When the Bermuda National Pension Scheme was instituted back in January 2000, not many could have foreseen that investments in large and small cap equity mutual funds would ride the roller coaster down, and down, and down.

Even monthly injections from continued pension contributions did nothing to stem the losses, it seemed. Today, the bear market has been ruled virtually over, if such an end line is possible to draw in the sand.

Many Bermudian employees' pension funds have bounced back nicely, actually starting to look quite promising. Even so, there continues to be grumbling and discontent over the kind of pension one might have, the amount the employer contributes, the individual performance and so on.

The individual employee often fails to recognise that if they lost money in their pension (on paper), so did their employer (on paper). Historically, however for everyone involved in helping employees achieve a comfortable retirement, one investment mantra was relied upon; that is, over the long term, diversified investments have returned a premium above the rate of inflation, now at over four percent in Bermuda.

Consider this: In Bermuda pension offerings as an employee benefit are mandatory, with only very small firms exempted. Like it or hate it (and at inception, putting a pension plan in place was vigourously protested), very, very few countries in the world have regulated mandatory pension schemes.

In the United States, for instance, pensions are considered a perk, a voluntary effort by the employer to attract and retain talented human capital. Corporate pension plans are not offered out of the goodness of the corporate heart, trust me!

When times get tough and the bottom line slips; when shareholders of the trouble company are protesting decreasing market values, pension benefits get chopped. In the case of United Airlines, this week, pensions were eliminated altogether.

Look hard at the global airline industry; giant carriers are struggling just to remain in the bright blue yonder. How loyal are their workers now? No wonder, no cheap flights to Bermuda.

Because the pension scheme is still new (four years in context of a 30 years career) employees fail to realise that it is the consistent savings of incremental amounts that add up, exponentially.

For example, in a hypothetical illustration, the average 25 year-old, starting salary of $35,000 - pay increases of three percent a year, pension administration fees of .85 percent of one percent per year (85 basis points) will accumulate in a pension over 40 years four percent average return - $550,000 and eight percent average return - $1.25 million dollars. Give that same five percent match directly to the employee - $1,750 per year to save; inevitably, this perceived tiny amount slips through the fingers like catgut chasing after a pollywog. Gulp and gone.

Pensions almost the world over are made up primarily of mutual funds. The investing world has its proverbial neck craned to the left (in the US) in observation as a new wave, this time of mutual fund managers' (the list continues to grow) impropriety and self-dealing at shareholder's expense.

Putnam Investments owned by Marsh & McLennan has so much egg on its face it looks like an omelette. In less than a month, more than 23 billion, not million, dollars has been yanked from their fiduciary care, precisely because they didn't - care.

While individual investors are voting with their already very thin pocketbooks, most of these withdrawals are from large institutional pension fund managers concerned that they may be held responsible by association. We have yet to learn the decision (to stay or leave Putnam) of the largest pension funds in the US, $2 billion - Calpers (the California Public Employees' Retirement System and its sister pension fund for teachers.

Should you be cashing in your Putnam, Janus, Alliance Capital, Schwab, Strong, Van Eck, and other mutual funds because of recent allegations? Are these limited to just the US market? Will there be more revelations? Source materials derived from website www.thestreet.com indicate that US Securities Exchange Commission attention on excessive redemption patterns is now focused on the variable annuity industry, among them SunAmerica, Scudder, Franklin, ING, AIM, Oppenheimer, Hartford Life, Lincoln, John Hancock, TIAA-CREF.

Exactly what does Elliot Spitzer, Attorney General of the State of New York, know? www.fundalarm.com, the non-profit protector of small mutual fund investors, has voiced concerns about market timing long before recent press exposure.

I've continually harped on full disclosure for small investors, so that they can check the facts themselves. Knowledge turns indecisiveness into informed decision making. But even the most well intended professional advisors have been broadsided by these latest developments, whereby brand name fund managers internally allowed selected outsiders to trade in and out their funds profiting at the expense of everyone else.

However, even these insidious acts do not change the basic responsibility that each and every pension holder has, that of learning about what your pension choices are, understanding the structure of the funds that you own and the effects that capital markets have upon them, and assuming control for your future financial success.

Never make a decision about your hard-earned money without knowing all the facts. In the next few articles, we will be discussing exactly how to rate your mutual funds (pension and other wise), what questions to ask your advisor, and how to calculate your chances of preparing for a fulfilling retirement - ten, 20, 30 or 40 years hence.