Posted by: Ms Morris | July 22, 2009

The party may still be going on – but do the young know they have to pay for it – forever?

Posted on behalf of Martin:

A number of years ago, a friend of mine was part of a team of Consultants that was asked by a medium sized local council in the UK, to consider ways that the Council could reduce its costs. He told me that when you looked at the main heads of expense, one the biggest ones was the provision of free bus passes for Senior Citizens. Yes, there were other areas were  ‘cost trimming’ could take place, but it became clear that if sizable savings were to be made, items like free bus passes would have to be tackled. The Council chose not to do so. Senior Citizens often need support later in life particularly as many are on a fixed income. How could you possibly take that away? How mean spirited they would look. In the end, the bus passes stayed and householders paid more in local taxes instead.

No one told the children that they would inherit the responsibility as the next generation of taxpayers. Worse still, no one told them that the current population was due to change in the coming years, such that the number of young tax payers would decrease whilst the number of free bus owners would increase, thereby increasing the tax burden. And so it is in Bermuda, except that we are talking about Future Care not bus passes. As it was with the local council example, tackling the cost issues of Future Care, would be seen to be mean spirited. The difficulty here, as in much of the world, is that whilst the number of taxpayers diminishes, the number of none taxpayers increases. The Government’s measure of this is called the Dependency Ratio.

Looking at those numbers shows that it goes out of whack. The Old Age Dependency Ratio for 2000 was 19.2%. The view for 2030 is that it will rise to 44.8%.
Breaking that down a little further, the Black Bermudian Ratio of 16.9% in 2000 will increase to 44.5% by 2030; a move described in the Report as ‘soaring’.

Maybe someone needs to get their head around this before it becomes a real issue.


  1. The Economist just had a cover story on this (essentially) that was quite enlightening:

    For us in Bermuda it is an even greater problem, because one of two things will happen and happen fast due to the tiny size of our population: either the national pension will dry up and leave old people to starve, or we’ll have to introduce high enough taxes to chase away the high-earning young people. Neither a good situation.

    But don’t worry, the PLP government have demonstrated their skill at balanced budgets over their tenure, so I’m sure we’ll be fine. I mean, just look at how they’ve grown our debt. Impressive eh!

  2. I will be interested to see how the Government deals with this, in particular over the coming 2-3 years.

    We have already seen a ‘phasing-in’ onto the new arrangements; one presumes because the costs were a concern.

  3. I have little doubt they’ll take the typical route. They’ll drag it out as much as they can to the next election and subsequently make bigger and grander promises of ‘free’ to try to get elected.

    Political parties can be even less short sighted in managing themselves than a government. In the short term they’re willing to sacrafice future chances at governance to win now, thus depriving the next generation of leaders they’re grooming from actually leading. Is it much of a surprise they pursue the same acts when it comes to government itself?

  4. Hi Denis,

    You may well be right, although with the absence of a credible alternative right now, the possibility of the PLP loosing an election seems – well – remote.

    Maybe there are other ‘party issues’ that are nagging at their confidence – who knows?

    So, with my assumption of re-election and, more importantly, the report yesterday that Government borrowing was moving towards 10% of GDP and the fact that we by no meas out of the woods yet generally speaking, then I still come back to the main question….”Maybe someone needs to get their head around this before it becomes a real issue”.

  5. if only the poor got benifits then there would be no strain on future generations

  6. Looks as though this one is warming up.

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