In response to COVID-19 and its impact on the economy and individuals, the Bermuda government has introduced the temporary suspension of
- National Pension Scheme (NPS) contributions
- Social insurance contributions
What is the National Pension Scheme (NPS) temporary Amendment Act 2020?
It allows for a suspension of employee and employer contributions for 12 months commencing 1st July 2020 and ending on 30th June 2021.
Is it mandatory?
Yes, However, employers and employees can make voluntary contributions should they wish.
What are the benefits?
Where the employee and employer each contribute 5%, either party may suspend their contributions with other’s agreement. As a result, employees will see their take-home pay increase by 5%, and employers will also benefit from reduced payroll.
What does an employer need to do?
Once the employee and employer agree on the employee suspension, the employer should write to the plan administrator, advising them of the suspension of contributions.
The employer may agree with the employee suspension, but still wish to make their contributions. If that is the case, the employer must advise their plan administrator accordingly.
An employer’s continued contributions are not treated as voluntary, and as such, they are not subject to payroll tax.
If the plan is a defined benefit plan, then the employer does not have to receive the employee’s agreement to make the suspension. This is because the employer is financially responsible for making up any pension shortfalls that may result from suspending the contributions.
What is the Contributory Pensions Temporary Amendment Act 2020
The act allows employees, employers, and self-employed persons to suspend the payment of their social insurance contributions for the whole of the suspension period- 1st July 2020 –30th June 2021.
What are the benefits?
The suspension of social insurance contributions will provide further relief to assist businesses and employees with a pressing need for financial relief. It intends to ease financial burdens on employers and employees as we navigate this pandemic.
Is it mandatory?
Yes. However, employers and employees can still contribute to the Contributory Pension Fund if they wish.
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