Increasing numbers of retirees coupled with a shrinking workforce meant action on pensions had to be taken, the Senate was told yesterday.

Government Senate Leader Sen. Lynda Milligan-Whyte made the comment as she introduced a "take note'' motion yesterday on Government's Green Paper on Pensions.

She recited some statistics to highlight the pension dilemma faced by governments around the world.

The World Bank projected that the over-60 population would make up 16 percent of the world's total by 2030, compared to nine percent today.

In Bermuda, the total population grew by 56 percent between 1950 and 1991, while the over-65 population grew by 153 percent. And another increase of 38 percent was expected by 2011.

The median age would move to 37 by 2011, compared to 25 in 1950. Meanwhile, the fertility rate had dropped to 1.73 percent in 1991 from 2.55 percent in 1970.

Since 1968, employers, employees, and the self-employed had made weekly payments to the Contributory Pension Fund, which today provided pensions and disability benefits to 7,500 recipients, including more than 5,000 pensioners.

But the maximum benefit under the plan was only $755 per month. "It is totally inadequate.'' Meanwhile, 50 percent of the workforce participated in a company pension scheme, but 50 percent did not.

Three aspects to the pension problem were the long-term viability of the CPF, adequacy of pension income, and safety and security of pension assets, Sen.

Milligan-Whyte said.

While the CPF was in no immediate danger, "something has to be done'' because it would have a negative cash flow after 2001.

As for security of pension assets, many companies did not segregate pension funds from general funds, meaning that if the company went broke, the pension fund did, too.

The Green Paper proposed not a Government "super pension fund'' but a legal framework for the operation, regulation, and supervision of pension plans.

Joint employer and employee contributions to a minimum of ten percent of earnings, segregation of assets, a separate trustee, portability, and a Pensions Commission would be among the features.

The CPF would continue, though it might have to be reworked.

Meanwhile, businesses would be given plenty of time to adjust to the new requirements and absorb extra costs.

It is expected "vesting'' -- the point at which a contributor is guaranteed some type of pension -- would occur after two to five years.

Legislation would be brought forward in 1996, she said.

Sen. Terry Lister (PLP) said his party supported full pension rights for Bermudians and had for many years.

But it appeared Government was side-stepping the CPF, because many in Bermuda's business community had lost faith in it.

It was reasonable to ask why Government had not merely changed the CPF to one into which ten percent of earnings were contributed, rather than the current flat weekly rate.

Instead, Government was turning responsibility over to the private sector.

Sen. Lister added the new legislation would do nothing to ease the plight of people who were already retired on what had been admitted to be the inadequate state pension of a maximum of $775 a month.

He said that would mean someone on a salary of 30,000 a year would need $18,000 a year, 60 percent of their final salary, to ensure a comfortable life -- far in excess of the current provision.

Sen Lister added: "I would be pleased to know that some time in the future, the Government would address the needs of the people currently in the plan and see if we can take the figure which is more in keeping with the needs of the present community.'' He said many retired Bermudians owned their own homes and supplemented their income by renting an apartment out, but that some were not home owners and no supplementary income.

Sen. Lister said that guaranteeing the safety of employees' investments was vital.

He added there had been no cases in Bermuda of fraud involving pension funds as far as he was aware, but that many funds were held within companies and could be used for funding their day-to-day operations.

He said: "If there was failure to segregate funds and a business fails, then these funds disappear. The idea of having a trustee group in place, having segregation of funds and pensions independently run is a very good idea and is something I greatly support.'' And he said that there should be strict laws forbidding actions like a firm using pension funds to buy shares in itself.

He added: "If a pension scheme is to meet its objective, vesting at its earliest stage really does become a necessity.'' On the proposal for Pension Commissioners to ensure the safety of funds, Sen.

Lister said that consideration should be given to how they are selected.

He said: "When these things come up, instead of having five names flashed up, we should establish criteria and names should be put forward based on those.'' He added the list, whether five or 1000-strong, could be used to select the best-qualified people.

Sen. Gary Pitman (UBP) said the days of a job for life were gone and the tendency towards "down-sizing'' firms would inevitably have an impact on the Island.

He added: "We need to have in place a pension scheme which will provide individuals with a pension which is portable from one job to another.'' Sen. Larry Scott (UBP) agreed that the economy had taken a downturn and that adequate pensions were a necessity.

He added that too many young people "had chosen not to work'' and that there had to be a sense of social responsibility.

He added: "The previous generation must be looked after because we will all get to the stage where we will be retired.'' Sen. Milton Scott (PLP) claimed that some firms deducted payments from pay cheques -- but did not forward them to Government.

"People would be amazed because some very prominent individuals in this country engage in this.''