I. Introduction

The Ministry of Finance is inviting public feedback on the Draft Pensions Bill, 2023 (the “Pension Bill”), which seeks to fundamentally restructure the public service retirement system to allow for greater preservation, reduction in pension liabilities and equitable employee benefits.

II. Background

During the past two years, the Government’s mission has been to prioritize the containment of growth in relation to pension liabilities, aimed at reducing the burden on public sector finances. Currently, the Government carries an unfunded liability of more than $2 billion dollars. Pension consultant, KPMG Advisory Services Ltd. conducted a pension reform feasibility study on the Government’s pension scheme in 2013 which was revised in 2022. This study estimated pension liabilities for public sector employees would accumulate to $2.2 billion dollars between 2013 and 2020, and projected an increase to $3.5 billion dollars by 2030. Future cash outflows are also projected to increase significantly, from approximately $165 million currently to $219 million by 2030 (including both pension payments and gratuities). In addition, Government-owned corporations have similar defined benefit pensions, with annual cash outflows of approximately $10 million dollars. Given these alarming statistics, measures must taken to provide a sustainable solution to bring about reforms to the public sector pensions plan.

Against this backdrop, the objective of this consultation is to invite the views of stakeholders and interested parties on the broad policy thrust of the Pension Bill, and to provide any additional perspectives that will help to improve the clarity, scope and deliverables sought after in this important legislative initiative.

III. The Proposed Legislation

The objective of the proposed Pension legislation is to provide for the establishment of a public service pension fund and a public service pension scheme. It aims to promote employee inclusivity, fiscal responsibility, accountability, and efficiency in the management of the public sector finances, through the implementation of a defined contributions pension scheme.

The Pension Bill also seeks to provide for the governance, functions, organization and management of the fund, to provide for the collection of contributions to the fund and payment of retirement benefits to pensioners and their survivors.

The Pension Bill further seeks to provide for the investment of the monies of the fund and for related matters. In the current pension arrangement, under The Pensions Act, a number of challenges are presented relating to its exclusivity of certain categories of employees, and the unsustainable pension liabilities, owing to its noncontributory character by public servants.

Therefore, the proposed legislation seeks to transform from a non-funded, non-contributory pension scheme, to a funded and contributory pension plan for public servants. Given the extensive revisions required to address these concerns, it was agreed that it would be best to repeal the current Pensions Act, and draft a new Pensions legislation that is in alignment with modern public service pension laws, and would improve the effectiveness of the Government’s fiscal policy outcomes.

It is important to note that after engaging in meaningful dialogue with KPMG Advisory Services Ltd, Public Service Officials, and the respective Unions, The Draft Pensions Bill, 2023 was also approved by Cabinet for public consultation to facilitate a transparent decision-making process. Subsequently, the proposed legislation is now available on the Government website for public consumption and feedback.

IV. Feedback Guidelines

The Ministry of Finance appreciates your participation in this important initiative. To ensure that the consultation exercise is productive and focused, we ask that you kindly observe the following guidelines:

1. All questions, comments and feedback should be emailed to the following email address: pensionsbillconsultation@bahamas.gov.bs
2. Identify yourself and, where applicable, the organization you represent to enable us to contact you, should clarification be needed.
3. Be clear and concise in your comments—referencing the specific clause.
4. Focus your comments on how the legislative provisions can be better written to make it clearer and more effective in application.
5. All comments received during the consultation will be reviewed and, if accepted, will be incorporated into the final bill for consideration of the Cabinet.

V. Consultation Period

The public consultation will last for a period of 6 weeks, from February 26th to April 5th, 2024. Comments received after April 5th, 2024 will not be considered.

VI. Documents to Download

For reference, interested persons may download a copy of the relevant documents for this public consultation by clicking here.

Appreciation is extended to all of our stakeholders and interested parties who have and continue to play a vital role in supporting the Government in this initiative.