CPF projected to run out in 17 years
The Social Insurance pension fund will run out sooner than previously reported.
The Actuarial Review of the Contributory Pension Fund from August 2023 projects that the fund will be depleted in 2042 – two years earlier than the last triannual review. (Scroll down to view the Review, or click HERE)
This follows the trend of the last two Actuarial Reports in 2017 and 2020. Each report shows the fund being exhausted progressively sooner.
The financial performance of the fund over three years was above expectations, the Review states, mainly due to higher-than-expected investment and contribution income.
The number of contributors to the fund declined by 850 people since the last review, and it should be noted that it was possible to suspend contributions for a year from June 2020, in response to the COVID-19 pandemic.
Premier and Finance Minister David Burt acknowledged the seriousness of the situation in the House of Assembly on Friday.
He assured the public they are facing up to the challenge, saying “the government continues to advance consultation regarding the necessary amendments that will make the CPF sustainable.”
“The funding gap for the CPF has larger, more difficult issues to resolve given the rapidly aging population, and persons living longer and drawing more benefits over time.”
The Premier says that topping up the fund with revenues from the Corporate Income Tax has been suggested during consultation with local and international business.
“The need to address the Contributory Pension Fund is an urgent one. Whether the answer is future revenues from corporate income tax changes, the contributions or increases in the eligibility age for social insurance. The government looks forward to a bipartisan consensus to advance the difficult but necessary changes to ensure that this fund is sustainable.”
“I wish to assure current and future pensioners that the government is clear on the challenges facing Bermuda’s pension plans.”
The Actuarial Review of the CPF also states that the Old-Age Support ratio has fallen from 3.1 to 2.8, another continuing trend.
That means that as of August 2023, there were 2.8 people of working age per pensioner. That ratio was 4.4 in July 2011, so over twelve years there had been a drop of more than 1-and-a-half working age persons per pensioner.
