Bermuda is following a move by the Cayman Islands that allows residents to withdraw a portion of their pension savings to help them cope with the economic fallout from the COVID-19 pandemic.
Bermuda’s government has amended its pension legislation to allow eligible savers to take out either $12,000 or 25% of their pension account balances.
Pension account holders can start making withdrawal applications for $12,000 from 1 June, if they are under 65 years old and not already retired.
Like in Cayman, the applications are made directly to the private pension plan administrators.
“This option has been put in place as part of a COVID-19 economic relief programme to assist persons negatively affected by this pandemic. Therefore, persons will have until 30 June 2021 to make an application to request a withdrawal,” said Bermuda’s finance minister Curtis Dickinson at a press briefing on 28 May.
Savers who are applying to withdraw 25% of their account balance must be 65 or older, retired and no longer working. They are only eligible if their account balance has not been converted into an annuity. These applications are made to the Pension Commission but are not subject to a deadline, Dickinson explained.
In the Cayman Islands, pension plan administrators have been inundated by thousands of applications to withdraw up to $10,000 and 25% of the funds in excess of that amount from their pension accounts.
Lawmakers approved this more expansive programme than Bermuda’s in April.
However, in contrast to Cayman, Bermuda has been supporting the unemployed with benefits payments.
Bermuda’s government has paid 9,000 people about $32 million in unemployment benefits since the start of the programme. More than 2,600 of the recipients have since returned to work.
Last week alone, Bermuda paid $9.2 million in unemployment benefits to 7,780 people, of which 640 were first-time recipients. More than 2,000 people on unemployment benefits are expatriate workers.
The strain on the country’s finances and the employment market is likely going to lead to a review of Bermuda’s immigration policy.
Wayne Caynes, the national security minister, said, “We will need to review, reassess and re-evaluate our immigration policies and procedures in order to adapt to these unprecedented times. More specifically, we will now be closely scrutinising our work-permit policy, as there are a significant number of Bermudians who are unemployed.”
This would include the potential closure of certain work-permit categories for foreign workers. Caines warned businesses that work-permit approvals would “not be guaranteed”.
While expats make up more than half of Cayman’s labour force, that figure is much lower in Bermuda, with foreign workers representing about a quarter of employees.
The restriction of work-permit policies is reminiscent of Cayman’s response to the 2008 global financial crisis, a measure that is widely blamed for having exacerbated and prolonged the negative economic impact locally.
Bermuda has seen 140 cases of COVID-19 and nine deaths. There are 39 active case with nine hospitalised patients and two in critical care.