It is annual pension review time again. The Bermuda National Pension scheme structure, implemented almost nine years due to the endeavours of the dedicated group of volunteers, professionals and politicians in Bermuda, still exists and is growing.

This mandatory pension scheme (for the majority of able-bodied employees working in Bermuda) was formed in anticipation of the growing percentage of seniors (I hate that word, you don't hear anyone calling young people juniors) retiring in Bermuda. The powers that were, at that time, understood only too well that the Bermuda's old age contributory pension would not be adequate for anyone's monthly living expense, net of purchasing power deflation.

When considering conscientious financial plans for the future, I surmise they also realised that the individual statistical savings rate in Bermuda was no better than the low averages of the United States, Canada, or the United Kingdom.

Unless anyone can convince me of the opposite, that viewpoint is probably still accurate If you started in the beginning with this new pension scheme (or even at a considerably later date), it is time to take an annual look at your pension statement for the following:

• Where you were.

• Where you are now.

• Where you would like to be.

• Whether you should make some changes in your allocations, such as increase your voluntary savings, reallocate your asset sectors and risk tolerance, say from aggressive to balanced, or from conservative to growth, as an example.

Reviewing your statement

You need to act in your own self-interest here; it will not be easy, particularly if you are finally tracking the entire nine years worth of statements. How could anyone ignore his or her pension for nine years, you may think? You'd be surprised at how easy it becomes to put off dealing with this issue.

As the years keep rolling on, suddenly, it becomes time to think about a new job, or a retirement location, or other personal issues. It is then, that many of us, come to with a start with the question, what portion of my assets is represented by my pension? So, start!

There are some basic, very important items relevant to your pension that can adversely affect you. Make a note of them and establish a checklist going forward every year. In the next couple of weeks, we will work our way through them and if you decide now to spend one night a week on all those prior reports, not only will you be current, but you will certainly have a better idea of where you are.

Ready, set..

1. Are all your yearly contributions from your employer (and yourself) verified on your pension statement? Today, this should represent a five-percent match from both sides (10 percent), your employer's contribution, and your mandated contribution. As an example, if your salary is $50,000 annually, generally, you should see a total of $5,000 added to your pension account for the year. Use your salary level to compute your personal pension contributions for the year. If the total amount contributed does not match your informal calculations, reasons that it may not match could be attributed to interrupted employment, etc, an error in tracking, or in a worst case, that your employer has not made the required deposits to your account. If you've neglected to review prior year's pension statements, this will be a bit more of a chore. See chart next week to help you do this job quickly.

2 If you are making additional voluntary contributions, does that number reflect the appropriate savings pattern (deducted from your wages) for the year.

3 Is your investment asset allocation the same one that you chose originally?

4 Have you considered changing your allocations? Again, this may seem like a very simple question, but I am continually amazed at casual remarks made, that 'they don't really know what they picked', or 'I just throw it in the get-to-later pile'.

5 Have you been comfortable with the returns that you have achieved? If not, why not? Did you second-guess yourself, feeling more aggressive than you really are? We will discuss more about investor emotions and hindsight bias in Part II of your annual pension review.

6 What is your rate of return for the year? Different statements report performance differently. Reviewing your statement more than once a year will help you familiarise and feel comfortable with your pension-reporting format. Note whether your pension performance return is reported, net of all expenses (NAV), or gross of fees.

Generally, this requires a careful look at the whole statement, compared against performance reports. It is particularly important if, for instance, you have occasion to compare pension reports from various pension providers. You may not be able to adequately compare the performance figures (net of fees) on a statement against one that has been reported gross — meaning, not all fees to manage, administer, etc. have been subtracted. This is an important difference, given that the gross (fees not deducted) statement will show considerably different results — until the rest of the fees have been deducted.

• If the return is stated net of fees, Net Asset Value (NAV).

l Or total expense ratio, that is your pension performance actual return.

l If the statement does not show any indication that the fees have been deducted from your total return, you will need to contact your pension administrator for further clarification and to obtain the total expense percentage number. Deducting those fees against your performance return will give you a more accurate picture of your pension performance for the year.

7 Tidying up the paperwork. Do you know whom you designated as beneficiary on your account? Have you divorced, married, become a widow(er), have considerably older children now? If you pass unexpectedly, without designating the beneficiary of choice prior to your death, your pension assets will be transferred by matter of law to the individual listed on the account at the time of your death. While not in the pension purview, life insurance policy beneficiaries are determined in the same way. More on that in part II or III.

8 Weighted average return. If your pension scheme provides for individual fund selections, can you calculate the weighted average of your entire portfolio? Or are you focusing on the returns of each individual fund? This is enough for today. I hope to hear that you are taking charge of your financial future by closely monitoring what will probably be one of your biggest assets, down the road.

Martha Harris Myron CPA -NH1929, CFP® -67184 (US licences) is a dual citizen (US and Bermuda) and a student member of STEP.uk. She is a Senior Wealth Manager at Argus Financial Limited, specializing in comprehensive financial solutions and investment advisory services for individual private clients and their families, business owners, endowments and trusts. DirectLine: 294-5709 Confidential email can be directed to mmyron@argusfinancial.bm

The article expresses the opinion of the author alone. Under no circumstances is the content of this article to be taken as specific individual investment advice, nor as a recommendation to buy/ sell any investment product. The Editor of the Royal Gazette has final right of approval over headlines, content, and length/brevity of article.