Bermudians need to save, not dip into their private pensions because of immediate financial concerns, according to the Executive Director of Age Concern.

Claudette Fleming voiced concern yesterday over Government's decision to loosen restrictions on private pension funds.

Finance Minister Paula Cox announced an amendment to the National Pension Scheme in Friday's Budget, that would allow the "partial withdrawal of accrued benefits on the basis of financial hardship".

Ms Fleming said Age Concern was very worried that with 25 percent of the population set to be over 65 by 2020, accessing the fund now would leave little to live on in the future.

"We find it additionally troubling that the public are being given the opportunity to access their pension funds prematurely," she said.

"We truly empathise with those who are finding it difficult to make ends meet, but we strongly caution against the practice of tempering with retirement funds, whether public or private.

"By 2020 almost one quarter of Bermuda's citizens will be over the age of 65 years. The Government of the day will have to think prudently about how to allocate resources to this population as it increases, during the same time the younger working population is decreasing.

"Seniors may therefore have to rely heavily on their retirement plans as a primary, and in some cases sole, source of income if they have not planned adequately for their later years."

She pointed out that the average monthly cost of a nursing home is $10,000 a fee that could fall on the shoulders of seniors' children. Legislation requiring all Bermudians between the ages of 23 and 65 to invest in a private pension fund came into effect in 2000. The funds were to be inaccessible until after retirement.

The Pension Commission was tasked with overseeing the documentation and administration of the funds.

The funds must be purchased through a handful of providers including Freisenbruch-Meyer Insurance, the Argus Group, BF&M, Bermuda Investment Advisory Services, and Colonial Insurance.

William Madeiros, vice president and general manager at Freisenbruch-Meyer, said: "What took us by surprise was that people might be able to access their pensions. I think we have got to be in a desperate place to do that.

"They are best left alone to continue to grow and enjoy some investment income. But it's really about waiting to see what the legislation is."

BIAS CEO Robert Pires gave the move his support.

"I do think the notion of allowing those in difficulty to partially withdraw their accrued benefits is a compassionate move on the part of the Minister. If managed by the Pension Commission, upon application and subject to proof of need, I would support this initiative."

Reticence was voiced during a Chamber of Commerce meeting attended yesterday by Ms Cox.

Butterfield and Vallis president Jim Butterfield said: "I am old enough to remember the days when people were allowed to get into their pensions to take out money. Sometimes they would do it for that trip they had to take, or that new car they had to have. I would hope you would not entertain that."

The Finance Minister replied: "The ideal is that people should not dip into their pensions. "However, there have been many questions raised about this, coming at a time when people are at risk of losing their homes, because they are not able to come up with relatively minimal amounts of money, $10,000 or $5,000."

Withdrawals from pensions would be allowed only in "prescribed cases of hardship", she said, adding that the criteria would be fleshed out in forthcoming legislation.

"It's about hardship, so it's not going to be about getting off 'the rock' to go on a shopping spree."

Gerald Simons, president and chief executive officer of the Argus Group, said after the event: "It is clear that the Minister of Finance understands this primary goal of a pension plan but she is mindful of the financial hardship that many people are facing in the current economic climate.

"I believe that any rules allowing withdrawals will need to be drafted very carefully in order to prevent abuse and to preserve the integrity of Bermuda's private pension system."