Seniors will see a five percent rise in pension payments from August but contributors will not have to pay more into the scheme for at least a year.

MPs voted for the amendment, which will give some pensioners as much as $105.67 extra each month.

"This is yet another indication of Government's commitment to enhance the quality of life of our senior citizens during these difficult times," Finance Minister Paula Cox told the House of Assembly.

She said the Contributory Pensions (Amendment of Contributions and Benefits) Order 2009 fell in line with Government's desire to "stimulate economic activity" without causing additional financial hardship.

"Mr. Speaker, you will recall that in the 2009/10 Budget Statement, Government announced there will be no increases in major taxes.

"Government's main objective in this period of economic challenge is to facilitate and stimulate economic activity; accordingly the contribution rate for 2009/10 will not be increased and will remain at the prevailing level.

"It is important to note, Mr. Speaker, that this is a temporary measure and it is anticipated that the normal financing policy of increasing contributions by at least 1.75 percent above the rate of pension increases will be adhered to for the 2010/11 period."

She continued: "The Contributory Pension Fund in principle, relies on current contributors or workers paying for current pensioners and for the most part is a pay-as-you-go financed plan.

"However the policy of increasing contribution rates by 1.25 percent and 1.75 percent above the rate of pension increases has allowed a significant level of fund to build up and thus the plan is partially funded, which provides further security of benefits."

Persons on the basic contributory pension plan will receive an extra $45.33 each month as payments rise from $906.40 to $951.73.

Pensioners with maximum coverage will see monthly payments increase from $1,215.66 to $1,321.33 a difference of $105.67.

Added Ms Cox: "Seventy-four percent of the persons currently receiving benefits under the Act receive the basic contributory pension. Approximately 47 percent of the 9,611 seniors covered by the Contributory Pension Fund receive the maximum pension benefit."

The Finance Minister said that in the 1990s, under the United Bermuda Party, pensions increased every two years however since taking office in 1998, the Progressive Labour Party "has put through nine increases over an eleven-year period".

She said that three percent increases were given in August of 2000, 2002 and 2003 while in August of 2004, pensions were increased "by an extraordinary nine percent". Pensions rose each year following by 3.5 percent in 2005; four percent in 2006; 4.5 percent in 2007 and five percent in 2008. "In total benefits will have increased by 47.7 percent or $307.36 per month over this period," Ms Cox stated.