Comfortable: Prepare your investments for retirement.
Comfortable: Prepare your investments for retirement.

Even in hard times, it is imperative that you plan for retirement.

While we are all living longer, we must ensure that we do not outlive our accumulated pension savings.

In fact, this is perhaps the single greatest challenge that will confront ‘baby-boomers’ who will be reaching retirement age in large numbers over the next 20 years.

Making smart money choices over your lifetime can mean the difference between a stressful retirement and a comfortable retirement.

When should you start planning for your retirement? The best possible time is while you are in the early stages of your work life. The more time your money has to work, the greater the potential rewards. Because of longer life expectancies, it is quite possible that you could spend almost as long in retirement as you did in the workforce.


There is a global problem with Defined Benefit (DB) pension plans in that they are increasingly severely underfunded.

A pension plan, which is a traditional DB plan, provides a pre-determined monthly retirement benefit to an employee based on their earnings history, years of service and age.

The costs of these plans are generally funded by employer contributions into a trust fund.

An underfunded pension plan is one where the known liabilities (obligation to pay future pensions) are far greater than the assets that could be used to pay those obligations.

The problem of pension plan underfunding is not just limited to the large and mature economies.

The recent SAGE Commission report revealed that Government employees and MPs pension schemes are almost $1 billion underfunded, while the national contributory pension scheme was underfunded by $2 billion two years ago.

This national problem is further compounded by the fact that people are also taking advantage of recent legislative changes that allow them to take out some of the money from their current pension plans.

All told, this represents a looming pension crisis for Bermuda.

In an environment like Bermuda’s, where you are legally required to have a pension provider, it is essential that you partner with the right pension provider.

Planning for your retirement is a personal process as we each have our unique circumstances, and you should not be boxed into a one-size-fits-all approach.

A retirement plan should be based on what you envision for your life and must take your unique financial situation into account.

Your pension provider should, among other things:

-Be transparent with its fee structure, while being focused on the long-term success of its investment platform;

-Provide you with options and investment flexibility to enable you to construct a portfolio to match your needs;

-Give good advice but respect your right to choose; and

-Provide access to leading investment professionals and learning opportunities.

There are opportunities to make your money work harder for you as you plan for a comfortable retirement.


Instead of having your money sitting in a bank account earning less than one per cent a year, why not put it in your pension plan, as an additional voluntary contribution (AVC) or open an Individual Investment Plan (IIP) where it could earn much more for you.

You may argue that investing in a diversified portfolio of stocks and bonds is more risky than keeping your money in your savings account earning 0.40 per cent per annum.

But with a long-term inflation rate of around 3 per cent per annum, a savings account will not help you build wealth –– the value of your money is actually shrinking.

History has shown that if your investment horizon is greater than five years, you will be compensated for the additional risk you take on.

Compare the recent performance results of the various pension plan providers to make sure you’re in the best one (see chart for more details).

It should be noted that each ‘managed profile’ represents an actively managed, risk-controlled, diversified portfolio of funds offered on our investment platform.  So how does your pension provider compare?

If you want to ensure that you can enjoy a good life in retirement, it is important that you have the right pension and investment partner working with you at all times.

Marie-Jo Caesar is Chief Operating Officer, Pensions at Colonial Group International Limited (CGI). Colonial Pensions Services Limited (CPS) is a member of CGI, and is licensed to conduct investment business by the Bermuda Monetary Authority. Please direct any questions or comments to