Senators passed a bill increasing pensions by nine percent yesterday but an Independent Senator sounded notes of warning on the long-term cost to the Island., a former Financial Secretary, welcomed the rise but said that if pay-outs were going up by nine percent, contributions needed to go up 12-13 percent to balance the books.

"That doesn't seem to be the case in this case ? we're getting a 4.3 percent increase," he said.

He pointed out that last autumn there had been an increase of three percent in benefits with no increase in contributions.

All of the various benefits payable will be increased by nine percent in August and the changes will raise the maximum benefit payable to about $1,000 a month.

Around half the 8,500 seniors on pensions are at the maximum benefit.

Introducing the bill, Government boasted the increase would be the fourth by the Progressive Labour Party Government since coming into power in 1998.

He said that in March this year the fund was valued at $858 million "roughly 12 times more than the annual pay-out of some $67 million in pensions and allowances", and a $100 million increase in value over the year. said the fund had lost $100 million in 2001 and took around two years to recover.

He suggested a nine percent increase was less effective at helping those in real need than a flat-rate payment mixed with a percentage increase.

Such a formula had been used at his old firm Belco, said who pointed out around half of pensioners did not get the full $1,000 a month.

He said: "Right down at the bottom you are getting peanuts."

Increases will be funded by a one-off payment of $2 million from the Consolidated Fund to the Pension Fund.

Opposition Senator lamented the fact that the $2 million needed to pay for the increase had come from the American Bases settlement which should have been earmarked for maintaining Longbird Bridge.

He said Hurricane Fabian had shown the importance of the bridge.

"I hope, before all the bridge money is lost, Government tries to invest some of the nickel, pennies and dimes." said the British Foreign and Commonwealth Office had done a review of the pension policies of eight overseas territories and had no major concerns about Bermuda's position.

And he said a new actuarial review was being done now based on 2002 figures after noting the last review was done back in 1999.