1.An International Pension Trust Fund providing for retirement allowances for employees, widows, and orphans pensions and for capital payments on death may be established, and may be registered under the Pension Trust Funds Act 1966 on a voluntary basis. A Government tax exemption undertaking may be sought. Prior approval of the Trustees by the Minister of Finance is required, and there are prescribed rules applicable to the establishment of Pension Trust Funds.

Bermuda is frequently used for the establishment of pension and employee benefit plans for employees working outside their home country, or the home country of both the employee and employer ("third-country nationals").

Such a scheme avoids home country regulations (such as ERISA) and allows a single plan to cover employees who move from one country to another. Other advantages include lower costs of administration, wider permissible investments, flexibility in the design of benefits and freedom from withholding taxes. Further, no perpetuity period applies, offering interesting innovative facilities for planning purposes aside from the standard Pension Trust Fund Situation.

The Bermuda trust holds and invests the assets. A set of rules is provided to define contributions, vesting and benefits. "Umbrella" plans may be created for a group of different employers sharing similar needs, thereby reducing the cost to each employer and allowing investment to be pooled. There may also be portability and "Asset Protection" features.

2.The Schedule to the Pension Trust Funds Act requires the following matters to be dealt with in the Trust Deed/Rules:

PENSION TRUST FUNDS ACT 1966

Schedule Requirements As To Rules Of Registered Funds

The rules of a pension trust fund, to be qualified for registration under this Act, must make provision for the following matters, that is to say:

  • The whole of the objects for which the fund is established.
  • The appointment and removal of trustees.
  • The vesting in the trustees of all property belonging to the fund.
  • The investment in the names of the trustees or in the name of nominees of all capital moneys belonging to the fund and for authorising the investments, if any in addition to those authorised by law, in which the trustees may invest such moneys; so, however, that the rules of the fund may provide for the deposit of such moneys with a bank, and may also provide for their deposit with the employers of persons employed in the undertaking or combination of undertakings in connection with which the fund is established.
  • The making of contributions to the fund by the employers of persons employed in the undertaking or combination of undertakings in connection with which the fund is established.
  • The contributions payable to the fund, and the rates of benefit payable there out or the method of calculating the benefits so payable.
  • The conditions on which persons may become or may cease to be respectively, contributors to and entitled to benefits from, the fund.
  • The circumstances in which the fund may be wound up and the manner in which the assets thereof are in that event to be applied.
  • The method by which the rules may be amended.
  • The preparation of all statements of accounts, balance-sheets and reports required by this Act to be prepared.
  • The supply on demand to every person having any rights in the fund, being a person who is or has been employed in the undertaking or combination of undertakings in connection with which the fund is established, of a copy of the rules of the fund and of all amendments thereof, and of the latest statement of accounts, balance-sheet and report prepared in accordance with the requirements of the Pension Trust Fund Act.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.