Senior citizens will get a pension increase of 3.5 percent in August ? but workers will see their social insurance contributions go up by 4.5 percent to cover the cost.

And Government will write off "a significant portion" of the $44 million debt owed by the Public Service Superannuation Fund (the Government employees pension scheme) which will relieve some of the "immediate pressure" on the fuund while an ongoing actuarial study continues to seek ways of improving its financial strength in the long-term.

Finance Minister Paula Cox also announced the creation of a "Bermuda Birthright Fund" where $1 million will be set aside and invested over a minimum period of 30 years ? creating a potentially large pool of money to help relieve future generations as the average life expectancy continues to grow.

"Given that the birth rate in Bermuda has been in the region of 800 births a year, as part of the forward planning for the future retirement needs of today's youth, we plan to set aside monies that will be saved and set aside in a Reserve Fund specifically for those who may yet be unborn.

"The monies will not be able to be used by any recipient for a prescribed period and will be invested for a minimum of 30 years on a cumulative basis.

"Increased life expectancy places unsustainable pressure on our pensions system. We have an opportunity to take action today."

"In addressing the pension needs of our public servants," she continued, " I am pleased to advise that Government will write off a significant portion of the $44 million owed by the PSSF to the Consolidated Fund."

"You will recall earlier this year Government indicated there was a shortfall in the Superannuation Fund and that we were arranging for an actuarial study to be done so that we could take active steps to improve its financial position.

"While there are a number of measures that will be considered, this forgiveness of the current debt will relieve some of the immediate pressure on the PSSF. Following the receipt of the actuarial report, further steps will be taken in the future to further improve its funding position and sustainability."