The National Pension Scheme (Occupational Pensions) Amendment Act 2019 (the NPS Amendment Act), the provisions of which come into force on different dates, amends the existing legislation and regulations requiring employers to establish, register, fund and maintain occupational pension plans. The NPS Amendment Act contains extensive amendments to the National Pension Scheme (Occupational Pensions) Act 1998 (the NPS Act) as amended that enhance existing provisions and introduce new provisions including provisions relating to non-Bermudian employees, civil penalties, Guidance Notes and hardship benefits for persons who are retired. The most significant amendments and the dates they come into operation are highlighted below.
1. Application of the National Pension Scheme
The NPS Amendment Act extends the requirement to provide an occupational pension plan to all employees meeting the eligibility criteria, with the exception of a person granted permission under the Bermuda Immigration and Protection Act 1956 to engage in gainful occupation in Bermuda for less than an aggregate period not exceeding twelve months, with effect from 2 March 2020. Historically and until such date, employers must only provide an occupational pension plan to Bermudians and the husband or wife of a Bermudian.
Citizens of the United States of America granted permission under the Bermuda Immigration and Protection Act 1956 to engage in gainful occupation in Bermuda who participate in a pension plan qualified under what is commonly known as section 401(k) of the United States Internal Revenue Code are also excluded from the above requirement, with effect from 2 March 2020.
2. Time Frames and Submissions
The time period within which an employer must apply to register an occupational pension plan has been shortened to ninety days from one hundred and eighty days after the establishment of the plan, with effect from 30 December 2019.
The time period within which an administrator must pay (transfer) the commuted value of a member’s benefits in the case of a defined benefit pension plan or a member’s account balance in the case of a defined contribution pension plan on the direction of such member who terminates employment has been extended to forty-five days, with effect from 2 January 2020. The commuted value or account balance, as applicable, of such a member who fails to provide a direction shall be dealt with in accordance with the administrator’s fiduciary obligations or as directed by the Bermuda Pension Commission (the “Commission”). These provisions, however, do not apply where a pension plan provides for an employee who terminates employment to remain a member of the employer’s pension plan and the member has elected to do so.
Employers are required to retain certain records with respect to their pension plans registered pursuant to the NPS Act and each of their employees as set out in the Regulations, for a minimum of seven years following the date of termination of the employee, with effect from 2 March 2020.