The Contributory Pension Fund lost $342 million or more than a quarter of its value in 2008 as the fund was hammered by the global stock market meltdown, figures released by Government show.

And the Public Service Superannuation Fund — which funds pensions for retired Government workers – lost $108,555 or 25 percent of its value in the same period.

In all, the Contributory Pension Fund fell from $1.32 billion at the end of 2007 to $975 million at the end of 2008, while the PSSF fell from $434.3 million to $325.5 million in the same period.

However, in written answers to questions from Shadow Finance Minister E.T. (Bob) Richards, Finance Minister Paula Cox said the funds' performance would have been worse if the way in which they were invested had not been shifted to more conservative areas in 2007.

And she also said pensioners need not fear that they will not receive their monthly cheques as the funds have enough money remaining to pay pensions for years to come.

The funds did recover slightly from the lows they hit at the end of November last year, when the world's stock markets plunged by amounts not seen in decades.

Ms Cox said: "During the 11-month period from December 31, 2007 through November 20, 2007, equity and bond markets suffered their worst returns since the Great Depression years.

"The S&P (Standard & Poors) 500 (a basket of the 500 major stocks traded on US stock markets) dropped 37.7 percent while equities declined by 46.6 percent."

Ms Cox noted that bonds held up better than stocks but were still disappointing.

"To be sure, virtually all risk bearing assets suffered steep declines as fear and panic selling gripped the markets and investors shunned all but sovereign and agency bonds. In short, there was nowhere to hide."

In answer to subsequent questions, Ms Cox said she believed they were in better shape than many other countries.

Assistant Financial Secretary Anthony Manders said the CPF had assets equal to ten times more than the annual projected payout of some $94 million in pensions and allowances for fiscal 2008 while the Fund was expected to collect Contributions of $111 million).

He said PSSF's assets were equivalent to six times more than the annual projected payout of some $50 million in pensions and allowances for fiscal 2008.

However, he noted the PSSF took in $45 million in the same financial year meaning it is taking in less than it is paying out. This is expected to change in the next financial year as increased contribution rates come into effect, he said.

Mr. Manders said he could not comment on whether additional cash injections or increased contributions would be required to ensure the viability of the funds until a new actuarial review was done.

These are done at least every three years, and the last review was done in 2006.

Asked if any further changes in asset allocations were planned to ensure the safety of the funds, Mr. Manders said: "The asset allocation of the funds are constantly monitored to ensure that the long term target asset allocations are maintained."

Determining which sectors of the pension fund investments is difficult to determine because the extent of asset allocation changes in 2008 are not fully known.

But the fund's investment in "large cap" US equities – the largest and best known US companies — slumped from $379 million in 2007 to $197 million in 2008.

However, one fund administrator responsible for around $50 million in investments was removed from this sector in 2008. Mid-cap US equities dropped from $63 million to $40 million and small cap US equities plunged from $56 million to $33 million.

Global Equity investments lost around a third of their value, falling from $299 million to $172 million.

However, Global Asset Allocation investments held steady at $102 million as did Global TIPS funds, an investment which is supposed to protect against inflation.

However investments in hedge funds, dropped from $53 million to $39 million, but its investment in conservative absolute return funds held at $63 million.

Investments in cash were increased from $14 million to $32 million.

Mr. Manders said Government was satisfied that the fund managers currently investing money for the pension funds were financially solid.

He said due diligence of the funds had been improved after a review in 2005 and Government's investment consultant also conducted further due diligence.

All are required to contribute to pension funds

All Bermudian workers are required by law to be enrolled in a pension fund.

The majority in the private sector are enrolled in defined contribution plans in which they invest a set percentage of their income and on retirement, receive a pension, or annuity, based on how much they have saved.

Retirees also receive a pension from Government's Contributory Pension, but this is a fixed amount, assuming that the employee has made the correct number of contributions.

Last year, the basic contributory pension – received by 73 percent of pensioners – was increased five percent from $863.24 to $906.40 per month while the maximum pension of $1,172.5 per month was increased to $1,215.66.

There are some 9,300 seniors who receive some form of Government pension.

At the same time, the contribution to the CPF was increased by 6.5 percent.

Government workers received a "defined benefit" pension on retirement, which is based on a formula tied to their salary and the number of years they have worked, as opposed to the value of the funds they invested.

Public service retirees received increases ranging from two to eight percent in December last year.

Bermuda's public pension funds have held up better than state pension funds in the US, which had lost 37 percent of their value through the middle of December.

Some funds have fared even worse, including some that were tied in to the Bernard Madoff Ponzi scheme.