As stock market returns have improved, so too have the performance of Bermudians? pension plans, according to the Island?s main pension providers.

For many employees, investing in their pension over the past few years seemed equivalent to pouring money into a black hole. Poorly performing markets meant that pension accounts were often losing more money than they were gaining from contributions.

But stock markets began to recover last March, bringing pension accounts up with them. Many have even posted a profit since 2000, according to providers.

2000 was the year when many employees were enrolled in a pension for the first time, after legislation had made plans mandatory. Argus, the Island?s largest pensions provider, reported a three-fold increase in the number of pension plans under its administration. Many employers also switched from offering schemes which defined the benefits employees receive when they retire to defined-contribution programmes which are less certain.

2000, coincidentally, was also the year that technology stocks crumbled and brought the rest of the market with them.

?People were thrust into the market at the top and have had three painful years,? said Anne Kast, the president of Kast Investment Management. Ms Kast advises the investments for nine of Argus? pension portfolios.

But according to Ms Kast, all except the most aggressive pension plans ? those with the highest risk ? have fully recovered losses incurred since 2000. On Friday, the Dow Jones Industrial Average closed at 10,600, 6.7 percent shy of the level at the beginning of 2001 and 3,300 points higher than the low point reached in October 2002.

Argus?s vice president for life and pensions, Lauren Bell, said in a written statement that ?the funds offered by Argus under its pension plans have performed well compared to their benchmarks over the past few years?.

Employees are usually allowed to choose the risk level of their pension plan. Younger employees with time to weather market troughs are advised to invest in a more aggressive pension plans, since the long-term returns are typically greater. Older employees typically invest more conservatively.

According to Argus, the poor markets prompted some workers to change to a less risky pension.

Kast discouraged people from liquidating their pension altogether while markets were declining. ?We had seminars and meetings to tell people not to do that,? Kast said. ?If you take these losses, you?re never going to make them back. There?s something to be said for sticking with a plan, if the quality of the plan is OK.?

The benefit of pension plans, she explained, is that they require employees to contribute fixed amounts, even when the markets are in a slump.

?It ignores all emotion,? she said, and employees are forced to buy while stocks prices are depressed.

?The money gets made when the market is down,? she added. ?People purchased good, quality assets at bargain basement prices. When the market turns, people are loaded up on high numbers of shares.?

Ms Bell said that the market gains in 2003 had provided ?very attractive returns for our members?. Returns during the year ranged from 16 percent to more than 25 percent, she said.

Every year, Kast reviews the makeup of pension portfolios ? the distribution between stocks, bonds and other investments ? and has decided not to change them in the years since the markets began to decline.

But Kast does change the funds in which pensions are invested ? dumping some in favour of others.

?We have to apply an enormous amount of due diligence,? she said. ?In a bear market, all weaknesses get exposed.? The average turnover for her clients? portfolios is 20 percent, although that percentage was higher in 2001.

She said her firm has had very little exposure to the mutual funds affected by recent scandals. ?We?re not making any changes because of it,? she said.

Several fund managers have been implicated in trading abuses, including Janus Capital, Putnam Investments, Invesco and others.

More than half of US companies are changing retirement plan investment options or are considering a switch because of the scandals, according to a recent Duke University survey.

BF&M was not able to respond to e-mail questions before Ppress time and no one at Colonial returned calls for this article. Although Argus is the largest pensions provider, the other two companies control a significant share of the market.

According to fund reports on BF&M?s website, during the year leading up to September 30, 2003 ? the latest for which statistics were available ? the funds in which BF&M pensions are invested gained between 7.10 to 28.02 percent.

But some of the funds have yet to recover from the losses of the previous two years ? the average annual returns for the BF&M funds ranged between ?12.5 percent and 8.94 percent.

Colonial?s funds all posted gains between December 2002 and November 2003, ranging from 2.6 percent to 34.8 percent. Over the last three years, Colonial?s funds provided average annual rates of return between -8.3 percent and 11.4 percent.

The figures do not reflect recent market activity ? since October, the Dow has gained 14.3 percent.