Pensions are to go up in August by three percent but Government has promised a review of whether they are high enough.

Pension contributions are set to rise by 4.25 percent as Government seeks to build the fund, which before corrective action was taken in 2000, was on course to dry up.

Education Minister Paula Cox, acting for Finance Minister Eugene Cox, who arrived late to yesterday's House of Assembly session after his lobbying visit in Washington, said the three percent raise for contributory pensions was slightly higher than inflation and would yield a maximum pension of $850 a month.

She said Government had been advised if contributions were not increased by more than the rate of benefits the pay-outs would outweigh income by 2006-7.

But she said by raising the contributions by 1.25 percent higher than pay-outs the fund would be more than $1 billion by 2037 rather than in the red.

Opposition leader Grant Gibbons called on Government to overhaul pensions because there were still many people not benefiting from the national pension scheme because they hadn't been in it long enough to get sufficient benefits.

He said: "There are a lot of people falling between the cracks. After three years you would have thought this government would have done some careful thought about this."

He said the $850 figure quoted by Paula Cox was the absolute maximum but the basic pension was $631 a month which Government was increasing by about $18 but rising rent costs and tax hikes had hit the over-65s hard.

He said: "It simply isn't good enough." He said the increase was not a cost of living increase because the last increase had been two years ago.

He said later: "It's 1.5 percent per year. It's not covering it, it's slipping. Something needs to be done right now."

Opposition Environment spokeswoman Kim Young said the rises were tiny in real terms - adding about $5 a week to pensioners' income.

She said hospital insurance plan pay-outs further depleted pensioners income and that Government needed to provide a realistic pension and adequate affordable health coverage.

She said: "In four years the PLP Government has only provided seniors with free entry to the Aquarium, some have had tax breaks in land tax, and of course money was spent on china tea cups for the Premier's tea party."

She questioned what would happen when the number of pensioners increased, as per the projections, from 6,100 now to 7,500 in eight years' time.

"A country is measured on how it treats it's aged population - I don't think we would be measured very well in this area for our senior citizens."

She said pensioners in poverty didn't want to turn to social assistance, which they found intrusive, but merely wanted pensions to fund a decent quality of life.

Government backbencher Delaey Robinson blasted the UBP for demanding reform now for a system they had set up when they were in government.

He said: "You are saying it is inadequate - you made it inadequate."

He said the Government's review would deal with inadequacies.

When the Finance Minister did arrive in the House early in the afternoon, he addressed the issue.

He said if the former United Bermuda Government (UBP) had not treated the whole idea of pensions with such disdain in the 1960s and 1970s, Bermuda would now be in a much healthier situation with regards payments to seniors.

And he said as he had listened to the Opposition's comments on the radio on his journey back from the airport he had heard nothing but "arid nonsense".

He said: "In 1970...when we were talking about pensions, the members on the other side were taking about how we could not go with pensions unless we were communists or socialists. Those are the kinds of words they used.

"We have found out that we need something like 40 years of contributions to make a decent pension. It's not designed to replace a wage, but it's to subsidise a wage.

"It's the error of their (UBP) ways because they have not done what should have been done. They did not believe in pensions.

"They just believed that we had to save money. They (personally) did not need money, so they did not think that we needed pensions and insurance. They did not believe in social benefits, so they did not do anything about it."

And he said it's stupid for people to say 'we should give more money'.

He added: "How are we going to find it?"

Shadow Legislative Affairs Minister John Barritt said talking about the UBP of the 1960s had no relevance on the discussion in the House yesterday.

He said the members of the Opposition now did not necessarily think like the UBP of the past, and he said continuously talking about the past solved nothing for the present or the future.

But he said the UBP merely wanted to see Government thinking outside of the box when it came to pensions.

He said it was time to disregard the present pensions system and look at introducing alternatives.

He said: "What we are worried about is the people who are falling between the cracks now.

"It's simply not good enough to shove them to social services.

"For the Government of the day, it takes time. But it does not take take to start building a new box and looking at it afresh.

"We seem to be able to find funds in time for all sorts of activities that are of no good" to people in need of financial assistance.

"It's not good enough. Something more needs to be done and needs to have been done yesterday, and it's not good enough for the Government of the day to simply say we are carrying on what you started. That's not the answer."