31, 2013) ◦ Fund is currently unsustainable ◦ Offers better benefits than PSSF Plan  Faster accrual, 66% of max salary payable  Recommendations ◦ Immediately Freeze MMLPF. No new entrants, no new benefits to accrue ◦ Replace with a Defined Contribution plan ◦ Reduce benefits to current beneficiaries/members  Raise age to 65, no COLA adjustments
  • 7.  Findings ◦ At present, the Government provides a pre-retirement lump sum leave (GEPLSL) benefit to certain eligible Government and quango employees upon retirement.  Recommendations ◦ The SAGE Commission recommends that the Collective Bargaining Agreements governing the payment of this benefit be renegotiated to provide the following:  Determine the accrued benefit for each active employee as at a Specified Date based on the current rules and freeze the benefit to be paid to active employees when they retire ◦ SAGE estimates this would save $10 million in future cash outflows
  • 8.  Findings ◦ 100% Underfunded - $269.4 million (41% retirees, 59% active) ◦ At present GEHI provides coverage for employees, retirees and their eligible dependents ◦ Goverment costs up 137% over last 10 years  Recommendations ◦ Fix the amount paid to retirees at current figure ◦ Cease providing health benefits for new retirees (7 year grandfathering) ◦ Retirees can stay in plan by paying 100% of premium ◦ SAGE predicts changes will save $169 million
  • 9.   SAGE recommends a “Glide Path” to deficit reductions. Recommends following schedule of reductions Year Amount 2014/15 $65 Million 2015/16 $80 Million 2016/17 $85 Million 2017/18 $90 Million Total $320 Million
  • 10.  2014/15 ◦ Abolish all unfilled posts, reduce non-personnel expenses, reduce grants and contributions ◦ Reduce personnel      Terminate poor performers Require those above age 65 to retire Incentivise early retirement Scaled reduction of salaries to meet savings target 2015-2018 ◦ Repeat cycle every year during the budget process ◦ Privatisation will not take effect for 18-24 months
  • 11.     SAGE acknowledges the existence of the multiplier. Every dollar reduction in spending will cause a $1.28 reduction in output (contraction) in the Bermuda Economy To meet SAGE targets with 3% revenue growth spending will need to be reduced by $235 million over 4 years from $984 to $749 million According to multiplier $301 million removed from economy Reduction of 1344 Jobs

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