Trust (CST) that will cut administrative costs significantly, and reduce the number of payment defaults by Bermuda subscribers.

This year there have been 20 to 25 cases where parents have failed to maintain regularity with payments.

Senior vice president, finance and administration at CST, Tom F.

O'Shaughnessy, visiting from the Toronto headquarters, conceded he had been working with parents to attempt to resolve individual cases.

The importance of continuing with the plan includes the fact that those who do not, will be repaid their contribution without the benefit of the interest generated by the plan. The interest earned will benefit other students who have remained in the plan.

Mr. O'Shaughnessy said CST and The Bank of Butterfield Executor & Trustee Co.

Ltd. had agreed to an extension of the trust agreement that governs the plans.

The three-year agreement, which includes an option for a two year extension, will cut the cost of administration by almost 40 percent over the term of the agreement, providing more funds in the investment pools to be paid out to future qualifying students.

During the three years, CST and the bank will work toward further reducing the cost of administration.

CST in Canada has some $850 million (Canadian) in assets under administration, with 150,000 plans. CST's Bermuda Trust was set up in 1989, with assets of $3.2 million (Canadian). Today, there are some 3,700 plans from Bermuda residents, representing some $26 million (Canadian).

Partner with chartered accountants, Coopers & Lybrand Bermuda, Ray Medeiros, said, "I am a member of the CST advisory board, and a subscribing parent. I have two children in the programme, with one in her final year.

"The amount that I have received from CST has been able to pay tuition and books, leaving me only with the responsibility to pay room and board.'' Mr. O'Shaughnessy said, "Subscribers payments are based upon what the invested assets have returned over the period of time they were invested. It would also depend on the number of students who went on to collect their benefits, because those who don't, automatically donate their earnings into the fund for the other children.

"In addition, the foundation makes a donation into the scholarship amount, this year being $100,000 (Canadian) to prop up the scholarship.'' He said that the fund grew about $4.4 million (Canadian) over last year and some families involved in the plan have seen their invested money grow at about 13 percent per year.

He said, "We do a calculation every year for a situation where a student has received all of their benefits, all three scholarships under the programme.

"For a child who has received their third scholarship this year, their parents rate of return, if you were to calculate it on a weighted average investment return similar to a pension plan or mutual fund, would be approximately 13 percent per annum weighted average return over the 21 or 22 year period that it takes to collect the benefits. And that is a very healthy return.

The money is invested in government of Canada bonds, Canadian mortgages that are insured by the Canadian government and bank investments.

CST and the bank has also agreed to alter the method of deposit from the standing order system to an electronic pre-authorised payment system.