Bermuda Amends National Pension Scheme



Bermuda:

Bermuda Amends National Pension Scheme – UPDATE


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Following our alert of 30 December on recent amendments to the
National Pension Scheme, there are two updates: the National
Pension Scheme (Occupational Pensions) Amendment Act 2019 (No. 2)
Commencement Notice 2019 (the “No. 2 Notice”) and the
National Pension Scheme (Occupational Pensions) Temporary Amendment
Act 2019 (the “Temporary Act”).

The No. 2 Notice

The National Pension Scheme (Occupational Pensions) Amendment
Act 2019 Commencement Notice 2019 has been revoked by the No. 2
Notice. The only substantive change occasioned by the issuance of
the No. 2 Notice is a change to the operative date for the
amendment to the variation of payment to disabled persons
provision. With effect from 2 March 2020, a pension plan that
permits variation in the terms of payment of a pension by reason of
a member having a mental or physical disability requires an opinion
of a qualified medical practitioner that the disability is likely
to reduce the member’s life expectancy to five years or
less.

The Temporary Act

The Temporary Act, which was brought into force 1 January 2020,
allows employees and their employers to suspend contributions to
their pension scheme during the period of 1 January 2020 through 31
December 2021.

In respect of a defined contribution pension plan subject to the
National Pension Scheme (Occupational Pensions) Act 1998 as
amended, the Temporary Act permits plan members to reduce their
required contributions from 5% to 3% with the written agreement of
their employer. It also permits employers to reduce their required
contributions as they relate to a member from 5% to 3% with the
written agreement of the member. These reductions can only be
applicable in respect of the period 1 January 2020 through 31
December 2021.

In respect of a defined benefit pension plan subject to the
National Pension Scheme (Occupational Pensions) Act 1998 as
amended, the Temporary Act permits an employer to reduce by up to
2% all employer normal cost and 2% of member contributions in
respect of the period 1 January 2020 through 31 December 2021. No
agreement is needed between the employer and the member. If,
however, there is a collective bargaining agreement that addresses
the pension plan, then there must be an agreement between the
employer and the collective bargaining agent representing the
member.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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