Hospital chiefs have denied that a tender for businesses to administer the hospitals? pension fund has anything to do with the an ongoing probe into the alleged mishandling of the $40 million fund.

Pension consultant Morneau Sobeco, from Toronto, Canada, was hired to conduct a governance review of the existing pension plan and, according to a source, also investigated the circumstances surrounding a decision to alter management of the deferred benefits plan ? which covers the more than 1,000 hospital workers ? in 2000.

It is understood that arrangement led to $800,000 annual commission fees, performance fees and management fees being charged by third parties including the administrators ? a prominent local financial group ? after they took over almost five years ago.

The slow growth rates of the fund sparked concern from members who approached the Bermuda Public Services Union.

But the Bermuda Hospitals Board denied that the recent tender had anything to do with this ongoing probe.

The Deputy Chairman of the Bermuda Hospitals Board, Anthony Richardson, said the BHB generally tendered all significant finance related contracts on a three-year cycle.

?With respect to the pension plan, the fund value approximates $40 million and it is currently administered on an unbundled basis,? he said.

An unbundled pension plan means that the three aspects of the pension ? the trustee side of things, the investing and the administration ? are all done by different entities or companies. A bundled pension plan is when one company, such as Argus or Colonial Insurance, performs all three aspects.

In a statement from the BHB, Mr. Richardson said that, given the value of the pension plan, the Board wanted to consider the relative efficiencies of bundled and unbundled approaches.

The BHB engaged a pension consultant, Morneau Sobeco from Toronto Canada to conduct a governance review of the existing plan as a first step in this regard.

?The review has been completed and, after consideration, the BHB has requested bids for pension services on both a bundled and unbundled basis since there are advantages and disadvantages to each approach,? Mr. Richardson said.

He added that the BHB anticipate a good response to the tender and they planned to complete the process in a timely manner.

?The BHB would like to emphasise that the focus of the governance review was to provide information to the BHB to assist in evaluating the efficiency of the BHB pension programme,? he said.

Mr. Richardson added that a secondary component was to provide recommendations regarding the relative advantages and disadvantages of a bundled and unbundled approach to administration of the pension plan.

?The BHB believes the details of the report are private to the BHB, plan members and current pension plan providers.?

He said: ?The BHB is very mindful of the fundamental importance of pension benefits to its employees, especially given the cost of living in Bermuda. We are committed to ensuring that we make pension related decisions that will safeguard this important benefit for our employees,? he said.

BPSU leader, Edward Ball, said the Bermuda Hospitals Board and the BPSU were totally in favour of the tender process for the pension fund and that the union had confidence in Morenau Sobeco to protect the interests of both the board and members of the BPSU.

He added that all the parties involved ? Bermuda Industrial Union, Bermuda Public Services Union and Bermuda Hospitals Board ? would collectively participate in the review of the tender process and the selection of successful company or companies.