Industrial action threat over pension changes

INDUSTRIAL action has been threatened by a large number of public sector workers if the States pushes through current pension reforms.

INDUSTRIAL action has been threatened by a large number of public sector workers if the States pushes through current pension reforms.

Unite union regional representative Bob Lanning said his phone had been ‘ringing off the hook’ since a joint working group on public sector pensions announced its recommended changes to the controversial final salary scheme.

And he sent out a clear warning that his 1,000 members were ‘absolutely adamant that they are not accepting’ the deal.

‘The feedback I’m getting from my members is they are incensed by it,’ Mr Lanning, pictured, said. ‘If it was forced on us, if the States ratify this, don’t come around the table and give us no option – bearing in mind this is a compulsory scheme – then my expectation would be a period of unrest.'

Comments for: "Industrial action threat over pension changes"


I fully support the workers on this. The State's blow hundreds of millions on projects that are not needed like schools where a bit of TLC on the existing buildings would have done,Marina why? A massive airport terminal that's bigger than we needed. I could go on yet they try and screw over their own staff. Any new staff could have a different scheme but it should not be changed for the existing members. If the planned changes go through its the lower paid who will suffer most.


Irrespective of what the STatesmay have spent money on only an id%$t would suport the workers on this matter. Globally everyone is realising that final salary pensions are unworkable - what planet are you living on??


Time for a reality check Mr Lanning.

It's a free world - they are of course fully entitled to protest and we all recognise that its your job to get them the best deal possible.

However it's a stark and simple choice. Either accept the deal or accept that the public sector is too bloated and has to be culled. Lots of public sector jobs will be lost if the overall cost of running the public sector cannot otherwise be cut, just as it is in many other jurisdictions right now.

Once they no longer have a job, they won't be getting any new benefits from whichever scheme the States operate going forward. Some will find other work but others won't in the current climate. I really hope that point is stressed to them.

In my view the proposed new scheme goes nowhere far enough as its still a defined benefits scheme.

Time for the States of Guernsey to be ruthless in doing what clearly needs to be done. If certainly won't be smooth and it will get nasty but that's no reason not to do it.

Guernsey will be in a real mess if the public sector costs are not able to be reduced. We cannot afford it unless we are prepared to accept GST. Are we ready for GST instead of making cuts to a bloated public sector?


GST - yeah what a good idea just when people are struggling to make ends meet make everything more expensive,

you may think there are empty shops in town now wait and see if this was ever introduced.

When will people realise that there are a lot of others that only earn around £10 an hour living on this Island!



I don't think anyone actually wants GST. I'm just being realistic in saying that it may be the only alternative.


Well said Bloggs. This guy is an absolute dinosaur and a totally unwelcome throwback to the Arthur Scargills of the world. He is doing his members a huge disservice with his inflammatory talk which brings back to mind the worst union excesses of the 70s. Most of these members of his will not be badly affected but I bet he's not telling them that.


I am missing something but unless both parties agree the contract in relation to the pension cannot be cahnged for exsisting employes, but can for future.

So what is the problem and why is everyone getting hot under the collar for.

The union should be careful when they. Quote that they have full support because I am fully aware that is not the case.


Bloggs As far as the manual workers are concerned remember that State's Works is run as an independent private company that is owned by the State's. It currently undertakes contracts for the State's but gets no direct funding, it also has a vast amount of private clients, all profits are re invested in to the company. Would you cut staff off of a company that makes money? Look at the staff levels in the civil service if you want staff cuts not the manual workers.


You are clearly out of touch with reality Mr Lanning, whatever your members think, in fact you remind me of the infamous Arthur Scargill and his blinkered approach to cuts in the coal industry a few years back

No employee wants to have cuts to their benefits, but much of the private sector changed their pension arrangements years ago, usually to a scheme that is not as good as the one now proposed for public sector workers.

Those private employees either had to accept the changes, or resign - none of this 'out brothers out' attitude

As Bloggs says in post 2 above, time for a reality check!!


I haven't seen anything online yet that says what will happen to existing members, but I have trouble imagining anyone with an existing agreement being forced to accept changes. A contract is a contract. Surely any changes would only apply to newcomers?

I worked in the finance industry ten years ago when their pension arrangements were changed. We neither had to accept the changes nor resign. The old scheme was closed to new entrants, and existing staff had the option to stay put, or to switch. There was lots of encouragement, incentives, and slanted advertising, to persuade people to switch voluntarily, but we could not be forced.


Typical union bully boys threats if the States don't cave in. Well go ahead and strike, you should then be sacked for breach of contract. The Unite union should be sued for all losses.

I look forward to the States having some backbone for once.

If you don't like a job leave and get something better, Oh I forgot, they still will be in a better pension scheme than the private sector.

Let them strike, they won't last out long when the rest of the island blackballs all the strikers and their families.

Big Time

"threats if the States don’t cave in".

The employees are not asking for more, just defending what they have. Unless you are wet you would do the same. If you do not resist an attack on your pay and conditions the employer will be back for more very soon after (the pension arrangements were already adversely changed only 4 years ago). Who's to say that a roll-over mentality now will not see them revisiting again in the next couple of years.

Two or three of the proposals might be acceptable, but not the half dozen or so as they stand. And it's not Unite that will resist the most but the Firefighters and Police Officers.


Wouldn't the pension changes be breach of contract?


Sort of, but an easy contract to agree to vary if the alternative is being made redundant with widespread job cuts in the public sector.

It's pretty straightforward. The States of Guernsey can no longer afford to employ a bloated public sector on the current terms. So either keep your jobs and accept a new pension deal, or take your chances of finding alternative employment.

Redundancy payments would pay for themselves very quickly through savings. Financially it's a no-brainer for the States of Guernsey and for the taxpayers. When the employees are thinking sensibly about their alternative employment prospects instead of listening to their union man, they will quickly realise that it's a no-brainer as well.

Seems like an astute move for the States of Guernsey to time this when the local job market looks so bleak.



I recognise your gravatar, another name you use is Spike and as you know I have sussed you out before, as being GM posting under a different pseudonym.


Spike and Bloggs are both me (I stopped using Spike a while back because there was another Spike and it was getting confusing especially when the other Spike took an opposite view on the same thread!).

I can assure you though that I am not GM. Seems to me like GM is big enough and ugly enough, not to mention confident enough, to look after himself/herself. I certainly don't agree with many of his views and IMHO the two of you should be locked in a padded room rather than bore us to death with your arguments. You both make valid points but have bloody annoying ways of getting them across.


That is what I have been saying since this all started.

Both parties have to agree or it is a breach of contract, but future employes will not get the benefit of a final salary pension, so what is all the fuss about.


I think the comments written above have a touch of the green eyed monster about them probably written by people who earn a lot more than most of the public workers, if you earn good money you can afford to pay into a decent private pension.. Vhris If you poke the dog with a stick sometimes it bites. If all the effected workers strike this island will be very effectively closed down. You can Blackball me all you like I won't loose any sleep.

Foxy Lady

The States scheme underwent changes in 2008 where employee contributions went up. At the time employees were told these changes safe guarded the future of the scheme. with the current funding of the scheme being 90% why are any changes needed? There is something else going on here which is underhand.


Foxy Lady

As you are likely to see from my "debates" with Spartacus, it's because the true health of the pension scheme is far worse than it was deemed to be in 2008 when it was clearly anticipated that the economy would grow sufficiently to fund the scheme. Since then, a combination of no economic growth, poor prospects for the next decade and the worst global economic collapse since the 1930s have forced the powers-that-be to look far more closely at how the hell it can be funded going forward. The answer is that it can't be.

The world is a very different place indeed since 2008. Let's hope Mr Lamming realises that.

Sara Thompson

Don't think striking States workers will get any sympathy from island in general. Most pensions went the way that is being proposed years ago. If the dinosaur that is Mr Lanning wants to do his members any favours he should be urging them to accept before the other option is put on the table - fewer States employees.

Ill- informed

Who is after / needs your sympathy? How arrogant.

Sara Thompson

@Ill-informed Just the sort of attitude which will make sure the vast majority of islanders will be against striking States workers if they really are that stupid to go down that route which will be tantamount to signing their own redundancy notice. How ignorant


Readin the proposals for the new scheme it appears very fair and if anything does not go far enough. If I read it correctly, existing contracts whould stand but all new contracts would take on the new scheme. So it would take some years to produce any savings.

The States really must stand firm on this, no matter what bully boy tactics and threats they get from the union. This has apparently been debated amongst interested parties over the last twelve months and they appear to be in agreement that it is the right way forward.

Don't forget that it is the taxpayer subsidising this pension at present, taxpayers, some of who have no chance of getting a pension antything like the one on offer. Any strike action will get no public support whatsoever.


After the success for the Airport Firefighters in striking why wouldn't these people try the same thing, or has everyone forgotten how successful they were?


The States should tell Unite that any strike will lead to summary dismissal. Prior to any strike the States need to have negotiated a contract with one of the many contract labour suppliers in the UK to bring in as many workers as needed to cover the positions vacated by striking workers. In case Unite forget the reality of 2012/2013, there are loads of people looking for jobs in the UK and Europe that would jump at this.

When Unite comes crawling back to the States we can remploy the strikers on new terms. Hey presto, we taxpayers save a huge amount.

Unite has no place in this island, it's a bunch of fat cats living off the contributions of it's members and stuck in the 70's era.


The idea of replacing up to 5,500 essential Guernsey workers at short notice with UK contract supply workers is absurd.

Employee groups within the scheme(s) include:

(1) Standard Groups – Established Staff (‘Civil Servants’), Nurses, Prison Officers, Public Service Employees, Teachers;

(2) “Special benefit” groups – Crown Officers, Firefighters/Airport Firefighters, Police

Officers; and

(3) employees of the ‘Associated Bodies’ e.g. Guernsey Electricity, GFSC, Guernsey Post, the Colleges and Libraries



I never said 5500 workers. Just the essential workers to keep the island ticking over.

1) pen pushers - don't need them short term including teachers. Prisoners ship them to the UK, Jersey, France, wherever, or let the non violent out on short term parole. Nurses, there is a well established system to ship in


2)Police, unlikely to strike, but we have support agreements with other forces, We also have support arrangements for the fire service.

3) Associated bodies, not highly unionised and unlikely to strike but would it be life endangering if the library staff and the GFSC walked out for a couple of weeks?

The SEB staff aren't stupid, cutting the electric affects them and union people only like to affect other people, don't they?


Because we no longer have the man in power who just caved in and gave them what they wanted, a really bad decision, which someone said at the time , would come back and haunt us


Unions are obviously on another planet.

Are they not aware that there are very few final salary schemes left in UK simply because the funds would be bankrupt otherwise?


Like the banks would be bankrupt if they hadn't been bailed out with billions of pounds of taxpayers money?


Now is not the time to strike. Now is the time to batten down the hatches, weather the storm and wait for better times. Even those senior civil servants with 40 plus years experience are not safe from the wielding axe. The pension scheme needs a little adjustment as does many other areas. I recall a story of shipyard unions that took positive steps to secure jobs, get the workers motivated and by these actions secured many jobs and a community for many years. Rather than moan your way to Christmas why not be positive in difficult times. Striking will not benefit this island but working to promote the benefits of all will.


I don't think anyone can deny that the pension arrangement needs to change but I can see why the States employees and the Union are pretty peeved -being asked to work two years longer before retirement,pay an extra percentage of their wages into the pot and at the same time loosing out on the final pension payment figure was never going to please anyone.

The silent majority

So the people who do very little for their totally secured jobs and gold plated pensions are threatening to go on strike. The States should use this opportunity to get rid of at least a third of them and get the rest to do a decent days work. Us working people cannot continue to carry these parasites , we need a civil service fit for this island and not for an island three times the size. They should also work at least as long as the rest of us, since it's us that pay their inflated wages.

Eddy Tor

IT will not just be manual workers taking action over this, I think you will find civil service, teachers, nurses etc etc are just as incensed aswell and work to rule like the airport fire-brigade did will only be the start if these proposals are forced through .

Imagine the following scenerio.

You have got a quote to build a house. The builders gave a guaranteed price to build the house and a guaranteed time to complete it.

Then half way through the project they tell you, sorry, your house will now be built 7 years late and you will have to pay a lot more for it. I am sure you would not be happy about this as you had a quote/contract and the builders would be breaking it.

This is exactly what is happenning to states employees. They had to join the pension scheme whether they wanted to or not under the states rules and they expect the States to honour the contract (terms and conditions of employment) that they were forced to sign up to..

Many people took a paycut from the private sector to join the states, seeing the pension as deferred salary, and management referred to it just as that, and still took the decision to join so they would give up their immediate gain for their long term future.

As no-one has been saying there is any problem with the level of the pension fund I can only assume some-one may have other ideas of what they could be using the pension fund and its earnings for if they could only tie down its liabilities. (build a few projects? help fill the black hole etc etc ..?, but of course I could be wrong)

I dread to think what this could end up costing the island if all the unions end up taking this to UK high Courts or European courts and the states lose and the cost of any compensation claims that may arise as a result.

Oh well, didn't take long, under the control of this new treasury department, to lose over 2 million to a common scam and now after this they may well bankrupt the island aswell if this all goes pear shaped.

And I, like most Guernseyman, would still say, that if I make a deal/ sign a contract with someone I would still expect to honour it, even in hard times and I would hope the states do the same aswell.

Why they havent just closed the scheme to new employees I don't know, but it appears this was not even put forward as a possible option.

will the last person who leaves the island please turn the lights off. :(


Eddy Tory

The contract has been honoured. All service to date has resulted in accrued pension rights. Nobody can take away what has already accrued.

But future service on which future pension benefits will accrue has not yet been provided by the public sector employee. Future service can only be provided if the employment contract continues. What's clear is that future employment depends on it being affordable to the employer. The fact is that the employer can no longer afford to keep paying the employment package. So the choice is between keeping employment with different pension benefits, or cutting public sector jobs.

You say that making these changes will somehow bankrupt the island. Not true. But what clearly will bankrupt the island is having to somehow find the several hundred million pounds of finding needed to honour current pension obligations, which stand at only 70% to 76% of the scheme's liabilities.

Ignore Spartacus' denial that such a pension black hole exists. It does, and that's why these proposals were brought about. All the current States are doing is precisely what their predecessors should have done a few years ago before the deficit arose.



I like your analogy about building a house which is cost and time agreed.

It very simply and affectivey illustrates the thinking and mindset of the civil service and its inability to grasp the concept of unforeseen events and how these impact on even the best made plans.

Despite us finding ourselves in the worst recession since the Great Depression of the late 1920's and the entire world being thrown into financial turmoil you still believe that you should be protected from all of this on the basis that "we'll that was what we agreed on so it HAS to remain in place". Meanwhile in the real world unprotected from the financial cushion of tax payers money, people have had no cost of living rises in years, taken massive pay cuts or have lost their jobs and homes and have NOTHING or ANYONE to fall back on.

As one Guernseyman to another I totally agree with you regarding honouring any agreement but I think you would have to agree that in this case we are living in exceptionally difficult times that no one could have foreseen and we ALL have to adapt to survive.


@the silent majority

I think you have gone on a slight tangent with your rant about the commitment of the Public Sector. I have had dealings with various departments as most of us have and have not seen employees ignoring their duties in favour of popping to the pub at lunch etc.

More over, many of them work longer hours than expected for no extra money!!

What I'm trying to point out is that while they may have been employed under the terms set, which included the current pension scheme without a get out clause, should you really be so harsh to so many hard working people.

If the scaremongering is correct and there will be a walk out, do you think you won't notice walking around in S"£t cause the carts aren't emptying pits or the lack of flights in and out of the island, children not having a school to go to due to a walk out of teachers. You would notice the work they do then wouldn't you!!!

keep the discussion on the thread it should be.

Yes we should be looking to resolve the current problem and maybe the proposal is a good mid ground? its not what they want while other people think it doesn't go far enough.

lets not slag off what the island relies on. After all, they didn't write their own pension rights did they!

@Eddy Tor

You mention 7 years late in you scenario?? How is that in relation to the proposals when most people are talking about 2 years extra??



You are quite right. The vast majority are hardworking and totally committed and that really shouldn't be questioned at all.

I think quite a few would agree that in recent years there has been unnecessary recruitment of extra staff which simply wasn't required, filling new full-time jobs which, with greater efficiency, simply didn't need to be created. It is this "froth" which needs to be eliminated.

We should be left with a core public sector of hardworking public sector staff who are decently remunerated for working hard and efficiently. I can't see how anybody could question that as an objective.


I wonder what sort of Pension Scheme Unite Representatives and Management have got?

The States Scheme proposed will STILL give its employees a Golden Handshake! The Pension will be slightly less and 5 years later.

Keep working like the rest of us!

The Truth

Is a scheme that is, on average between 1998 and 2010, over 95% fully funded, broke?

I don't think so.

This is the States clutching at straws and using the media to shine a bad light on something that is and has been working fine for years.

The last valuation of the scheme determined the fund at least 93% fully funded, in fact parts of the fund for the trading sections were well over funded.

Come on let's have the truth.

The pension is a part of the overall employment package and what is being proposed for existing members must be verging on being an unlawful action.

The information is out there if anyone wishes to evaluate the real situation of the States public sector pension fund, I challenge anyone to determine the reality before making loose comments without the knowledge required to do so.

The Truth

Pension Data from 3-Yearly Valuations.


Assets = £569m

Liabilities = £490m

Perentage Funded = 116.12%


Assets = £617m

Liabilities = £543m

Perentage Funded = 113.63%


Assets = £656m

Liabilities = £764m

Perentage Funded = 85.86%


Assets = £896m

Liabilities = £940m

Perentage Funded = 95.32%


Assets = £930m

Liabilities = £1003m

Perentage Funded = 92.72%

Average funding percentage over the period 1998 to 2010 = 100.73%

Please see States of Guernsey Billets to confirm, The Truth.


The Truth

You are not stating the truth at all.

The 2010 actuarial valuation states liabilities of £1,216,473m against assets of £930m. That's a deficit of £286m, not your £73m. That's a difference of £213m. Instead of being funded to the tune of 92.72%, as stated by you, it's in fact only funded to 76.545%.

To make matters far worse, the 2011 States accounts then show a drop in value of the fund from £930m to £896.5m. When measured against the liabilities in the 2010 actuarial valuation, its now a deficit of £320m, so its only covered 73.7%

So, in 2007 we had just a £54m deficit, but by 2011 the deficit has risen nearly sixfold to £320m. That's an increase in the deficit of £266m in 4 years, or an average increase of £66.5m PER ANNUM.

Our politicians were understandably quite relaxed in 2008 when they last reviewed contribution levels. A modest increase was required to maintain the fund. Nothing to panic about.

4 years on....PANIC. It's out of control. How can the deficit ever be funded? How big will the deficit be by 2015, by 2020 and 2030 if we don't deal with it now? The public sector has grown by 16% over the last 8 years while the population has stayed (officially) static. All of those extra 16% of workers have been accepted into the scheme and so the liabilities have mushroomed while very poor investment returns due to the severe global economic crisis have eaten heavily into the assets. Result - not a black hole but a very deep crater which is going to swallow Guernsey completely if we don't urgently address the issue.

I just hope that our politicians have the a cajones to see this through. The proposals to date go nowhere near far enough.

These figures need to be properly explained to the members and to their union bosses. Guernsey will go bust before they even reach pension age if they don't acknowledge the extent of the problem.

A combination of the previous Assembly not being willing to confront in 2008-2010 when final salary schemes were being closed down across the globe for being unsustainable, together with the public sector being allowed to grow unrestricted, creating unnecessary jobs while Guernsey continued to build gold-plated schools and hospitals. And of course global economic conditions.

To really cap it all, the one industry which keeps the island's economy going is in really struggling and is facing a deade of severe cutbacks with no industry able to replace it.

We have a really tough two decades ahead of us even if we had no pension deficit to worry about. But we do, and its dire, yet some are incapable of recognising the problem.

Tax rises, GST and severe public sector cutbacks are completely unavoidable just to enable us to survive. That's not scaremongering - it's facing reality.

Get on with it!



You are mixing apples with pears again. The 2010 actuarial valuation does not state liabilities of £1,216,473m at all. That’s entirely false.

You seem to be getting confused again with Notes to the SOG accounts which show a liability calculation under FRS17 for information purposes.

You cannot superimpose the FRS17 calculations onto the actuarial valuation which uses different formulae. No wonder you are in a muddle. Liabilities have not mushroomed.

In 2008 the decision was made to raise contributions back up to normal rates with effect from 2010, following a period of deliberate underfunding in order to reduce a significant surplus which had built up during the boom years.

4 years on….a) investment values have taken a hit and b) the increased contribution rates have only just kicked in. Even so there is still a funding SURPLUS.

There is no real current deficit. The net assets of the pension fund are recorded on the SOG balance sheet as £896,537M.

The actuarial deficit is the result of a calculation used to measure whether the fund is meeting it's funding target of 90% against accrued benefits which will be demanded in future years. As long as it does this there will always be a funding deficit of 10%. There is no reason to clear the deficit as this would make the scheme 100% funded, contrary to the funding strategy which has been decided by SOG.




The 2010 actually and very clearly state liabilities of the scheme of £1,216,473m. It's there in black and white.

I am not confused at all. I know what assets and liabilities are.

FRS17 was adopted because it is widely accepted as a more accurate way to account for pension scheme liabilities. Until then, the accounts painted an inaccurate picture. That's precisely what caused the confusion and especially the complacency which has made a fool out of you and also of people far cleverer than you.

You are clearly incompetent at reading or understanding a balance sheet. The fall in investment values merely reduced the assets and increased the deficit. You conveniently overlook the effect on the liabilities which directly relate to the benefits payable to the huge number of extra public sector workers taken on - 16% increase in 8 years. The compound impact of that increase is massive.

No - it is NOT the net assets of the scheme which is worth £896.5m - that is the GROSS assets figure. You need to deduct the liabilities of £1.216 billion from that figure - hence a £320m net deficit. If you have a house worth £896k and a mortgage of £1.216m, then you have negative equity of £320k, not a net worth of £896k, even if you don't have to repay the mortgage for another 25 years it is still a liability to be accounted for and repaid by you. You can't just disregard it because you don't have to repay it yet!

A desire to fund the scheme to 90% might be reasonable, but the facts show that we are failing miserably - it's only now at 73% and the signs are that this funding level is going further southwards.

We are up the creek and we still have one paddle left which might save us - by doing what needs to be done now, no matter how unpopular and unpalatable it will be.



I'm beginning to think you are acting dumb to deliberately convolute the issue. Your first sentence does not even make sense. The actuarial valuation does NOT state that figure at all and anyone can check here. P2489 onwards

FRS17 has NOT been adopted for the actuarial valuation nor for the SOG accounts, it is used for INFORMATION ONLY.

Note 22b of the accounts explain this. Anyone can check see page 30 of the attached.

GM there is no balance sheet deficit and there are no balance sheet liabilities therefore the fall in investment values has only effected the value of the balance sheet NET asset. Look at the balance sheet yourself page 16.

I don't know why you are telling me to deduct liabilities from the assets figure, I don't prepare the accounts.

In your mortgaged house analogy there is no mortgage there is just a house on the balance sheet. The contributions and pension payments (current liabilities) are not balance sheet items they are income and expenditure items.

The scheme is 91.6% funded against a target of 90% see page 2511 of the actuarial valuation section 7 "funding position".

Neil Forman


Good post again. Totally agree!

Signing off for the Xmas hols now.

All the best to all readers / posters on this forum.

Have a good one.

The Truth

Neil Forman

You totally agree with what, that GM has got their facts wrong!?

Or are you also blinkered to the real facts?

Bring on your evidence!


The Truth / Spartacus

My facts are not wrong. The figures stating the assets and liabilities are there in black and white in the published audited accounts and actuarial valuations.

Why would they refer to the liabilities figure of £1.216 billion if those liabilities didn't exist? Do you think it was dreamt up and included just for fun? That figure is there because FRS 17 required it to be there, and FRS17 was adopted for the reason that its a more accurate way to evaluate pension scheme liabilities. Forget the understated liabilities in previous audited accounts - those are obsolete.

I am interested only in what are the present scheme assets and liabilities, not what some outdated reports using an obsolete accounting standard were stating previously, which resulted in a misleading understatement of the liabilities.


Don't think a strike will be required to bring Island to its knees. If the people working in the so called " bloated " Public sector worked the hours they are actually contracted to work, States would grind to a halt!

In fact might be a fairer way to respond. Staff work the hours they are paid for and people might just see what further cuts to Public sector might do for Guernsey.



Ponder this.....

The population has stayed pretty static at between around 63,000 and 65,000 for around 15 years, an increase of around 3.5%. I cannot find the comparative figures of how many public sector employees there were 15 years ago, but it was clarified last week that it is a 16% increase in the past 8 years alone, ie a 2% per annum increase. Lets be conservative and assume that its at least a 20% increase over 15 years in a period when the population has risen by 3.5%.

So why did we need such an increase in the public sector? One must assume that they are all doing new jobs which didn't exist 15 years ago, yet we seemed to cope perfectly well then. Were all these jobs really necessary? It seems very hard to believe that.

Throw in another major factor. Computers have changed our lives massively over the past 15 years. They take seconds to do what used to take humans hours or even days to do. So this massive increase in the public sector workforce is DESPITE the massive investment in labour-saving computer technology!

What extra functions is each department now doing compared with 15 years ago? Can we compare staffing numbers with each department then with now and try to reconcile what we now do that we didn't do 15 years ago, and evaluate the benefit or otherwise of that massive extra payroll burden?

I strongly suspect we would find that we have simply created hundreds of unnecessary jobs to carry out valueless extra functions, and in the process created multitudes of inefficiencies.

How on earth did we cope 15 years ago? I suspect that public sector workers worked a damn sight harder and more efficiently in those days, even without the benefit of modern computer technology. Several veteran civil servants swear to me that this is EXACTLY the case, and their departments have continually been increasing their headcounts unnecessarily.

Lets see that analysis of staff numbers broken down by department. It will reveal some truly astonishing figures, of that I am certain.



Please explain the following:

1) Your source of information for current population figures

2) Your source of information for the increase in public sector workers.

I am very skeptical about the figures you have used I believe you have plucked them from thin air. Correct me if I'm mistaken.



In March 2012 the States of Guernsey stated that the current population was 62915. In view of the cancellation of the 2011 Census, this is the most "official" figure available.

Comparative official figures are;

2001 - 59897

1996 - 58681

1991 - 58867

It is therefore appropriate to state that the population rose by 5.03% in the 10 years ended 2011. That's a bigger increase than I had estimated prior to having the figures available.

In terms of public sector workers, as Yvonne Burford recently pointed out the figures are now presented differently. But according to the official historic figures the numbers of "all public sector workers" were:

2001 - 5771

1996 - 5445

1991 - 5200

In the 2011 official States report, the figures were not stated as "all public sector", but are stated as;

Public administration - 5480

Education - 485

Human health, social and charitable work - 1641

It's impossible to break down that 1641 figure, but lets assume conservatively that only 1000 of those are public sector workers in the comparative sense. On that basis, the total would be 6965.

So the population rose by 5.03% between 2001 and 2011, while the public sector appears to have risen by 20.69%, which would support my hypothesis entirely, even allowing for some deviation but my figures are I suspect conservative and the 1641 figure contains a higher number of comparative public sector workers than 1000.

If we can get a detailed breakdown of the 1641 figure then the figures can be more formally confirmed but the conclusions look totally valid.


Thought as much - plucked from thin air.



For heaven's sake - they are the most official figures available. What figures do you suggest I use?

The public administration employee numbers are actual, as are the education numbers. We are given an official but all-encompassing figure of 1641 for human health, social and charitable work. Well, its bleeding obvious that "health" contains all the nursing and medical employees, as well as many others. Social workers should also be included. . My estimate of 1,000 of the 1641 being relevant is extremely conservative - how many charity workers do you think there are in Guernsey?!

As ever, you discredit 100% of an argument because a tiny element of the numbers are estimates - but you yourself have no more accurate figures available. Do you seriously think that the numbers fall down because of that?

The Truth


Please see Billet of 30th Nov 2011 Vol 2 for The Truth, amongst others, or do you wish to continue with your scaremongering?

Its you that needs to face reality, the scheme is not broken. Other similar schemes around the world are not funded and managed like the one in Guernsey.

Please state facts as being armed with little information and a blinkered outlook is dangerous, although it is clear your view will be unaltered anyway.

Accept and live with it.


The Truth / Spartacus

Other similar schemes around the world...,presumably run by high tax jurisdictions with GST or VAT who are also able to print their own money to meet their liabilities. Jurisdictions which may already be bust.

Lets see some examples.

I have stated facts -assets and liabilities quoted directly from the published audited accounts for 2010 and 2011. Are you suggesting that those assets and liabilities have been fabricated?

No scaremongering whatsoever on my part, just naivety on your part.



The assets are real and therefore are stated on the balance sheet. The liabilities do not currently exist and therefore do not appear on the balance sheet of the audited accounts for 2010 and 2011.

Future deferred liabilities have been calculated and explained in the notes to the accounts but have not been included in the published audited accounts so you are Wrong with a capital W.

Similar DB schemes include:

1) Unfunded, e.g. Austria, Belgium, Japan, Finland.

2) Low funded, e.g. UK, USA, Australia.



1. Agreed - the assets are real.

2. Wrong - liabilities do exist! This is the globally accepted method of evaluating accrued and future liabilities of a pension scheme. You have clearly never heard of accrued pension rights, or about accruals generally.

Take a 50 year old civil servant who has been a States employee since he was 25 years old. He could leave the civil service today and demand a transfer of a cash value based on his accrued rights right up to the date of termination of employment. That is an accrued liability and it already exists.

But the actuaries will also assume, in their forward projections, that the 50 year old will in fact work right through to 65 and so they will factor in the appropriate liabilities to provide for in respect of those extra 15 years of service. Those are accruals for anticipated liabilities. To not provide for them would be negligent, as FRS17 fully recognises.

And then for every single member, including existing retirees, future projections of liability must be provided for as an accrual, because statistically the pensions will be payable for another 20-25 years (on average) after retirement. FRS17 takes that into account as well. Therefore it is correct to properly evaluate those accrued provisions and include them as liabilities as that then ensures that a fund is built up to cover them. And that's exactly why we now have a big deficit,as these liabilities are now being properly recognised at last.

Interesting references to DB schemes which are either unfunded or low funded. Exactly as I predicted in my post of 10.13pm yesterday. In case you haven't noticed, Guernsey is in no position to run an unfunded scheme and can only afford to run a scheme which is slightly unfunded. Unfortunately if we aim to achieve 90% then we must ensure that we do a lot better than 76% or 73%, and we must ensure that we base it on the right liabilities figure. Over the past 5 years we have got this dreadfully wrong, to what will be our huge cost.



The vested benefits are covered as they arise by the employee and employer contributions which are contractual obligations however no accruals are made for these receipts towards future accumulations.

FRS has not been adopted, nothing has changed in that respect it is just another way of looking at the numbers.


FRS17 funding level = 76%

Actuarial funding level =91.6%

"A valuation as at 31 December 2010 was undertaken and showed that the funding level was 91.6% of the accrued benefits and in line with the States funding target. As a result the States when they considered the Actuaries report in November 2011 agreed to make no change to the general employers’ contribution rate from 1 January 2012."

That is copied and pasted directly from the chief accountants report of the 2011 accounts. Page 8 and clearly proves that SOG ignore the FRS funding level.


Facts ..... here's a cut'n'paste from the 2009 accounts (chief accountants comments):

"Despite the strong investment performance, the funding level dropped to 73% (2008: 83%) which was due to changes in the assumptions driving the actuarial valuation"

"The combination of the reduction in the discount rate and the increase in the inflation assumption has significantly increased the value placed on the liabilities by around £220m"



Thank you - exactly what I have been saying all along.

Spartacus will no doubt read differently into those words...,



No I take those words at face value, however they are not the funding values used by SOG to determine whether the scheme is meeting the funding target. The actuarial figures are used for that. See my post of 12.44pm in response to GM above.

The Truth

Copy and paste from the last actuarial valuation, Billet 30th Nov 2011:-

"The overall value of the Superannuation Fund as at 31 December 2010 was £930million and the Actuarial Valuation calculates the Scheme’s liabilities to be £1,000million which means that the Scheme is 93% funded." :-)



The same actuarial valuation states the scheme's liabilities to be £1.216b. That's a £216m difference.

The Truth


I'm affraid you are using the wrong figures but you already know that and just don't want to admit it.


The Truth / Spartacus

Well, lets just wait and see.



I believe through discussion with people today, that Ed Freestone is on around 85K annual pay.

Seems strange that initially the amount was capped lower than that and changed twice until the representatives (Ed Freestone) were happy with the deal for the Civil Service.

You have to chuckle at the balls these people have! Makes you wonder where they get their maths from?

It's a boys club looking after the right people.


The problem you have The Truth is that many of the people who post in this thread wont accept the truth because it gets in the way of their opinions.



My figures have come straight from the audited accounts for the years ended 31st December 2010 and 31st December 2011.

Are you suggesting that those figures are incorrect?

The Truth


A meaningless statement with nothing to back it up.

The Truth


You need to lift your head from the sand and read the Billet of the 30th Nov 2011 Vol 2, which contains the triennial actuarial valuation from the 31st Dec 2010. This contains the latest full actuarial valuation; next one due 31st Dec next year.

Once you have read that go and look at the accounts once you have researched and learnt about what FRS17 reporting accounting is, which is also mentioned in the same Nov Billet.

You don't seem to acknowledge the truth as you do not fully understand the information in front of you, unless you choose to ignore it.

By the way, if the scheme is in trouble then why were there recommendations within the last triennial valuation to suggest employer contribution reductions; I,ll tell you why, because sections of the fund were over funded, yes OVER FUNDED!

Please go away and educate yourself with the full information rather than attempting to alter the truth to your own personal view.


The Truth / Spartacus

I have read those documents in full.

I have read the accounts in full.

I fully understand what I am reading and I fully understand FRS17. I also fully understand the implications of what I am reading, and I still see an uncovered exposure of an actuarially estimated liability of £1.216 billion, backed up by assets of only £896.5m.

It is crystal clear that the recommendations based on the 2007 triennial valuation were made because FRS17 had yet to be adopted, and so insufficient recognition of the scheme's liabilities was taken into account. It was a big mistake to reduce employer contributions because it was based on an inaccurate assumption of the state of health of the scheme. A combination of that decision, plus investment losses ever since, alongside proper recognition of the scheme liabilities, have left the scheme in the dire mess that we see today.

I don't need to read any more than I have. The position is very clear.

The Truth


Your blinkered view is very clear and if you carry out a search on FRS17 you will note that it is to be used with caution, which is why I am quoting the full and proper actuarial valuation figures contained in the report from the independent experts that produced it.

I assume you know better than the experts, so keep it up, as your hole is getting bigger.

I have said my bit for now, I'll let you have the last word.

Happy Xmas.


The Truth / Spartacus (why the charade?)

Believe me, I am well versed on FRS17.

I don't claim to know better than the experts. I do, however, contend that the figures used in 2008 to set future contribution levels based on the 2007 valuation turned out subsequently to be inappropriate, and we are now paying the price of that decision.

My overriding concern is that the total scheme liabilities have risen massively compared to the assets. As both the assets and liabilities figures are based upon widely used standard accounting standards, I couldn't care less now about what accounting standards were used in 2007 and 2008. Today's assets and today's projected liabilities are the only figures which now matter - and they are terrifying.

I don't think I'm the one with blinkers!

The Truth


Incorrect again.

The pension contribution reductions are contained with the 2010 valuation report where FRS17 is also mentioned as there is a comparison between FRS17 and the final actuarial valuation.


The Truth /Spartacus

That's irrelevant.

Answer the one question which you have crucially failed to answer. Why is the £1.216 billion figure stated as a liability when all you can do is deny its existence? Why include that figure in the first place?

The Truth


FRS17 is prepared for accounting purposes whereas an Actuarial Valuation is carried out to compare the value of the Scheme’s assets with a funding target which calculates the value of the benefits that will be paid from the scheme in the future using information about the scheme at the valuation date.

e.g. The actuarial valuation takes the real situation of the scheme rather than a predefined set of rules, as FRS17.

FRS17 can be used to compare schemes between companies as the rules are the same for all, however, it does not necessarily take into account the actual scheme conditions.

Please do your research.


The Truth/GM/Spartacus/Anyone Else,

The FACT is - NO ONE knows for sure at what age public service employees will chose to retire, NO ONE knows for sure how long they will live and draw from the pension so as far as I can see you can juggle figures and argue the toss all day long but it is all speculation!


The Truth / Spartacus

Rubbish. Simply incorrect.

But all will become clearer to you soon.



You are quite correct - which is precisely why actuaries have a role to play, using mortality rates to project average life expectancy upon which pension projections can be based.

Average life expectancy for males and females in Guernsey are used. Some will outlive that average and others will die early, but the average over a large enough statistical sample will be close to the average upon which calculations are based. The actuarial projections will be pretty accurate overall, and that enables funding requirements to be set.

I can't lay my hands on the figures, but I recall that over the past 25 years the average life expectancy in Guernsey has risen by around 4 years for both males and females. Think of the implications of that in respect of contributions being made 30 or 40 years ago for somebody who is now 85 years old. It means that a pension pot which was intended to fund 20 years of retirement from 65 to 85 is now required to last from 65 to 89, which is 20% longer. That's why actuarial valuations every 3 years are required in order to account for statistical trends and maintain funding levels.

Royston Gauno

This will not make the Civil Service give value for earnings, those capable of employment elsewhere will leave for better conditions, leaving only the lickers, and those who have no skills..


Royston Guano

Leave for better conditions? Good luck to them in the current employment market.

Guern abroad

Final pensions schemes are a relic from the past. Reading all the posts I agree with GM's position. I see the other side as denying an inconvenient truth.

It is always possible to generate enough smoke and mirrors to make a position seem attainable, but that does not make it so. I am no expert and could not read a balance sheet but I have seen what has been going on for years as final pension schemes have often been discussed.

I was particularly interested in the observations about the comparison to employed public sector workers and the population level and how one has risen disproportionately to the other. I would like to think this was because we were working with more due diligence but then the 2.6m scam put paid to that idea.


If the naysayers are so convinced that the scheme is adequately funded and contribution rates sufficient for the future, they won't have any trouble with the following suggestion:

Everything stays as it is, no extra States contributions and absolutely no fund top-ups from the taxpayer whatever actuarial reviews find.

Cap the lot and see what happens...


Or better still, close the pension scheme immediately for both staff and the taxpayers contributions, repay each employee what they have paid in total plus an extra (small) percentage for each year they have paid in.

Job done and dusted, no future funding problems.

And just might be more acceptable to the employees than being asked to pay more,work longer and accept less.



You can't take away their accrued benefits to date - that would be completely illegal. I'm one of the biggest critics of the scheme but even I'm not advocating that,

All we can do is change the benefits going forward for services not yet provided, which is completely fair.


Sorry GM, I don't see much difference between taking away their accrued benefits or radically altering the scheme from its current form providing they are fairly renumerated in a different way.

It has been handled very badly as usual - ALL States employees should have been consulted with various options before half a dozen people gathered around a table and decided on a course of action (which probably won't affect any of them), that would have been a far more sensible way of determining what those affected may have been prepared to accept.

How can the changes proposed be 'fair' when ultimately those affected are going to be asked to pay more,work for longer and accept less?



The difference is that the changes should only affect their future service, not their past service. It cannot be right to retrospectively change the rules because that means taking away something that they already had.

In the case of a 50 year old with 30 years service to date, those 30 years should be covered by the current defined benefits scheme. His remaining future years of service can be covered by new rules. He then has a free choice going forward whether to accept those future terms of employment. If he doesn't accept them then he is free to try his luck elsewhere, but nothing should affect his accrued benefits to date, no matter what the public thinks about those benefits. In my view the public has to respect those accrued rights to date, regardless of changes made thereafter.

As to the consultation process, something has clearly gone wrong. Mr Freestone clearly had a mandate to represent the public sector workers and their unions. He should have been consulting with them throughout. If he hasn't, then questions must be asked. If he has, then the unions are out of order bleating now.



That's all very well, in the case of one employee, then the Sates of Guernsey as Employer would have to deal with either a compromise agreement or perhaps a constructive dismissal claim or breach of contract claim.

However when the majority of the Sates workforce has the same grievance it is a significant problem and they cannot afford to do as you suggest.

You keep banging on about how worried you are for Guernsey's future, the diminishing finance industry, decreased income etc but who do you think is going to steer Guernsey through the stormy seas ahead? Like it or not the public sector is a powerful and essential machine which is keeping Guernsey ticking over. Now is not the time for slashing remuneration and dealing with the aftermath. Everyone needs to be calm and measured. Guernsey plc simply cannot afford to have a disgruntled workforce.

I gather the pensions review panel comprised 3 union reps and 3 SOG reps together with the independent chairman. I believe Mr Freestone has commented publicly about the proposals they agreed to recommend to members however he is not responsible for any decisions. Indeed no decisions have yet been made.



No - you have omitted one key option which is redundancy on the basis that the employer can no longer afford to pay the employee based on current remuneration levels. That option is open to ANY employer - not just the private sector.

It's really quite simple - if they don't agree to it then they are guaranteeing that x% of the public sector will lose their jobs.

Be sensible - I'm not suggesting that we don't have a public sector workforce. I'm merely advocating getting rid of some of the "froth" which has been allowed to be taken on to create jobs which we did perfectly well without before the IT age really came to the fore. What do all these newly created posts over the last decade contribute, bearing in mind that we coped perfectly well without them in the past?



I view public sector redundancy is a separate issue from pension scheme reform.

I get the impression that you and I have broadly the same views in relation to universal benefits, I suspect the review of taxes and benefits next year will recommend bringing them to an end and we will then be left with a plan to create a system which matches benefits to needs. Efficiencies can then be created such as merging the tax and social security systems. There would be a lot of work to be done by the public sector to effect any changes and at the moment a lot of work is going into FTP, which is under threat of derailment.

Once these processes are securely underway, scaling back the workforce can then be done over time if necessary but there needs to be a plan in place to do this properly. For example, as and when people leave, don't replace them. Or outsourcing public services for example would result in people leaving to join the private service provider.

Giving out ultimatums over pensions would perhaps be shortsighted.



Redundancy and pension reform normally would be separate issues altogether, I agree, but in this instance it must be obvious that if pension reform proves impossible, then cutting the public sector by an even greater extent becomes inevitable. Some reduction of the public sector, irrespective of the pension reform, also seems inevitable. I would speculate, based on nothing more than a gut feeling, that a reduction of at least 5% of the public sector will happen if there is pension scheme reform, but could be potentially double that if the units don't accept the reforms.

Taxes and benefits definitely do need reform, and it would be madness for the States to only do half a job there. Merging the tax and Social Security departments has to undoubtedly be the most obvious area to achieve major savings, especially with Income Tax in such disarray at present. Merging those two departments would I suspect be very popular with the public as well.

None of it is going to be easy, but then again we aren't just paying our elected deputies and ministers to make the easy decisions. They are going to have to make the hard and unpopular decisions to do what's right for Guernsey as a whole, instead of trying to avoid doing anything which will reduce their chances of getting re-elected. We should not play down that factor,



Benefits can be taken away if the pension fund cannot meet its liabilities. In basic terms it will run out of money. Many pension schemes promised a great pension but people have had to accept a lower pension than promised. Take guaranteed pensions(equitable life) the firm couldn't pay out. Although the States would not do this.



You are quite right but I have taken it as read that the States will not default in honouring existing accrued liabilities.

donkey's Wotsits

What it surely comes down to is this - if you're planning on living a longer life than people did in the past, you'll have to pay more.


IF it is proved that the pension scheme is not wiping it's proverbial face(at least), it will be interesting to see if the Scargillesk leader of Unite sticks to his guns, dragging his members along with him in this shortsighted and rather foolhardy notion, and how he deals with the considerable backlash generated from a lot of righteously (some would say) angry public sector workers facing redundancy packages.

...wonder if he'll claim he 'didn't know' that might be the alternative cost cutting option? Pleading ignorance appears to have kept him out of the bouvaing to date, after all.

If I was a Unite member (under duress, may I add), then I'd be pretty peeved already that my senior rep was denying all knowledge of the year long formal discussion (involving some of his own members!) that's been going on regarding the very important and contentious issue of my pension, and wouldn't trust him further than I could throw him, in this matter or any other.



Don't get me wrong i understand why no one would want there pension cut but the offer is still incredibly generous, we can't afford the old scheme and would they rather be sacked?

Having seen the offer in detail as a private sector worker i would still love to have this kind of pension. The average wage basis is still very generous and stops the common problem of people getting promoted for two years before they retire.

The offer is not changing the already generous pension so far, just going forward. Public sector workers need to get real and striking is not the answer. You get so many benefits and protections if anything your pension should be smaller.

At the end of the day you are employees of the tax payer and the tax payer wants change and will eventually go bust if there is no change. The changes in fact do not go far enough to make it sustainable. GET REAL PLEASE!

Careful what you wish for....keep the pension and they'll need to make changes else where...bascically sack most of you!

It makes me sick how unrealistic and selfish people are. Lets all muck in and do whats neccessary and set an example to the world. So many people i know have a defined contribution scheme and had their wages cut recently and they just get their head down and get on with it to try and keep their jobs. Custard Castle is a mess of wastage!



States employees don't get as much as a free teabag!

The only benefit is the pension (which they pay 6.5% of their wages towards) and it looks like thats not going to be for much longer.

No bonuses, Christmas meal, healthcare scheme, cheaper loans/mortgages/travel, company vehicle, tea & coffee for them.



I run and part-own a big financial services company with well over 120 staff. Of those benefits, my staff sometimes get a bonus (not this year or last year though), they get a Xmas meal, they get healthcare and they get tea/coffee, Certainly no loans or mortgage or travel or company vehicle.

They get a 5% contribution to a pension scheme (provided that they match that contribution).

I would suggest that the States of Guernsey's employer contributions towards the public sector's final salary scheme dwarf the total value of the benefits that my staff get.

And remind me, how much holiday entitlement do civil servants get after say 15 years service at manager level?


Ah, now I know what you do for a living that goes a long way towards explaining why you are so adamant that Guernsey must continue bending over backwards for the finance industry - not that I necessarily blame you because I would probably be doing the same if I was fortunate enough to be in your position.

I am, however, less impressed to note that you are quite prepared to see thousands of public sector employees (many of whom are earning a lowly wage) either lose their jobs or be forced into paying more,working longer and accepting a lesser pension whilst the finance industry continues to prosper at what is effectively the expense of these people.

How would a few hundred more unemployed help the Guernsey economy?

Not a lot I'd suggest.

Rather than just pointing the finger at the States and blaming them for overspends, overstaffing etc its about time the finance industry looked a bit closer to home for some answers as to why the island is short of money and maybe come up with a few ideas how they could help top up our reserves without looking at everyone but themselves to make up the shortfall.

Anyway, back to your couple of questions - can I just remind you that States employees are also taxpayers and therefore pay the same into the States pension pot as everyone else. This is in addition to the compulsory 6.5% that has already been deducted from their wages.

I'm afraid I have absolutely no idea what the holiday entitlement for Civil Servants is.



Wasn't it obvious that I worked in the finance industry? The detailed explanations I gave to your various questions was more than a clue.

But my job and business interests have absolutely nothing to do with either (a) whether the public sector defined benefits scheme is sustainable oe excessive, or (b) whether all the extra jobs created in the public sector over the last decade were either necessary or essential. You see, in the private sector we don't pay for jobs which aren't essential as the cost comes out of our own pockets (in more cases than you seem to realise - its not just about the banks). We also don't risk our businesses by building up defined benefits obligations which we can't fund.

To what extent is the finance industry benefiting at the expense of public sector workers who might lose their jobs or have their pensions reduced? Are you suggesting that the island should ignore the question of whether their jobs are necessary and affordable? To what extent would the island benefit from unemployment of several thousand employees from the finance sector who are doing jobs which their employer deems necessary and where their pensions are being paid by the private sector, not by the taxpayer? How much extra tax do you think you would need to be paying to help make up the annual loss to the States coffers if all that employee tax revenue dried up? Woukd you still have a job at all if thousands of finance industry jobs were lost? Who makes up your customer base? What about the value of your house dropping in half with your mortgage remaining at its current level? Have you considered the bigger picture at all?

You seem to have a complete mental block about the concept of competition. Guernsey's finance industry competes with other jurisdictions all over the world to win and retain business. If we raise the cost to clients by imposing taxes on their companies administered here, which was the very point I was making, all that business would leave overnight. I was merely explaining that point to you in response to your naive suggestion that we should just raise corporate taxes. It's not as simple as that, and never has been. You appear to have no grasp of the EU Code of Conduct and what we can and cannot do.

Like it or not, we are all in this together and the sooner that the likes of yourself realise that your own income and finances are inextricably linked to Guernsey's finance industry, whether you work in it or not, the better. If you think you'd be better off working and living in a ghost town with 10,000 unemployed, everyone with negative equity, 50% income tax for all and 20% GST for all just to try to maintain the island's infrastructure then good luck to you.

I have actually suggested a solution which would redress the balance of corporate v personal tax without damaging the finance industry, in the form of territorial tax. You see, unlike those who merely whinge without looking for solutions, or who whinge just for the sake of it because of a chip on their shoulder, I prefer to try to suggest some answers where answers exist. Yes, that includes trimming the excess and unnecessary fat from the public sector first.

Yes - I am well aware that States employees are taxpayers and also pay to support the same public sector pension pot as the rest of us. The difference is that they are getting their tax back, plus a lot of added return, by the rest of us (who are getting nothing back) to the extent that the pension benefits exceed what is either normal or affordable.

The civil service holiday question is important as extra paid holiday above the norm is an extra paid benefit to the civil servant which should be included when measuring public v private sector remuneration packages.



I knew you worked in finance but did not realise you part own a company employing over 120 staff.

I think your line of work and the finance industry in general have far more effect on everyone than you wish to admit.

Would you deny that the 'black hole' is in part caused by the zero-ten scheme?

If you are being honest I don't think you would.

As you have said on many occasions we cannot afford to lose finance business to other jurisdictions so to remain competitive it seems Guernsey has to ensure that it does not price itself out of the market.

For what it is worth I agree with you on that point, my main gripe is that many of the lower paid people on the island (at a guess thats probably 60-70% of us) are struggling to stay afloat and simply cannot afford to pay more tax, GST or whatever we are going to be hit with next.

States savings are quite rightly an area to be investigated but if it comes down to public service employees being made redundant I'm not convinced that is a good way forward, more unemployment benefits to pay out, less income tax take, increased workload and related problems for those left behind etc etc.

As everyone is aware the PS pension is a burden to the taxpayer and needs to be sorted out.

Next, I suggest we look at social and personal income tax rates, my personal opinion is that the capped upper limits should be ditched for starters -how is it right that a very high earner should pay a smaller percentage than someone who is scraping by on £15k a year?

I notice on one of the other forum posts you would be in favour of scrapping child allowance - in certain circumstances I would agree (single mothers on States benefit with 2 or 3 kids and continuing to breed should not have it) but equally there is families out there that do need the help, means testing is probably the best way forward in my opinion.

If you disagree with me on the above then I would like to challenge you to set yourself a budget of £40k for 2013 to pay rent or service a mortgage and feed,dress and look after a wife and a couple of kids - a lot of people have to manage on this amount or less, no mean feat I'm sure!



I agree with most of your post. I don't deny that it must be extremely hard for low earners. My overriding point though is that if we damage the competitiveness of our dominant industry, then it would be even tougher. I think you accept that point.

Zero-10 was always going to create a black hole. It was deliberate, which is why a set proportion of our rainy day fund was specifically set aside to help cover the black hole. That plan would have worked if we had seen "normal" economic growth to fill the remaining hole. But the global economic crisis in 2008 put paid to that. Otherwise we would have been in far better shape.

Yes, on another thread I suggest scrapping family allowance to raise £9.5m, but I accept that maybe 25% of that saving should be reallocated to helping those families who genuinely need it. Net saving around £7.5m.

I'm not in favour of removing the social security cap because the extra money is not needed for social security. Its a tax, so let's not pretend its something else. We need a 25% top rate of tax and we need to cap allowances for high earners. Its by far the fairest way of ensuring that the biggest beneficiaries of zero-10 pay our share, myself included.

However I am not in favour of being clobbered for extra taxes or removing family allowance until the public sector costs are actively addressed. Guernsey and Jersey outsourcing certain public services to each other to benefit both islands would be very welcome - its common sense when we are just 25 miles away with so many similarities and common problems.

I'm a big fan of territorial tax. I want to see the likes of Boots, Next and New Look pay full tax on their profits here. It CAN be done.



All fair comment, I like the idea of a 25% top rate income tax, as that would effectively give Guernsey coffers a much needed boost from those whose industry we are trying to protect.

I know it doesn't have much relevance but the fact remains that these same high income earners would still be paying considerably more income tax if they were in the UK. All things considered even a rise to 25% is still a good deal in comparison.

The only thing I wouldn't be so sure about is the terratorial tax for large retail outlets, we have a very limited amount of high street brands as it is and there seems to be a marked reluctance for any more to set up shop in Guernsey as it is.

We don't want to lose the few we have which I would have thought might be a possibility if they had to pay full tax on their profits?



You are right - there is no relevance to the UK rate of tax. Impossible and unrealistic to compare it. If we had a UK tax system then our economy and industries would be very different indeed.

Do we really need the high street chains ? We can access their entire product range on the Internet anyway, and for cheaper than they sell the same goods here! It would provide local retailers with more chance of surviving.

Neil Forman


From posts you have made I conclude that you are a manual worker employed by the States. You have also admitted that the pension scheme needs to change. I agree with you on most respects.

This schemes liabilities are real and if not tackled now or ideally years ago will become a problem. Some posters have stated that the liabilities are forecasted but they will need to be met in the future.

The changes are fair, it is still a defined benefit scheme and could have been a lot worse.

At least you will get a pension and a lump sum payment, many will not ad many have seen worse changes years ago because these schemes are not sustainable.

This change needs to happen or the redundancies GM predicts will happen.

I cannot see the taxpayer wanting GST introduced before ALL savings that can be made are made.



Quick question. If they don't go for this scheme and retain the old one, why are redundancies the only option.

The last actuarial valuation put the scheme at over 90% funded (the target) and actually more was paid in than out during that period.

The assumptions used under actuarial valuation and FRS 17 are different hence the different results.

If the next valuation showed a big problem, then fair enough, but what I see is that the proposed scheme does not save the States any money, costs the employees more (but I can see why, so don't necessarily have a problem with that) and just reduces the liabilities.

So if it isn't accepted now, there may need to be action in the future if the triennials show a problem, but I don't see it now...


Well guessed Neil!

I appreciate that the pension scheme cannot continue as it is however there should be other options available to States employees.

Firstly, why is it compulsory that every States employee has to pay it?

It may come as a surprise to some people but in this current climate there is those low earners amongst us that would find our 6.5% far more useful now than in 20 or 30 years time.

Secondly, it is proposed that we pay an extra 1.5%, work an extra 2 years and then receive less at the end of it - does that sound fair or reasonable when we have no other alternative?

Thirdly, given that the pension scheme is unsustainable in its current form and this has been known for a considerable time, why is it still open to new employees?

I don't think many people would argue that the whole thing has been badly handled.


Neil Forman

A I correct in deducing that you think the States should change the decision regarding the funding target to make it 100% funded instead of 90%? This would mean no deficit - would you be happy then?

Neil Forman

Spartacus / Billythefish

You are both relying on the Actuarial Report too much. These are based on generous assumptions. For instance, if you look at the Actuarial Report dated 31/12/10 which can be found here:

Look at page 2499 (4.2) Previous Valuation on Guernsey Post and then look at this :

I like GM prefer to look at the Annual States Accounts which I believe give a better view. If you look at the final accounts for 2011 which can be found here:

The notes on page 30 b(i) state that the figures are updated by the Actuary.

The statement made by Spartacus in answer to post 21 at 09.38am on Dec 24 is incorrect. She stated that FRS17 has not been adopted for the Actuarian Valuation or the SOG accounts. The notes state that FRS17 has not been adopted IN FULL and the deficit on the fund is therefore not included in the balance sheet which is a requirement of FRS17.

I believe that changes to pension fund accounting were introduced after the Robert Maxwell affair.

Here is a handy booklet for you both to read:


Redundancies will come if this scheme is not adopted.

Neil Forman


Thank you for your response.

It is refreshing to see someone who would benefit from the current scheme admit that it needs to change.

Why it is mandatory I do not know. Most companies invite employees to join their pension scheme. I do not see why the States insist on it, although you may struggle now but would enjoy a cosy retirement. ( if you should reach retirement age which is not guaranteed )

I can fully understand why low earners would prefer not to join but the benefits on retirement are good, even under the new proposals.

I think it is a bit unfair that your payments are rising but if this is what is needed to stave off redundancies, I think it is quite reasonable. £1.50 per £100 earnt is reasonable when the taxpayer is paying £14.

As for working for two extra years, does this not apply to everybody?

I totally agree that this scheme should have been closed to newcomers years ago and that the whole thing has been badly handled.

Neil Forman


Sorry, I only posted the rise amount of your contributions, that should read £8.00 per £100 earned.



I'm not relying on anything. What I have said is that the States funding target of 90% is used as a benchmark and based on the actuarial valuation. That's a fact. This decision is based on professional advice they receive.

I have asked you whether you think the States should change this and make it 100% funded. No answer.

I would also now ask if you think they should disregard the actuarial values and rely on FRS17 values?

My point is the benefits are funded by the contributions so the scheme washes it's own face. There is a huge pool of assets to fall back on.

We seem to be in agreement that FRS17 has not been adopted in full in the SOG accounts nor on the valuation. Both refer to FRS17 in the notes for information but do not include the accounting deficit on the balance sheet nor in the funding calculations. Why are you saying that my earlier post was incorrect?

SOG is not Robert Maxwell, and there is a difference for public sector schemes, especially when they are highly funded and transparent, as in this case.

The Press have repeatedly made their views clear on pensions. And your point is?

I gather staffing levels were reviewed again this year by scrutiny if redundancies come it should be nothing to do with pension arrangements.


I do feel for people who will see pensions change but historically it was understood that the private sector would receive less pay than private sector but better job security and a good pension in its place.

I have been working in the private sector for nearly two decades and it must have been a good 12+ years ago that final salary pensions (to my knowledge) were removed for new employees as they were simply unsustainable.

As well as public sector final salary pensions remaining unsustainable the wage gap has reduced whereby in some middle/higher management positions the public sector wages are far higher as the States wanted to (of course) be an attractive employer in what was in the 2000's a highly competitive job market.

Nobody wants to be the person to take something away once it has been given, but I'm afraid some serious changes to pensions has to be made as the argument to sustain these unsustainable benefits has long gone - the world has changed and so must this.


I'll give you an example when * Suisse wanted to get employees out of their pension scheme a number of years ago they gave a lump sum into a money purchase scheme. How much well an assistant manager with 10 years was offered £10,000 for their contributions that would get you a pension of £500 if that. The sum offered had all been approved.



"the only benefit is the pension" I can tell you that's a hell of a lot more than say somebody in the construction industry gets.



Nowhere do I suggest that every job has benefits, having worked in a variety of 5 or 6 different jobs over almost 30 years (including the States at public service level) I know only too well that everywhere is different.

The old saying 'Grass is always greener' springs to mind.


Kevin's assumption that because GM is informed on such matters and pro reform of the pension scheme he must work in finance is a widely held one and somewhat irritating, in fact, the whole idea that anyone pro reform is from finance and (quote) 'bleating on now that times aren't so good for them' is an assumption too far and repeated too often.

I am pro reform of the PS pension, I know what the offerings are as far as finance is concerned regarding wages/pensions/benefits etc and that things aren't half as good as they used to be, not because I am a finance worker (and thus, pro finance, which I am not particularly, for the record), I know because finance workers have told me as much, and choose to keep myself informed regarding one of island's major industries.

The notion that the island is divided into the anti pension reform public sector and the pro pension reform finance sector is an entirely deluded notion devised to denigrate the opinions of anyone who is pro reform and above all, is entirely incorrect.

A quick flick through the yellow pages will confirm what the private sector comprises, some well paid, some not so. Accountants, lawyers, architects, engineers, building firms, garages, tradesmen, retail, IT, estate agents, doctors, dentists, gardeners, hairdressers, everything in the tourist and hospitality trade....and finance, of course.

Maybe, just maybe, those 'other people' don't want to be propping up the public sector pension either, in particular, if it is proved with this upcoming audit of the scheme, that it is, as many speculate, unable to support itself, and in the face of that, perhaps more pertinently, feel even more peeved that Unite have already declared that no matter what the outcome, they aren't playing ball, and that the rest of us (see listed above) will just have to keep the public sector in the 'manner to which they are accustomed' whilst the rest of us don't have the luxury of refusing to change in these difficult times.

...right, that's it, I'm off for another glass of mulled wine. A la perchoine.



I too am well aware that something needs to change, for this reason I am pro reform of the PS pension, what I'm not pro reform of is being told I will have to pay more money, work two years longer and receive less money when (or if) I reach 67!

I'd rather pull out of the bloody thing if it was left up to me but that does not appear to be an option.



Whatever you feel, don't pull out of it. It will still be one of the most favourable schemes available to you.



I'm not saying that I would definately pull out of the pension scheme but I think the option should be available to any States employee.

I suspect there may be public service employees that already have a private pension and/or have inherited money or property who might not want to be paying into the States scheme.



It is a compulsory scheme!



Not after the employee has terminated his emoloyment it isn't!


Kevin try to remember that even with the proposed reforms your pension will be infinitlely better than anything you could ever hope for outside of this scheme. I appreciate that paying more for longer might feel unfair now but you will be one of a minority in the future who actually has a pension to fall back on at all.

I presume that you will also be entitled to the state pension as well which many islanders depend on solely to support them in their old age.

As far as you wanting to opt out, I think you would be in for a real shock if you planned to make your own pension arrangements.


My understanding is that the scheme is very likely to be unable to sustain itself, hence the phasing out many years ago of the final salary pension model everywhere else, that is why they are looking to change it.

You're pro this change, but don't want to pay any more in yourself, or work for any longer.

Where do you propose, then, we get the additional funds from?



I'd be in favour of closing the final salary scheme altogether and paying off those in it but this does not appear to be an option.

If, as seems virtually certain, the scheme is to continue then clearly there is not much option other than the employee paying more and working longer.

I firmly believe that the individual should have the choice to opt out altogether, the less people in it, the smaller the deficit.