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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. 

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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. 

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What types of pension plans can I have, and what is the difference between Defined Benefit Pan and Defined Contribution Plan?

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. 

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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.

A prescribed retirement product includes such products that the Bermuda Pension Commission shall permit from time to time. At the time of writing only the drawdown option attaching to BIAS’ Personal Retirement Plan falls into this category.  

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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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Who regulates pensions in Bermuda?

The Bermuda Pension Commission is the government body tasked with overseeing registered pension plans. This body operates from offices in Hamilton as follows:

The operative laws under which Bermuda Pensions are governed are:


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