Bermuda: International Pension Plans In Bermuda

Last Updated: 16 January 2015
Article by Vanessa Schrum and Ashley Fife

With its enviable reputation in offshore trusts, pensions and insurance, Bermuda is an ideal jurisdiction for employers wishing to establish international pension and employee benefit plans (IPPs).

Global organisations may consider establishing Bermuda IPPs for employees who work outside their home country or the home country of both the employees and employer. Advice should be obtained in the relevant home country jurisdictions prior to establishing a Bermuda IPP.


  • Less regulation of unregistered IPPs in Bermuda or IPPs registered under the Pension Trust Funds Act 1966 (PTFA) when compared to pension plans subject to home country regulations (for example, the Employee Retirement Income Security Act of 1974 (ERISA) in the United States and the Pension Act 1995 and Occupational Pension Schemes (Investment) Regulations 2005 in the United Kingdom).
  • Investment freedom as Bermuda IPPs may invest in a wider range of permissible investments compared to most home country pension plans. IPPs may be established to provide for self-directed investment options. Bermuda unregistered IPPs and IPPs registered under the 1966 Act are not subject to any specific investment, lending or borrowing restrictions.
  • Flexibility in the design of benefits. Unregistered IPPs or IPPs registered under the PTFA are not subject to any regulations in Bermuda regarding the nature of benefits including the payment of lump sums. If required, Bermuda IPPs rules (sometimes called the pension plan or scheme) may include limits on the payments of lump sums or other benefits if that is required to, for example, facilitate obtaining the approval of a regulator, or avoiding adverse tax consequences, in connection with a transfer of assets from a home country pension plan into the Bermuda IPP.
  • Lower administration costs overall compared to home country plans as a consequence of less complex regulation and lower administrative burden.
  • Bermuda does not impose income tax, capital gains tax or withholding tax.
  • Payments can be made from a Bermuda IPP in any currency free from exchange controls.
  • Single Plans may be used by employers to cover employees who move from one country to another. This may avoid employees who move from jurisdiction to jurisdiction having to join separate pension plans in each jurisdiction and experiencing a fragmentation of pension benefits as a result.
  • Umbrella Plans may be established for a group of different and, on occasion, unrelated employers sharing similar needs, thereby reducing the administrative costs to each employer and allowing the IPPs' investments to be pooled.
  • Unlimited duration – For trusts established on or after 1 August 2009, Bermuda trust law does not impose a perpetuity period over trusts except on trusts holding Bermuda land. This means that IPPs established in Bermuda can operate for as long as necessary without being forced to be wound up at an inconvenient time.
  • Access to Bermuda's strong insurance market to provide benefits, investments and solutions to defined benefit plan funding issues as required by IPPs.
  • Stable political and legal environment - Bermuda has a strong legal system with appeals from its Supreme Court determined by the Privy Council in the United Kingdom.
  • Regulated trustee option - Trustees who provide trustee and administration services to trusts (including IPPs) as a business are required to be licensed under the Trusts (Regulation of Trust Business) Act 2001 (TRTBA) and comply with its requirements including the code of practice and statement of principles issued under that Act. Licensed Bermuda trustees, such as Appleby Services (Bermuda) Ltd., have considerable experience acting as trustee for IPPs. There are advantages to appointing an independent licensed trustee to ensure that IPP is administered in accordance with the IPP's rules and that conflicts of interests are avoided or managed appropriately.

The IPP's trust instrument and rules set out the IPP's terms including the requirements for contributions, vesting and benefits. In practice, a Bermuda trust company may hold the IPP's assets and delegate the investment of the trust fund to an investment manager and the day to day administrative tasks to a specialist administrator. The trustee may also invest the IPP's assets and facilitate provision of benefits by entering into an insurance linked securities contract with an insurer.


In Bermuda, there is no requirement for IPPs to be registered and consequently IPPs may be unregulated. International employers with IPPs that qualify for registration may consider it attractive to voluntarily register IPPs under Bermuda's PTFA. It is understood that in some home country jurisdictions, voluntary registration under the PTFA may assist the IPPs (and the benefits provided to members) to qualify for a favourable designation for tax purposes in their home country jurisdictions.

In addition, the Trusts (Regulation of Trust Business) Exemption Order 2002 provides that trustees of trusts registered under the PTFA are not required to be licensed under the TRTBA. The employer or trustee may wish to consider registration of the IPP under the PTFA if, for example, it is the intention that directors of the employer or members of the IPP be represented on the board of an unlicensed trustee of the IPP.

The PTFA provides minimum requirements with which IPPs are required to comply. Importantly, the PTFA does not:

  • preclude the availability of the above listed benefits of unregistered IPPs; or
  • impose restrictive or onerous administrative or reporting requirements.

The schedule to the PTFA requires the following matters to be covered in the IPP's rules in order for the IPP to qualify for registration:

  • The whole of the objects for which the IPP is established
  • The appointment and removal of trustees
  • The vesting in the trustees of all property belonging to the IPP
  • The types of investments permitted by the IPP
  • The making of contributions to the IPP by the employers of persons employed in the undertakings in connection with which the IPP is established
  • The contributions payable to the IPP and the rates of benefits payable or the method of calculating the benefits payable
  • The conditions upon which persons may become or may cease to be respectively, contributors to and entitled to benefits from, the IPP
  • The circumstances in which the IPP may be wound up and the manner in which the IPP's assets are applied in that event
  • The method by which the IPP's rules may be amended
  • The preparation of all statements of accounts, balance-sheets and reports for the IPP required by the PTFA
  • The supply on demand to every person who is or has been employed in an undertaking with which the IPP is established, of a copy of the rules of the IPP and of the latest statement of accounts, balance sheet and report prepared in accordance with the requirements of the PTFA

The trustees of an IPP registered under the PTFA are required to:

  • annually, prepare an audited statement of accounts and balance sheet of the IPP;
  • at least once every five years, cause an investigation and report to be made by an actuary regarding the financial condition of the IPP; and
  • provide a copy of the abovementioned documents to the Registrar-General within 12 months after the close of the period to which it relates

The PTFA provides that the abovementioned documents submitted to the Registrar-General are not available for inspection by any member of the public.

An IPP registered under the PTFA may apply to Bermuda's Minister of Finance for an assurance that the IPP will not be subject to income or capital gains taxes for a specified period if Bermuda introduces such taxes.

Bermuda IPPs are able to provide and facilitate innovative solutions for global organisations considering provision of pension funds to benefit their employees.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions