With seniors awaiting a 4.5 percent pension increase later this month, Finance Minister Paula Cox has announced a turnaround in the fortunes of the fund that will pay it out.

A report on the Contributory Pension Fund as at August 2005 was finalised in June 2007, and will be tabled when the House of Assembly reconvenes.

Giving a preview of the contents, Ms Cox said: "The projected financial position of the fund at the current review is better in the longer term than at the previous review. The main reason for the improvement in the fund is that over the three years ended 31 July 2005, the real rate of return earned on the fund was about eight percent a year, as compared to the real rate of return of three-and-a-half percent a year assumed at the 2002 review. As a result, the value of the fund as at 31 July 2005 is about 25 percent higher than projected at the 2002 review. "

Ms Cox also attributed the improved financial position of the fund to Government's policy shift in increasing contribution rates by 1.75 per cent rather than the previous level of 1.25 per cent above the rate of pension increases.

She added: "As at July 31 2005, the market value of the fund was $996 million, approximately 12.25 times the outgo in the year ending July 31 2005. This is a relatively high level of funding when compared to national social security schemes of other countries. For instance, the US Social Security trust fund and Canada's national pension plan holds assets valued at four times benefits."

Ms Cox said in the short-term the fund is in good financial shape and continuing to get stronger in the current market environment. The market valuation of assets in the Contributory Pension Fund as at June 30 2007 was approximately $1.27 billion compared to the $996 million as at July 31 2005, she said.

However, the Minister conceded that Bermuda, like most of the developed world, is faced with the challenges associated with the growth of an ageing population. During the next 40 years the numbers over the pension age of 65 are expected to increase from 7,728 to 18,506 - an increase of more than 139 percent, which, she said, will place greater strain on the country's pension system.

The 4.5 percent increase in the pension payment is the seventh in the eight years since the Progressive Labour Party was elected in 1998.

Reacting to the news, Shadow Finance Minister Patricia Gordon-Pamplin said: "Any increase for seniors is welcomed, but with the high-end rate of benefit set at $1,150, what the Minister needed to say, to be honest, is that there are very few of our seniors receiving pensions at that rate. In addition, she should put the percentage in real number terms - at the top end, seniors will receive about $25 per week more money. A significant number of seniors are receiving closer to $500 and this equates to approximately $12 per week more money."–She also criticised Government for lack of action in curtailing healthcare costs.

"Many seniors are still in the position of making the choice between food and medicine or rent and electricity. The HIP premium increased with effect from April 1, but seniors have to wait until August to receive their pension increases. It is interesting that government Ministers voted their increases to be retroactive to April 1 last year," she commented.