International Pensions and Employee Benefit Structures

As a business friendly international financial centre, Bermuda is an excellent base for international pension and employee benefit plans often using a trust as a key component of the structure. Globally mobile employees can remain in one Bermuda international plan rather than be moved from one jurisdiction based plan to another.

Whilst providing the protection afforded by Bermuda trust law, Bermuda international pension and employee benefit trusts are not overly regulated allowing for greater flexibility than in many jurisdictions. While there is no requirement for international pension and employee benefit plans to be registered, there is a provision for voluntary registration with the Bermuda Registrar General. There are no income, capital gains, withholding or estate taxes in Bermuda applicable to these international plans and an assurance can be obtained from the Ministry of Finance on the non imposition of relevant taxes should Bermuda’s tax legislation change.

Hamilton Trust Company Limited provides trustee services for international pension and employee benefit plans.

Through relationships we have developed we can also provide for:

  • The necessary expertise to establish the Bermuda benefit structure.
  • Plan administration and reporting to beneficiaries using sophisticated product specific computer software.
  • Custody services both in Bermuda and in other jurisdictions.
  • Accounting and audit services.
  • Investment management options for the plan.

The segregation of responsibilities allows for greater accountability but these relationships have been carefully structured to allow for the seamless administration of the trust and plan.


Key Parties of Pension and Employee Benefit Plans

TRUSTEES – The trustees assume legal ownership of the assets and their responsibility is to administer the trust in accordance with the terms of the trust settlement deed and typically the rules of the plan. It is also the trustees’ responsibility to protect the interests of the beneficiaries as laid out in the trust settlement deed and in accordance with the plan rules. The trustees must secure the assets with a suitable custodian and with the necessary input from the administrator make the required distributions to the beneficiaries.

ADMINISTRATOR – The administrator’s primary responsibility is to administer the benefit plan in accordance with its terms in conjunction with the powers and duties granted to the administrator in the settlement deed.

  • Typically the administrator will be required to:
  • Interpret the provisions of the benefit plan.
  • Maintain the necessary books and records to allow for the proper administration of the plan.
  • Inform beneficiaries of their rights under the plan.
  • Distribute periodic statements to the beneficiaries indicating the value of their respective accounts and, depending on the benefit plan, the vested portion thereof.
  • Furnish trustees with information they may require to assist them in the performance of their duties.

INVESTMENT MANAGER(S) – The trust settlement deed provides that the trustees or the administrator appoint investment managers to invest the plan’s assets on a discretionary basis in accordance with the mandates provided depending on each beneficiary’s risk tolerance. Other than the requirement for trustees to invest prudently, there are no restrictions on the investments that can be invested in by international pension or employee benefit plans.

 Key Documents

SETTLEMENT DEED – The settlement deed document lays out who will benefit from the trust, usually by reference to the plan. It also transfers legal title of the assets in the plan to the trustees, subject to the trustees’ and administrator’s powers and duties. The powers and administrative provisions are usually very broad to allow the trustees and administrator to properly administer the trust.

The settlement deed also provides for the resignation and the removal and appointment of trustees, administrator, investment manager and other agents such as accountants and auditors. It also lays out the method of fee charging and incorporates various indemnity provisions applicable to the trustees and administrator.

PLAN RULES – The plan rules are usually incorporated into the trust as a schedule to the settlement deed. This document covers such items as the administrator’s powers and duties, eligibility for membership of the plan, entry dates, contribution formula, reporting frequency, vesting formula, retirement dates, death and disability benefit and circumstances in which the plan will terminate. It also covers the circumstances under which the Employer’s participation in the plan is terminated.