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Obligation of Employers

 

 The National Pension Scheme (Occupational Pensions) Act 1998 (the “Act”) came into operation on January 1, 2000 (commencement date). Subject to the provisions of the Act, every employer shall, in relation to his eligible employees – if, immediately before the commencement of this Act there is in existence a pension plan, continue and maintain the plan in accordance with this Act; if, immediately before the commencement of this Act there is no pension plan in existence – establish and maintain a pension plan in accordance with this Act; or participate in a Financial Institution Pension Plan 

Contributions and Contribution Schedules

The Act contemplates that pension plans may be designed to be either contributory or non-contributory, at the Employer’s option. An Employer may choose to make the required Employee contribution in addition to its own required contribution.

 When only the Employer contributes, the plan is said to be non-contributory.

 

When the Employer and the member both contribute, it is called a contributory plan.  

Defined Benefit Pension Plan

A member of a defined benefit plan and his or her Employer shall contribute in accordance with the provisions of the pension plan and the Regulations, such amounts as are required to fund the benefits accruing under the pension plan. The Act sets out the minimum annual defined benefit accrual rates.  

Defined Contribution Pension Plan

The Act requires a defined contribution pension plan member and his or her Employer to contribute equally to the pension fund of the pension plan for the benefit of that member. The Act sets out the minimum annual contribution rates.  

Defined Benefit & Defined Contribution Schedules  

 Defined Benefit PlansDefined Contribution Plans
 Annual Defined BenefitContribution
 Accrual RateRate

Date

(% of final average earnings)(%of pensionable earnings)
1 January 2000

0.25%

1%

1 January 2001

0.50%

2%

1 January 2002

0.75%

3%

1 January 2003

1.00%

4%

1 January 2004

1.25%

5%

  Self-employment Contribution Schedule                                                        

 Self-employment Pension Plans
 Contribution Rate

Date

(% of pensionable earnings)
1 January 2000

2%

1 January 2001

4%

1 January 2002

6%

1 January 2003

8%

1 January 2004

10%

 

 

Former members; a person or group of persons or an entity set up, by this Act or any other law, with the responsibility for pension plan or pension fund administration; or a financial institution.

  Responsibilities of the Plan Administrator

The administrator shall exercise the care, diligence and skill in the administration and investment of the pension plan and the pension fund. The administrator must ensure that the pension plan and the pension fund are administered in accordance with the Act and the provisions of the plan. The administrator is responsible for, among other things:

•applying to the Pension Commission to register amendments within 90 days;

•submitting an annual information report to the Pension Commission within 6 months after the fiscal year-end of the pension plan;

• immediately giving notice to the Employer and to the Pension Commission of any contribution that is NOT paid to the fund when due;

• providing information to eligible persons;

• providing members and former members with access to pension plan documents; and

• filing required documents with the Pension Commission.

Administrator and Fund Holder Requirements

The legislative requirements for plan administrators and holders of the pension funds Pursuant to sections 61 and 65 of the National Pension Scheme (Occupational Pensions) Act 1998 (the "Act"), the Pension Commission requires the evidence of compliance under sections 6 and 18 of the Act.

 These sections contain fundamental tenets of the Act; as such the Pension Commission cannot register a pension plan that does not have evidence of compliance with the basis elements contained therein.

The Pension Commission must ensure that the pension plan administrator and the holder of the pension funds meet the requirements as legislated in the Act. Accordingly, the documentation submitted for the registration of a pension plan must include evidence that the persons identified as plan administrators and holders of the pension funds meet the requirements under the Act, as set out below:

Section 6 of the Act states that a pension plan is not eligible for registration unless it is administered by an administrator and that such administrator shall be –

•the employer, whether an individual or a body corporate or unincorporated;  

•a joint committee composed of one or more representatives of the employer or employers participating in the pension plan and one or more representatives of the members or former members of the pension plan;

•a committee wholly consisting of members or former members of the pension plan;

•a person or group of persons or entity which by virtue of this Act or any other law, is vested with responsibility for the administration of a pension plan or pension fund;

•a financial institution; or •any other person approved by the Commission.  

•Section 18 of the Act states that all assets of a pension plan shall be received and held in a distinct fund, separate from the assets of the employer by –

•a financial institution;

•a trust in Bermuda governed by a written trust agreement under which the trustees are -

•a financial institution; or

•three or more individuals approved by the Commission to be trustees, either for a particular pension fund or generally for pension funds established or maintained under the Act, such persons being persons who, in the opinion of the Commission, have the necessary experience and expertise to be pension fund trustees;

•a person, or group of persons, or an entity, which under or by virtue of any other law is made responsible for holding the assets of a pension fund; or

•any two or more of the institution, trustees, persons or entity, as the case may be, referred to above.

Financial Institution - Defined

For the purposes of the Act, financial institution means:

•a bank licensed under the Banks Act 1969 or the Banks and Deposit Companies Act 1999;

•an insurer registered under the Insurance Act 1978;

•a local trust company licensed under the Trust Companies Act 1991; or

•any other company which is approved by the Pension Commission for the purposes of the Act

Are You Self Employed?

As a self-employed person you must apply for registration of a self-employment pension plan, if...

•you are Bermudian or the husband/wife of a Bermudian; and

•you are between the ages of 23 and 65; and

•you have pension able earnings from self-employment exceeding $20,000, in a calendar year.

Am I self-employed?

Some of the indicators as to whether a person is self-employed or not, include the following:

•Control over work you do (re: hiring, rate of pay, type of work, manner and timing of work) - The more control you have, the more likely you qualify as self-employed.

•Ownership of tools - If you own the tools you use in the work you do, it is more likely that you are self-employed.

•Opportunity to make a profit - If this opportunity exists, it is more likely that you are self-employed.

•Risk of losing money - If this risk exists, it is more likely that you are self-employed.

 

 
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