Bermuda's pension programme in nothing more than a gigantic "Ponzi" or pyramid scheme, according to businessman, author and economist Bob Stewart.

And he said that the current system was unworkable with huge problems looming for Bermuda's 30 and 40 year olds who currently will get little reward for contributions made now.

Mr. Stewart, speaking at the weekly meeting of the Rotary Club, criticised governments present and past for not producing figures for the scheme, stating that the last published figures for the Social Security Fund date back to 1993 and that he hit a brick wall when asking questions on the state of the scheme.

"The creators of the current design of a pension scheme have created a gigantic Ponzi scheme," he said. A Ponzi scheme is a kind of swindle, borrowing from Peter to pay Paul, is also known as a pyramid scheme.

He said that only half of the current population had an employer's pension - which left the state to pick up the slack from the Social Security Fund.

Mr. Stewart also said that those receiving the Government pension now - which is $875 a month - never paid in enough in the first place to allow them to receive the amount they are now getting.

And he said that this amount is being paid for now by younger workers who will face problems when they reach retirement age because the fund will not have enough money in it to pay out when it comes time for them to retire.

Speaking about the contributed pension scheme to the Rotarians yesterday, Mr. Stewart said: "You may have paid into it, but in order to receive the benefits which are now being received by you, you did not pay in enough.

"The question is the contribution made by both employers and employees to the contributed pension fund which pays out $875 a month, was insufficient to justify the level of benefits now being paid out.

"And although you paid into it, and I paid into it, the fact is we have not paid in enough for the pension."

He also said that the $875 was going to be "totally inadequate" to allow people to live in the standard of living they wished to enjoy. "It simply is not going to be enough."

He went on to say: "Now the people who designed the pension scheme, and this is and interesting point, because with pay as you go, whereby one group pays and another takes out, is fine so long as the balance is maintained, but there are people all over the world are finding that the pension funds are almost on the point of bankruptcy."

Mr. Stewart (pictured) added that unless the benefits were reduced or the pension contributions increased or a combination of these things, the pension system will not work.

"We are dependent on young people to keep the pension fund going," he said, adding that there was no longer an employer to take over if there was a shortfall as there used to be.

He said there was a huge deficit in the pension scheme but could not quantify the amount. "I say huge and I am deliberately vague because getting information on the Social Security Fund from the appropriate officer is really like trying to break into the Kremlin.''

Mr. Stewart pointed not only to the Social Security Fund, but also to the way pension from the employers were now paid out.

He said that over the past five years the pension as a percentage of a salary had died a death and instead was supplanted with employers and employees contributing a percentage of a wage to a scheme which did not guarantee a fixed income on retirement.

Mr. Stewart added that the pension scheme would face the worst problems 10 to 30 years down the line and the only way to change things was to either increase the amount paid into the scheme or lower the amount paid out.