Further details on the scope and objectives of the governance review commissioned to examine the public pension funds were released in the House of Assembly yesterday.

Finance Minister Paula Cox first commissioned the review after allegations of pay-to-play and the public funds surfaced in the wake of news that a fund-raising luncheon for Deputy Premier Ewart Brown's personal election campaign was organised by Government's pensions fund consultant Tina Poitevien.

The review is being conducted by Morneau Sobeco, a Canadian firm, while the partner in charge is Al Kiel, a consultant who has previously worked with the Bermuda Government.

In response to questions tabled by Opposition Leader Grant Gibbons, Ms Cox said the objective of the review was to evaluate the processes by which the Contributory Pension Fund (CPF) and the Public Service Superannuation Fund (PSSF) are administered, and to "ensure all potential conflicts are disclosed and independence and objectivity is maintained during the investment process".

Conducted over a three-month period, the review will examine the relevant legislation; existing practices, contracts and procedures; and comparison with best practices to ensure standards are current and robust.

The scope of the review includes, "among other things, providing advice on an appropriate model for disclosure of potential conflicts of interest with service-providers to the Public Funds and the Public Funds Investment Committee (PFIC) members; to advise of relevant legislation, if any, governing investment advisers, managers, and consultants and of sanctions if breached; and make recommendations to address any material areas of weakness." The ultimate objective once the review is complete, Ms Cox said, is to "have in place a clear and concise oversight framework that provides the necessary checks and balances to ensure the Bermuda Government Public Pensions Funds are operated with transparency and in accordance with best practice".

Some of Ms Poitevien's recommendations to the PFIC have also been made the subject of controversy following allegations of conflicts of interest, including the recommendation to use US firms Cooke & Bieler and Columbia Partners to manage some of the pensions funds.

In 2004 Cooke & Bieler was given $16,870,000 of the PSSF to manage, giving returns of 14.1 percent. The firm was given some $48,800,000 of the CPF to manage in 2004 showing returns of 14.16 percent. Columbia Partners also showed strong returns in 2004. The firm was given $14,868,000 of the PSSF to manage and showed returns of 24.86 percent, and managed $39,762,000 of the CPF with returns of 24.87 percent. "Despite the turbulence in the financial markets over the last four years, the Government of Bermuda's pension funds have performed relatively well," Ms Cox said.

Government has consistently stood by the appointment of Ms Poitevien to the pension funds, detailing the process used to appoint her and saying the portfolios are now considered to be well-structured and sufficiently diverse.

In the beginning of 2004 the CPF assets stood at $831.9 million, Ms Cox said, and by the end of the year they had increased to $937.4 million. The PSSF stood at $299.7 million at the beginning of 2004 but reached $333.4 million by the end.

"These market values represent the highest level that these funds have ever reached," Ms Cox said. "With annual returns averaging 12 percent, both the PSSF and the CPF again placed in the top quartile of public funds in 2004 and exceeded their respective policy targets."