PORTFOLIO MANAGERS - SECURITIES ANALYSTS
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BIAS Pension Solutions
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To receive more information about BIAS Pensions Solutions, please contact us.
About pensions - FAQs
What is an
occupational pension?
An occupational pension provides a regular source of income for
when you retire. Retirement age is usually 65 but the Bermuda National
Pension Scheme (Occupational Pensions) Act 1998 (the “Act”)
allows you to start drawing your pension entitlement at 55. As a
Bermudian or spouse of a Bermudian, it is mandatory for you to become
a member of an occupational pension scheme. Your employer may opt
to create a separate non-registered plan for non Bermudians.
Why has the Bermuda Government
made it compulsory for Bermudians to have an occupational pension?
When people stop working, their main source of income usually ceases. In the absence of sufficient retirement savings, this often places a burden on both the individual and the state. To avoid this, many governments have introduced national pension schemes to provide a basic retirement income. To supplement these schemes, governments have widely instituted additional laws to mandate personal saving for retirement on a gradual basis throughout an individual's working life. Bermuda's legislation came into being on 1st January 2000 after which all Bermudian & spouses of Bermudian employees must have a company pension plan.
What
types of pensions can I have?
There are two types of pension plan set out in the new Act referred
to as the ‘Defined Benefit Plan’ and ‘Defined
Contribution Plan’. The employer may set up either type of
fund but they differ fundamentally in what benefits they provide
for the employee.
Under a Defined Benefit Plan the employer sets the level of pension that the member will receive, usually calculated as a percentage of the salary at retirement based on years of service with the firm. The employer then sets aside funds to meet that obligation.
The more commonly used plan is the Defined Contribution Plan. Here the pension benefit is determined by the level of contribution made by each member and their respective employer(s). This is then invested on behalf of the beneficiary and the investment yield determines the ultimate pension that the member will receive.
What
specifically happens at retirement?
At age 65 (or earlier according to the member’s needs), the
Act mandates that all vested employee and employer contributions
be used to purchase an annuity or prescribed retirement product.
An annuity will provide a guaranteed monthly retirement income to
the retired employee. In certain circumstances it may also be able
to provide a widow/widower’s pension.
What are annuities?
Annuities are insurance policies that guarantee a pre-determined
level of income that will be paid to the retiree, usually on the
first day of each month, for the remainder of his or her natural
life. Alternatively, the annuity can be set up to pay a higher level
of income for a fixed period of years followed by a lower level
of income for the remainder of the retiree's life. BPS staff are
available for consultation as to the best course to follow. We recommend
consultation at least 1 year prior to retirement.
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