This document summarizes the findings and recommendations of the SAGE Commission regarding Bermuda's public pension plans, government employee benefits, and reducing government spending. Key findings include public pension plans being underfunded by billions, and government health insurance being 100% underfunded. Recommendations include raising retirement ages, freezing future accruals, reducing cost of living adjustments, and transitioning to defined contribution plans. The SAGE Commission also recommends a "glide path" to reduce government spending by $320 million over 4 years through measures like job cuts, salary reductions, and privatization, acknowledging this will negatively impact the economy.

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