MPs have approved pension rises for retired public officers, teachers, police officers and prison officers under the Public Service Superannuation Fund (PSSF).

The pensions are reviewed at two-year intervals, and rises are based on inflation and the date when people retired.

Following the conclusion of the 2006 review, the increases are in the range of two percent to 8.5 percent and are backdated to July 1, this year.

Finance Minister Paula Cox said the increases will result in the PSSF paying out an additional $3 million in pensions per year. She added that Government had already started to address the inherited problems associated with the Public Service Superannuation Fund (PSSF).

Based on actuarial advice, PSSF contribution rates were increased from five percent to eight percent and 9.5 percent for regular members and uniformed officers respectively, to place the PSSF on a more stable financial footing.

She said there has always been an annual operating cash deficit within the PSSF as pension contributions cover approximately only two-thirds of the pension benefits paid and amounts transferred out of the PSSF during each year.

While stocks and other financial sectors crashed around the world the PSSF Fund returned 14.2 percent for the first nine months of 2008, said Ms Cox.

"Government's investment strategy for pension fund assets is achieving decent results."

She said in 2001 the Government implemented an asset diversification strategy which substantially reduced the prior strategy's exposure to the publicly traded stock markets.

The PSSF's assets continue to perform admirably and rank in the top 11 percent of total funds assessed by a consortium of independent investment consulting firms over a five-year period, said Ms Cox.

The decision to reduce the public fund's exposure to the equity markets from 72 percent in 2005 to the current level of 51 percent, has saved the public pension fund significant amounts in investment losses, said the Minister.

She added: "In closing, it is important for the PSSF's pensioners and the general Bermuda population to know that this Government understands the trust that they have placed in us to be prudent stewards of the public pension funds.

"Our actions and the results of those actions demonstrate our deep appreciation of the gravity of this trust and our fiduciary responsibility to all participants in the public funds."

MPs also voted yesterday to increase pensions for retired government employees, former Ministers and Members of the Legislature.

The rises, due every two years, are set out in accordance with formula based on price rises.

Following the conclusion of the 2008 review, the increases backdated to July this year, differ according to when people retired.

n Pensioners whose pensions commenced on or before June 30, 2006 will be awarded a 8.5 percent increase in their pensions;

n Pensioners whose pensions commenced during the period July 1, 2006 to December 31, 2006 will be awarded a 8 percent increase in their pensions;

n Pensioners whose pensions commenced during the period January 1, 2007 to June 30 2007 will be awarded a 6 percent increase in their pensions;

n Pensioners whose pensions commenced during the period July 1, 2007 to December 31, 2007 will be awarded a 4.5 percent increase in their pensions;

n Pensioners whose pensions commenced during the period January 1, 2008 to June 30, 2008 will be awarded a 2 percent increase in their pensions;

Continued Ms Cox: "Government is committed to continuing to provide civil servants and Ministers and Members with access to good-quality defined benefit pension schemes which pay an index-linked pension upon retirement.

"This is an invaluable benefit especially in these times of rising prices and uncertain investment markets."