Changes might be needed to the Hotel Pension Plan if provisions in Govrenment's Green Paper on Pensions are made law, says the plan's administrator.

A discussion paper about a national pension scheme, called a Green Paper, was released by the Finance Ministry this year and is expected to be debated during the session of Parliament that begins in November.

Mr. Calvin White said the Green Paper talks about "defined contribution'' plans, rather than a "defined benefit'' plan like the HPP.

And it suggests that ten percent of a worker's salary be contributed toward a mandatory pension plan.

If the recommendations of the Green Paper are made law, "we would not be required to change the type of plan we operate,'' Mr. White said. However, "We probably would have to increase the contributions.'' Increases in benefits are made by the HPP trustees, while increases in contributions are a result of negotiations between the Hotel Employers of Bermuda and the Bermuda Industrial Union.

The HPP, which began in 1976, is administered by seven trustees, some of whom are usually associated with the HEB and BIU, while others are aligned with neither.

Currently, the HPP receives 55 cents for each paid hour for each employee. Of that amount, 20 cents is paid by the employee and 35 cents by the hotel.

Assuming an average hotel salary is about $500 a week, only about four percent is currently being contributed to the HPP, Mr. White said.

As of August 31, there were just under 3,200 participants in the plan, which takes in all non-management workers at HEB hotels.

Each month, the fund pays a total of about $90,000 to 417 pensioners, Mr.

White said.

If the Green Paper is adopted, earlier "vesting'' might also be required, Mr.

White said. Vesting occurs at the point when workers are guaranteed a pension, even if they leave the company.

"We vest our participants after ten years of service,'' Mr. White said.

"Government is looking at a much earlier vesting period of two to five years.'' Prior to vesting, a worker who leaves the plan is entitled to the return of all employee contributions, plus four percent interest.

Mr. White encourages employees to remain in the pension fund, even if they think they will never return to the hotel industry. "The pension fund is not a savings account,'' he said. "The sole purpose of the plan is to provide income for the participants once they no longer choose to, or are no longer able to work.

"That's not generally understood.'' Contributors who withdraw their contributions can regain their positions in the HPP by returning the money once they return to work, he said.

He felt a tendency for laid-off workers to withdraw their contributions was related to the relatively poor economy in recent years. "People have been feeling squeezed.'' "A person gets laid off. They have to pay rent. They start looking for sources of income and too often they look to the pension fund as a source of paying current needs.

"While I understand the trauma involved in that situation, what they are actually doing is mortgaging their future.'' That might be one reason Government was looking at earlier vesting of pensions, Mr. White said. Once vesting occurred, contributions were locked in.

Another change that could come as a result of the Green Paper is a requirement that pension funds be segregated from all other funds. "I fully support that,'' Mr. White said.

It would prevent a situation in which the employer goes bust and pension contributions have been spent as the directors scrambled to pay creditors and stay afloat. "There's a problem from the standpoint that because funds are not required by law to be placed in an escrow account, they become co-mingled with operating funds.'' Also, "from time we have problems with some hotels that have difficulties maintaining their pensions on a timely basis,'' Mr. Smith said.

In a recent case, a small hotel which had not contributed to the plan since December of 1993 delivered a large cheque to the HPP only after employees and/or former employees sought to go public with their concerns.

"I don't think there have been very many (similar) cases,'' Mr. White said.

"Maybe one or two.'' As in the recent case, there had been the odd time when workers who left a hotel and sought to withdraw their contributions were forced to wait for a portion of their pension money until the hotel made up the arrears, he said.

"If a hotel is late in submitting a report, or it submits a report without a cheque, we immediately send them a letter,'' Mr. White said. "If they still choose not to submit pension funds, then there's not a lot we can do, because we are a third party.

"I've been given legal advice that we do not have any contractual relationship with the hotels.'' As in the entire collective bargaining process, "the people who really have the power to force the employer to pay are the employees,'' Mr. White said.