High-earners to be paid more if States pension changes go ahead

MORE than 100 high earning States employees will receive large pay rises as part of the proposed shake-up of public sector pensions.

The Bailiff and other Crown Officers look set to be included in the new States' pension scheme.
The Bailiff and other Crown Officers look set to be included in the new States' pension scheme.

MORE than 100 high earning States employees will receive large pay rises as part of the proposed shake-up of public sector pensions.

Among them is the Bailiff, who will get an estimated £15,000 salary hike to compensate for the loss of the final salary pension scheme.

However, despite the pay rises, the move will result in significant savings for taxpayers, who will no longer have to contribute 20.8% of the Bailiff and Deputy Bailiff’s salary into their pension fund.

It is understood the Crown officers, along with HM Procureur, HM Comptroller and the island’s three judges, will be included in the new scheme despite not being represented during negotiations.

Within proposals to move to a Care [career average revalued earnings] scheme, announced by the joint working group on public sector pensions, is a recommendation to limit the level of pensionable pay in any year at £85,000.

Comments for: "High-earners to be paid more if States pension changes go ahead"

Spartacus

There we go.

These cash incentives will help enormously with getting the employees to agree to the proposed pension changes. Right Kevin?

I look forward to seeing the evidence of how the net effect of the proposals would represent "significant savings".

Woody

So what benefits does your average or lower earning civil servant get out of this to make up for the pension? I'm guessing nothing.

Terry Langlois

I am guessing that they will all get the same benefit, proportional to their current salaries and therefore reflective of what they will be giving up by switching to the new arrangements. That is how it should work, if done fairly, at any rate.

Naturally, those with the highest salaries will be giving up bigger potential pension benefits and so will get the headline-grabbing compensation now.

kevin

You have guessed correctly.

kevin

Woody that is - Nice idea Terry but I don't think compensation will be forthcoming for most States employees.

Tim

And the indians will get?

kevin

Shafted to keep the rich happy ( as usual)

New Year - same story.

milly

AH HA,now we know why mr freestone was so happy to agree to the outcome of the revision.

and the rank and file will be expected to tow the line for nothing,no thanks.

Dani

Cant help but think the pension changes are short term, not just for civil servants but for all of us. We need a culture change. A new way of tackling the problem instead of deferring it. A long term sustainable plan. This has been known for years but I don't see the issue really being tackled.

Im thinking what it's going to be like in the future when the younger generation have to fund these pensions. There will be less people to support more pension payments in general to the public and the retirees are going to live longer. Not only that but the younger generation are unlikely to receive the type of package they have to fund for the older generation value wise by then and will probably have to retire later themselves to keep it funded. Pension schemes in private business have largely closed to new entrants. Even in Finance. So unless they have spare cash for a private pension the younger person is unlikely to have an employment pension where as the older generation largely do to supplement their States one. There is going to be a lot of resentment if this happens.

Especially if it gets increasingly harder to get on the housing ladder and the baby boomers are renting out properties at high prices still - though I guess that could change but worth considering. They will pass away and leave the property as inheritance at some point which may ease things.

We can't keep pretending the issue isn't coming. The longer we leave it the more expensive the change will be. We should not be leaving young ones the mess to clean up. We should be more pro-active and tackle this head on.

Neil Forman

Dani

Excellent post! Totally agree.

Dani

Neil Forman

Thank you. May I ask how things are going at the douzaine? What are you lot up to at the moment?

Neil Forman

Dani

Hi, I officially started New Years Day and attended the function held in the Constables office.

I will attend the first meeting this month. I have spoken to long term Douzainiers who want assistance with projects and have pledged to assist.

Spartacus

Neil Forman

May I ask for your thoughts in relation to Geoff's post?

a voter

OH, WHAT A SURPRISE!!

THE PIGS HAVE FOUND A WAY OF GETTING THEIR NOSES FURTHER IN THE TROUGH.

As a tax payer of course I don`t begrudge them a penny of any UNEARNED pay rise.

I`ll gladly give up on any hope of a descent rise in my inadequate pension to allow these most deserving civil servants the extra pay rise.

Am I right in thinking that these venerable people will still get a pay out of the pension fund they are already fleecing out of the tax payers?

It looks like Mauritius will be over booked this year for the States Civil Servants reunion.

Vicky

Just typical, so the highest paid, aside from earning a fortune already and getting a much larger pension than most also get an additional hike in their pay whilst the average civil servant gets nothing to compensate for their loss. I guess we're not all in it together as usual.

geoff

isn't it funny the rich get a pay rise for their loss of pension and the poor get an extra 1.5% taken out of their wages to pay for theirs, i am also fed up of the daily vendetta by the editor of the GP claiming the civil servants have gold plated pensions, i am a civil servant and i am due to retire in about 2 years time after 43 years in the states doing all manner of jobs from digging roads, cleaning sewers to driving lorries i am now a supervisor and have been for a number of years and if i cash in the maximum amount i can from my pension scheme after all that time, it will still only be a fraction of one years pay of the bailiff, When i retire even though i am Guernsey born and bred and have lived here all my life i am going to have to leave the island because i cannot afford to live here, i do not own my own house because when i tried to get a mortgage i was told i wasn't earning enough so i will have to keep paying the exhorbitent rents here which means i won't be able to afford them on my pension and because i will have nominal savings, ( my pension payout ) i am not eligable for social housing.

kevin

Ah, but a few of the prolific posters on this forum (not to mention the GP editor)say that States workers are all minted with gold-plated pensions so it must be true.

The fact that a 'gold plated' States pension is worth nothing at all to anyone until they are old enough to draw it (in fact it is currently COSTING them money) does not come into their thinking.

Michael R

geoff, just think:- all your pension contributions are going to support the finance so-called industry which is unsustainable.

The very idea that it might have to pay a fair tax for doing business in the island is unthinkable to these fat cats who live "out west" like GM and don't get to see overcrowding in our little island.

Meanwhile, self-employed people are also being hit by this bunch of 6000 or so who want to see the island's population increase.

I suppose there is one way to achieve this without worsening the social problems on the island and that is by introducing swingeing land taxes on those who own more than a nominal amount of land, coupled with requisitioning of land in the south west to house the extra workers that GM and his ilk wish to bring here.

I often think that a true regression may well be beneficial in the long term:finance clearing off, house prices falling, population falling, less demand on education, health, roads etc. i.e. less public expenditure.

Builders and bankers are like turkeys: they will not vote for Christmas but it is surely time for a cull.

And as a sign-off, how about an alternative industry:- assisted dying? The Admiral's Park buildings would make fantastic departure points and would be far preferable to taking a magic potion in an industrial estate in Zurich.

GM

Michael R

Very good.

Always comforting to know that there are such forward-thinking visionaries out there.

Island Wide Voting

Michael R

A very delicate subject for anyone in the States to propose as an alternative income stream but I like your assisted dying suggestion.There certainly is a growing demand for it in an increasingly secular society

No need to re-invent the wheel,just copy the legislation that has worked successfully in other jurisdictions

Who dares wins and we should be taking steps to get in on the ground level as soon as possible

Another leg to our stool could be the new crop hitting the UK market .. persimmons .. perhaps they would be suitable to grow in our remaining vineries

http://www.dailymail.co.uk/news/article-2255839/Persimmons-crops-2012-Exotic-fruit-overtook-kiwis-mangoes-British-supermarkets.html?ITO=1490&ns_mchannel=rss&ns_campaign=1490

kevin

Excellent post - financy types won't agree though - cue GM and friends!

Sceptic

Geoff

By my reckoning you should be coming out with a lump sum of approximately 1.5 x salary, plus a pension of 50% of your final salary, plus your old age pension. Surely that should be enough to live on?

GM

Geoff

In any society there are people whose job earns them far less than others. Its unfortunate but life isn't fair - it never has been and never will be (except in communist countries where everybody earns the same). Should professional footballers earn what they earn compared to nurses and teachers? Of course not, but that's the world we live in. Should you earn anything like the Bailiff earns (which I would add is a mere fraction of what partners in local law firms earn, and which he has given up!)? Of course not.

If you haven't been able to afford to buy a house before retirement, then its clear that you wouldn't be able to afford to do so afterwards.

However, as Sceptic has suggested, your pension package is exceptionally good. You might not "earn" as much in retirement relative to what you earn in employment, but you will be massively better off compared to any other non-house owner who has done the same sort of jobs as you have in the private sector. That's probably of little comfort to you, but its worth saying.

geoff

isn't it funny how rich people always say life isn't fair, but what the hell you shouldn't expect to earn the same as other people, your right and i don't, i also agree i can't afford a house when i retire any more than i could while working but if i move to england i can afford one, that's why i have to move away. the reason is that too many well off people buy the houses over here that are for sale and then charge massive rents for them, which means you can't save for a mortgage unless you work for example in finance and are on a decent wage or are recruited from outside the island in which case you get a relocation grant and a rent advance. the other point you raised is that i will be far better off than other people with no pension, will i really be better off? as the states will not help me at all

( not that i expect them to by the way)even though i have worked all my life and never claimed anything off the states and paid into my own pension fund whether i wanted to or not but someone who has never worked in their lives will get all the help they want plus social housing at a rent they can afford, free dr's, free dentist, and free opticions

Sceptic

Geoff

At least you will have your self respect, knowing that you haven't been a burden on society all your life.

That shouldn't be underestimated, I don't know how some of the benefits claimants live with themselves. There is no reason why a childless, able bodied person should be out of work over here, none whatsoever. It's simply down to these scroungers choosing benefits as a lifestyle choice, rather than knuckling down into a job that demands hard work and/or long hours.

Most of them are probably too stupid to even realise what self respect is, at least you can hold your head up knowing that you've paid your own way in life.

GM

Geoff

You have struck quite a nerve there. The fact that lazy individuals, freeloaders, baby farmers and other scroungers of social security benefits who take massively from the system but who never contribute anything back, is one of the biggest problems that we have over here. You are right - we are all subsidising those individuals, and this has been allowed to get completely out of hand. It is also only likely to get worse.

I'd like to see a huge clampdown on social benefits, but in such a way that those who genuinely do need help do not suffer. Its the ones who really don't want to work, and who claim to be too ill to work, which need to be looked at very very closely.

I know that doesn't help your situation, but but it might make us all feel somewhat better in terms of where our taxes are being utilised. I still think you will be far better off though than you would have been if you didn't have your public sector pension.

Spartacus

Demonisation of the poor. Always an easy target. What about the rich tax avoiders?

Condescending holier than thou attitudes help nothing and no one it is just an ego trip for you.

Sceptic, I don't understand how you can be so judgemental while puffed up with self respect at the same time.

GM, as usual you think the civil servants, the government and everyone else in the world is doing everything wrong, and everything would be so much better if only someone would listen to you. Please just shut up.

JJ Lehto

Spartacus

Who do you refer to by "tax avoiders"? I wasn't aware there was a problem with tax avoidance in Guernsey. Are you just jumping on the Richard Murphy band wagon, but forgetting this discussion is about Guernsey?

GM

Spartacus

I am not letting that pass.

Your attitude is precisely why the social benefits regime of this island has got completely out of hand. There is a MASSIVE difference between those who are poor because of their unfortunate (non self-induced) health and other circumstances, and who deserve all the help they can get, and those who have chosen to be social welfare scroungers. Most sane, rational human beings will recognise that difference even though you are clearly excluded from that category.

If you seriously think that your average taxpayer in Guernsey is happy to see their taxes wasted on those who would rather collect their "social" than go out to do an honest day's work, or who are prepared to produce multiple kids from multiple fathers before they even reach their teens so that they can collect their benefits and climb the social housing ladder, then your moral compass is certainly not facing south. I for one would fully expect that this excessive social welfare system is slashed to only benefit those who genuinely need it, before ANY new taxes are introduced in Guernsey.

And Spartacus - I don't think that the entire civil service is doing wrong. There are just far too many of them in several departments and not enough in others, and they have the wrong pension scheme. Overall, the public sector is bloated and inefficient, but otherwise does a decent job.

Where have I said that the "government and everyone else is doing everything wrong"? Of course the government makes some mistakes - every government does, as do all human beings.

As for whether I think everyone should listen to me or not, of course I don't think that. But on certain topics they most certainly should not be listening to an ignorant, pigheaded individual like you who simply isn't used to anybody challenging them and certainly cannot accept defeat when they are being proved wrong.

You seem to live by the one mantra, which is that Spartacus is NEVER wrong. Well, just carry on making an absolute buffoon of yourself on here - you certainly don't need any help on that front.

Spartacus

GM

You refer to the most vulnerable groups in society as if they are an inconvenience and a burden to you personally.

No one deserves ill health or misfortune it's just the way the cards are dealt for some people but you seem to think there is some superiority within you which has this far prevented such circumstances.

Your sneering prejudice does a gross disservice to everyone who deserves help, not just a very small minority who might for seemingly unfathomable reasons "choose" a life on benefits.

You are talking about the unemployed, many who have worked damn hard for decades and fallen on hard times, mentally ill people who have turned to alcohol to self medicate, young mothers who have been abandoned by their partners and left to struggle to raise a family alone, wives who have been courageous enough to break free from abusive relationships, people who have been struck by disability.

And as for "benefits being slashed to only those who genuinely need it", you clearly feel you have the right to judge all and sundry and label them scroungers. You think it is up to members of the public to decide for themselves who is worthy and who is not. Shame on you.

There are people tasked with making those decisions who have been recruited for their skill and expertise or democratically elected to oversee best practice, but as usual you think they are not doing it right. You simply fail to understand that those people are aware of the underlying facts and you know sod all about anything.

GM

Spartacus

If you had actually bothered to read what I actually wrote, as opposed to what you wished I had written to justify your response, you will have noticed that I was attacking scrounges, NOT those who genuinely need help.

You seem incapable of reading what's written, but then that's absolutely true to form.

I will spell it out.

Scroungers, lazy, desperate to have as many babies as possible, don't want to work - No, I don't support paying benefits to them. They are NOT poor unfortunates - they have made their choice to milk the system.

Unemployed but genuinely wanting to work, genuinely sick and unable to work - Yes, I absolutely support paying benefits to them. They ARE unfortunate and there are circumstances beyond their control.

Now, what bit of that did you not understand? Would you like me to draw pictures or you shorter words?

Now re-read your earlier post and look how stupid you appear. Yet again.

I think you will find that your unwavering support of scroungers puts you in a very small group of island taxpayers who would share your view. The curse of the loony left-wing namby pamby nanny state of the UK social benefits system is blighting Guernsey and its people like you who encourage it.

Spartacus

GM

What scroungers? What evidence do you have that there are any at all? It is not your job to assess the circumstances of ordinary people some of whom might be benefit claimants.

Doesn't stop you doing so though does it, you just do it from a point of absolute ignorance. That was the point I made.

GM

Spartacus

You've just surpassed yourself with your most ridiculous post yet.

I will leave others to comment on whether they think all claimants of benefits claims here are worthy of it.

So is it mandatory to have a professional qualification in Social Work (no doubt issued by a London inner city council like Haringey) to be able to express an opinion on Guernsey's benefit claimants? I know several of them personally.

I think you've just lit the touchpaper there Spartacus. Queue the public response.

Spartacus

GM

As usual you fail to realise that you are being critical of the people who's job it is to determine whether a claimant is genuine or not. As usual you think you know better than everyone else.

And you are now saying that you know several benefit frauds personally are you? Well why haven't you reported them?

guern abroad

GM has it exactly.

I can't see any support for supporting those who choose to be supported through their actions not circumstances out of their control.

GM

Spartacus

I'm not suggesting that the staff are not following the parameters. I'm saying that the parameters are far too lenient. Too much namby pamby leftwing influence, taken straight from blindly following UK influences.

Who says that I haven't reported them? It has made no difference because social security see no problem. Those damn parameters again.

Spartacus

Guern abroad

There are very few who choose to be supported. In such incidences there is an underlying cause such as inadequate education, lack of parental support or other reasons for lack of confidence. Given the choice most would prefer to have a fulfilling hard working career and all the benefits of that lifestyle.

This is a typical line of attack which demonises the poor and less fortunate.

Tax evasion on the other hand is totally inexcusable. If you can afford to evade tax you can afford to pay tax. Some people nevertheless find tax evasion acceptable.

A.J.

Seems to me that all high earners should be more than capable of affording private pensions,but then, Greed, to some, can be a massive stimulant. He or (she) is 'comfortably off' is one saying that springs to mind,with the emphasis on 'comfortably' but rarely on the word 'happy.'

Quizzed

Look, I'm a bit naive when it comes to all this but call me old fashioned, a contract is a contract.

I knew it would come out about the boys club looking after the boys. Freestone!!!!! First capped at 75K then mysteriously becomes 85K (same as his wage) makes you wonder how the rest of the figures have been massaged.

Its just typical that the states would have a go at hard working people, (their people), to claw back money on a pot that they have been frivolous with. Scooping the cream so to say. Their people signed up to it cause they had to!

Yes 'They could have worked else where'! I here you say.... but some people look for security. Others on the other hand like the idea of chasing the private sector around for the best deals. You takes your chances!

It is sad that the states are punishing the people that have served them, under their conditions, I'll say again, their conditions.

@Sceptic

you are right in your opinion about the freeloaders!

It makes me sick to know that hard working people are having their contracts terminated to fill a States 'Cock up' while Freeloaders are bouncing off walls Pi$$6d as Hand Carts at 1 o'clock in the afternoon. All on Blady benefits!!!!! AAARRGGggghhhh!!!!!

Get it right! Stop taking it out on the good guys!

1. Don't take the cream off the top of budgets you shouldn't touch

2. Don't sell assets such as Guernsey Telecoms for £1 to some unknown company so that we can be fleeced in the future and have no say

3. SORT OUT THE FREELOADERS before the good guys.

4. Sort out the thousands of people over here that are NOT under licence. Yes there are thousands and they are taking our money

5. And by the way, what happens to all that extra Tax we pay since duty was put on the petrol pump? Can anyone enlighten me on how to find that out?

Oh I'm sorry...... of course, Civil Servants and manual workers are a captive audience and they are there to do as we ask. huh stupid me to think they'd upset the freeloaders by changing their contractual rights to millions of tax payers pounds.

Rant over! :) Feel better now thanks

Oh by the way GM, no I'm not Spartacus.

GM

Quizzed

I think it's pretty obvious that you aren't Spartacus - you are against the freeloaders for a start!

Quizzed

GM

That I am.

Look I had my rant and I meant what I said but I guess I was just trying to say that the deficit in the Pension Pot is born out of miss-management not the employees.

(in a calm voice)

Spartacus is right when he says that it has been used as a cash cow and milked when it suits them. Now unfortunately the sacred cow has come back and bitten them in the proverbial ass.

It is miss management.

Now, I know you don't accept the emotive view on this and figures are figures. Well Morals are also morals and contracts are contracts.

There are so many areas to make savings in the island before asking the public sector to put their hand in their pockets when the terms were initially placed on them!

Now in my rant I mentioned freeloaders and that I may or may not agree with them......:)(I mean freeloaders not the people that are ill or incapable of carrying out a days work legit).

They will continue to walk into Wheadon Hse on a regular basis claiming for the unbelievable with no alterations to their benefraud while the staff (that are processing their pocket money for doing nothing in society) will be worse off!?!!!!

Yes its a moral thing and yes apparently the freeloader should get their money because of the obligation set by the states of guernsey. Your money and my money GM.

Without going into the nitty gritty, each person entering into the new pension scheme will be hit in individual ways. The differences between individuals are unbelievable! The current proposal does not take into account those differences enough and in my opinion is doomed to fail!!

Spartacus

Quizzed

Much as I would like you to think I am right, I don't agree that the fund has been mismanaged at all. The deficit is not an accident. It is their strategy to maintain a deficit rather than have a 100% funded scheme.

I agree with your view on morals and yes a contract is a contract and so should be honoured.

I don't agree with people who make sweeping judgements about benefit claimants without really understanding an individual's circumstances but there will always be a few fraudulent claims just like there will always be a few tax evaders in any community.

You are correct that the States of Guernsey has an obligation to ensure those in need are looked after to a minimum standard but there are some people who would prefer to see beggars on our streets and a high crime rate. Not me.

The proposal to switch the pension fund to a Career average earnings plan is designed to be fairer but clearly it will effect every employee currently in the scheme and will mean they receive less. This seems unfair as it will be the low earners who will feel the pinch in their old age whereas the higher earners won't notice any difference due to this change.

bcb

Sorry Sparty but i think you seem to be contradicting yourself there a bit.

Are those you describe as fraudulent claimants not also scroungers and free loaders? one may be legal the other not but to me that pretty much amounts to the same thing. Is that not what GM was talking about and not those in genuine need of help?.

And i to know of people who have claimed money when they shouldn`t have i also know of some that claim illness when i know there is nothing wrong with them.

And no i haven`t grassed on them either.

As for the experts deciding if a claim is genuine or not then then try proving someone who complains of a bad back has`nt got a bad back or someone claiming to be stressed isn`t stressed. These people are both free loaders and making fraudulent claims.

Spartacus

bcb

Fraudulent claimants do not deserve financial support. They might deserve some compassion and sympathy though. I hope that clarifies my thoughts on this subject.

There have been convictions for fraud so the system does work.

Public servant

Lets be fair. The top earners are not getting a cash incentive, they are purely getting the pension contribution that their employer promised them as deferred wages. The public sector workers receive a portion of their pay as pension contributions based on two thirds the employee contribution rate. If the higher earners were not given this then they would be getting a pay cut.

The bottom line is, the States are using the UK revision to scaremonger us into believing our pension is in a dire situation and needs to be changed. Well in 2008 they did just that and advised us that we should not need to make any changes for 20 years. Charles Parkinson, in his end of year report 2011, stated that the superannuation fund had never been so high and its performance was on target. Spartacus is right to defend the benefits promised to public workers and further more is right to question the transparency of this review.

Spartacus

Public Servant

Thank you. I read something which said that the details of the review would not be made public until the matter is brought to the States.

Guernsey's biggest asset and investment is it's people, especially all public sector employees. Those who scaremonger seem to have lost sight of that.

kevin

'Lets be fair'

And the low earning public servants get nothing then?

Ah yes, the lower earners get to work until age 67, pay a higher contribution percentage of their wages into the scheme and then receive a smaller pension.

Doesn't seem particularly 'fair' to me!

GM

Public Servant

Unfortunately that decision in 2008 was followed by 4 years of significant trauma in the investment markets, which meant that the fund lost a significant amount of value, Coupled with more realistic projections of the scheme's liabilities, the gap between the assets and liabilities has mushroomed since 2008, and that's why it's a big problem now but was ok in 2008.

It doesn't matter that we have a big fund. What matters is how that fund compares with the liabilities. At the moment we are comparing a fund of under £900m with liabilities of over £1.2 billion. So a £300m deficit (I understand its £380m but I have kept the numbers simple. If that asset value has stood still in 2013, which is quite possible, indeed probable, and if the liabilities have risen, as they almost certainly have, then we MIGHT now have a fund of £900m and liabilities of £1.25 billion, so the deficit would have grown by another £50m. Continue that trend for another 5 years, which investment experts would say is likely, then that gap could double in that period. Remember, it's already grown from around £120m to £380m since 2008. Also remember that £29m goes in annually and £27m of that gets paid out, so growing the fund is going to be very difficult.

That's not "scaremongering" at all, despite what some suggest.

It is true that a raising of the retirement age by 2 years will reduce the deficit slightly, but until the actuarial projections are published its not possible to know by how much.

Spartacus

GM

"Continue that trend for another 5 years, which investment experts would say is likely"

Which investment experts would say that is likely? Who are you speaking on behalf of?

The investment experts in charge of the pension fund have not said that.

GM

Spartacus

The investment experts in charge of the pension fund who

are investing in the same universe as everyone else! I see probably a dozen different economic views from leading global investment houses each week or each month and its clear that sustained low interest rates are here for several years to come in order to help the western world to grow out the major recessionary period. Nobody is predicting double digit total returns from the core bond/gilt/equity markets for several years to come.

If the fund achieves anything like 5% to 6% compound return over the next 5 years it will have done extremely well. Unfortunately that doesn't look like being anywhere near enough to match or beat the likely growth in the projected liabilities of the scheme, hence the deficit is likely to increase.

The investment managers cannot afford to take greater risks to chase greater potential returns as that increases the risk of further capital losses. It is a very challenging time indeed for investment managers of pension schemes.

Spartacus

GM

No.

You suggested the fund value could remain at £900M this year and for five more years. That is a zero return.

Name one leading global investment house who saying this is likely?

GM

Spartacus

I was using that as an example for the sake of attempted simplicity.

I'm saying that its possible. Markets are flat. Capital losses are possible, especially on bonds as the shift into equities starts to happen.

Look at the capital losses sustained between 22008 and 2013 and then tell me that capital losses aren't currently possible.

I'm saying that there is a decent chance that the scheme's liabilities will increase at a faster rate than the growth rate of the assets in the fund.

Spartacus

GM

No sorry, you were exaggerating and made a false statement about investment managers' current predictions.

If you really think capital losses are possible and markets are flat then do you agree it is just as well the pension fund is not 100% funded because that would represent a higher risk to capital at the current time?

Note 22 in the Accounts says

"The asset and liability values on the FRS17 basis reflect market conditions at the year end and can be

expected to vary from year to year without prejudicing the scheme's long term ability to provide the required

benefits."

GM

Spartacus

I beg your pardon? I was "exaggerating and made a false statement about investment managers' current predictions?". I challenge you to back up that statement.

Of course capital losses are possible. They are always possible unless investing in cash only! In how many of the last 5 years has the fund made capital losses? Is it 3 out of 5? I don't have the figures to hand but I a sure you can confirm.

Your suggestion that its better that the scheme is not 100% funded in order to avoid the risk of capital losses is either ignorant or mischievous. Pension funds have to be invested in the bind and equity markets to achieve a risk-adjusted return. Capital growth is vital to grow the fund in real terms. In most 10-year periods positive returns would be expected in around 7 out of 10 years. The period since 2008 has been virtually unique in history. The fund has sustained big losses and now runs the risk of even greater capital losses if the manager chases higher capital growth.

Re your last paragraph, "can be expected" does not mean "will". And this scheme is clear evidence of that.

There are no guarantees in the investment markets. Anyone who knows anything about investments would of course know that.

Spartacus

GM

No. I repeat:

You suggested the fund value could remain at £900M this year and for five more years. That is a zero return.

Name one leading global investment house who saying this is likely?

If you cannot name one you must retract your assertion that investment experts would say this is likely. Otherwise you made a false statement and exaggeration.

Revaluation of investment values is NOT a crystalised capital loss. It is an estimate of value at a given point in time.

You obviously did not read my earlier post!

What I actually said was

"If you really think capital losses are possible and markets are flat then do you agree it is just as well the pension fund is not 100% funded because that would represent a higher risk to capital at the current time?"

Please answer that question or retract your comments inferring that losses are likely. You can't have it both ways.

GM

Spartacus

Of course it COULD. Anything is possible. Again I don't have the exact figures to hand but we both know of one who turned £930m into £896.5m in 2011, We also know of one who made even bigger losses in some years between 2007 and 2011. A zero return in those years would have been a major result! Look it up.

Please re-read my post of 5.07pm on 13th January and please look at what I actually said.

I said that the doubling of the gap between the assets and liabilities was likely based on what most investment managers are predicting, which is a trend of low returns for the next 5 years. In other words, low returns on the assets and big rises in the liabilities, ergo a bigger gap. That is exactly what has happened between 2008 and 2013.

Investment managers aren't of course commenting on the liabilities, which is obvious. I'm talking about generic global investment outlooks of multiple investment managers - low returns are forecast. I will name one which immediately springs to mind - Goldman Sachs. I will try to provide the link later.

What on earth are you talking about re unrealised investment losses? It doesn't matter whether they are realised or not. That is the VALUE of the fund. These are bonds and equities we are talking about, not long-term unquoted private equity!

You absolutely haven't got a clue.

I have already answered that question in full. You haven't understood it, but that's not surprising when you think that unrealised losses on investments don't matter.

Your last statement is sheer ignorance. Just because investment managers are generally predicting low returns doesn't mean that capital gains and capital losses on some investments aren't possible on some assets within the same timeframe. It's called volatility.

It is clear that what you know about the investment markets could be written on a grain of rice, which is actually on a par with your knowledge of pensions and balance sheets, so not entirely surprising.

And that's not an insult. You are clearly either ignorant or you are now trolling. I increasingly think its the latter, as I don't think anybody would choose to show their ignorance as openly as you are doing now. You got way out of your depth weeks ago.

Spartacus

GM

You haven't answered the questions at all.

We are not talking about the past we are talking about predictions. We are not talking about the liabilities we are talking about the investment returns.There is a difference between loss of cash and loss of value. As at 2011 the assets were 45% equities 18% alternatives 5% gilts and 13% corp bonds 11% property and 8% other.

You are expecting the fund to lose value and yet you are complaining that the scheme is only 70% funded Makes no sense.

And now instead of holding your hands up to the nonsense you have come back at me backtracking and describing volatility! Well hello?

You are funny.

GM

Spartacus

Yes I have answered the questions. It's your inability to read which is the problem.

You might be talking about the investment returns. I'm talking about the gap between the assets and liabilities. The clue is in the words, the ones that said "then that gap could double in that period". Which part of that phrase are you having difficulty with?

I don't accept that there is any difference between "loss of cash" and "loss of value". You are childishly splitting hairs for no purpose. Try negotiating fees with an investment manager on the basis that unrealised gains or losses should be ignored. Absurd.

Yes, the pension fund held rather a lot in somewhat un-pension-like investments. That's why it lost so much capital value. Reckless. Not how a pension fund ought to be invested at all. 18% in alternatives, 11% in property and 8% in "other". What the hell is "other"? The mind boggles. It vindicates everything I have been saying. A high risk strategy chasing more speculative returns. There are some very serious questions needing to be asked about the performance of the investment managers. This really is shocking.

The fund is only at 70% BECAUSE of the capital losses. If it has been invested in this way then it certainly is better that even more of it was not invested in this strategy. A bigger percentage invested in bonds/gilts is what I would expect to see in any pension fund.

This sort of portfolio is much higher volatility than should be the case with any pension fund of this nature.

I am not holding my hand up to anything. It vindicates exactly what I've been saying about the States adopting an over-risky investment strategy. No wonder they didn't want to fully adopt FRS17 to highlight what they've been doing.

Glad you think I'm funny. I don't think there is anything funny at all. I'm hacked off enough about this as a taxpayer. If I was a scheme member ad well then I'd be absolutely livid. This risky strategy, exposing the scheme to such losses, has a big impact on the funding issue.

Spartacus

GM

Yes we are talking about the investment returns. You are trying to digress to avoid my questions. It is quite obvious the reason you are getting angry is because you cannot answer these two questions.

I'll repeat them:

Question number 1

You suggested the fund value could remain at £900M this year and for five more years. That is a zero return.

You said investment experts would say this is likely.

Name one leading global investment house who saying this is likely?

Question number 2

“If you really think capital losses are possible and markets are flat then do you agree it is just as well the pension fund is not 100% funded because that would represent a higher risk to capital at the current time?”

You need to answer this question on the basis that the portfolio is aligned as you see fit. You have been highly critical of the funding ratio.

I proved you wrong about the asset allocation and so you have attacked the investment strategy. Laughable.

It seems obvious that "other" is some sort of cash or other liquid investments.

There is a VERY big difference between realised losses and revaluation losses.

It is quite clear that the funding level was the result of the contribution holiday which was deliberate but you are blaming the investment returns, again.

Public servant

GM

I get all of that. Let us accept that the new assumptions used by the actuaries along with the recent performance of the fund means that the fund is now 70% (ish) funded. Let us accept that you agree the actuaries got it wrong in the past.

Please accept that the lower paid public servants are going to be upset that they are going to have to work an extra 2-7 years longer to receive their pension because the fund that the employer and its actuaries controlled is now costing the states more than it wants. Also please understand that the employer took advantage of paying less when the fund was performing well, something the employer is retaining the right to do in the future.

This is less about affordability of the fund and more about affordability of the employers contribution guarantee. Whilst no one really doubts the situation needs reviewing, the way it has happened has caused anger and concern. The public sector workers should be valued, appreciated and included in this review, not kept in the dark and then threatened.

GM

Public Servant

Very valid points and hard to disagree.

Unfortunately though it doesn't make the scheme affordable.

Spartacus

Public Servant

"costing the states more than it wants to"

Affordability is subjective. The scheme is no less affordable than it ever was.

Dave Jones yesterday made the following comment on this forum

"the total income for the States in 1976 was 12 million pounds , last year it was about 350 million"

GM

Spartacus

Income £350m. Expenses around £380m. Deficit £30m. Pretty impressive eh?

You are making the same mistake as when you compare £900m of assets with £1.216 billion of liabilities. A big deficit.

You seem to think that just because there is income of £350m and pension scheme assets of £900m the other side of the accounts can be ignored. Ridiculous.

Spartacus

GM

No.

A deficit of £30M? wrong. £3M

Expenses of £380M? wrong. £333M

YOUR mistake.

http://www.gov.gg/CHttpHandler.ashx?id=75207&p=0

GM

Spartacus

I stand corrected. I was travelling and didn't have access to the copy of the accounts. I had included the contribution to the capital reserve (although I had got that figure slightly wrong as well).

A net deficit of £3m, which is actually made up of £346m of income and £349m of expenditure, including routine capital expenditure.

I stand by my comment though. If the States lost a net £3m it highlights the fact that the net position is more important than the income figure, and it doesn't make the scheme remotely affordable as there is nothing spare to help reduce the huge scheme deficit,

Public servant

Kevin

You are right to be concerned for the lower paid public sector workers. The latest statistics used by the actuaries say that we are going to live longer and these statistics have been used in the new valuations. Unfortunately statistics will also show that manual workers will not live as long as the top earners in the civil service and therefore less likely to enjoy longer retirement. Also no consideration is given to the ability to carry out these manual jobs at age 67 and beyond. Add to this the fact that a gold plated pension for a manual worker can equate to £450 per month for a tradesman and I share your concerns for the most vulnerable of all the groups covered by this review.

kevin

Public Servant,

Very good post, a lot of those complaining about the so called 'gold plated pension' don't stop to consider those on a low income - I don't consider a pension of £450 per month that good, particularly when I'm having to pay the thick end of £200 a month into it for the next 25 or so years!

Spartacus

Public Servant

Well said. Very valid points.

Lucky The Leprechaun

PS

I totally agree with the points you've raised and I must say they are very eloquently put.

GM

Even with my basic math so long as what comes in equals more than goes out the fund should never be in danger of being desimated. There are, and always will be both good and bad years and I feel that in the good times the employer can afford to take payment holidays (no doubt advised by BWCI to do so and who's former partner has been the "independent" chair of the proposing committee)

My question is with the whole fairness of what's being proposed and the employers eagerness to force this through. Is it fair to ask Police Officers to work an extra 12 years to get something they were promised when they gave up other careers to serve the community? Is it fair to ask the gardeners/landscapers who work so hard to keep this island paradise looking beautiful in all weathers to work an extra 7 years to get what they were promised? Is it fair to ask Fire Fighters to go into burning buildings at 60, some 5 years after they would have retired under the old scheme?

As has been said before it isn't perfect and something needs to be done but I can not see how a one size fits all scheme forced in so soon is good for anyone let alone the island.

Lets not forget without a decent public service sector we would not enjoy the safe community which we all enjoy.

Firefighter

Lucky

Just to correct one point; The proposals require your firefighters to work to 62 not 60.

Lucky the leprechaun

Firefighter you're kidding surely?

UNBELIEVABLE!!

Question - with the government on the mainland looking to increase the pension age to 70 it would not be a stretch to think that Gov.GG would do the same, would that effect the retirement age for firefighter and I'm assuming Police and the like?

Terry Langlois

Lucky - you are adopting Sparty's logic that so long as the payments in today equal the payments out today, and the payments in tomorrow equal the payments out tomorrow, then all should be rosy and it does not matter whether the scheme is 70% funded or 90% funded.

The problem with that analysis is that the payments out in the future are almost certain to be higher (in real terms) than today, so the payments in in the future will need to be higher as well. It is an inevitable spiralling cost to be met from public coffers.

Plus, on top of that, the amount of underfunding could also increase unless investment growth outstrips the rate of growth of long term liabilities - which is unlikely.

You correctly mention the importance of a decent public sector. No one is doubting that. But, looking to a date in 15 years' time (as an example), I would rather that my childrens' future tax revenues are used to provide decent services for them in that day in 15 years' time, rather than to fund the increasing pension costs for services which were provided to today's generation, with their front line services suffering as a result.

As for what is fair for current public sector staff, I fully support the idea of compensating staff in today's terms in order to redress the effect of reducing their future pension benefits. Better for today's society to bite the bullet and bear that cost, than to allow the pension liabilities to become an increasing burden for the future.

Spartacus

Terry Langlois

My logic is sound.

Government revenues will also be higher in future but you have disregarded that. The costs to be met from the public coffers will remain relative to revenue.

Terry Langlois

Sparty, I am not talking about inflation, which would be offset by increased revenue. I am ignoring all inflationary increases.

Liabilities will rise in real terms due to pensioners living longer and so there will be an increasing number of pensioners as time goes on.

Are you really expecting our children to meet the bill for the services provided to us today, even though that bill will almost certainly represent a greater proportion of their tax revenue than we are paying today?

Terry Langlois

Sparty - to say that costs WILL remain relative to revenue is simply optimistic pie in the sky nonsense. How can you base prudent financial planning on that??

None of us knows for certain what will happen to either life expectancy or future tax revenues, but I can safely say:

1. the strong odds are that life expectancy will continue to increase, thus causing an increase in liabilities in real terms

2. tax revenue could go up or go down. Is the finance industry at a peak? Possibly. Could it continue at about the same level as today? Definitely. Could it contract? Definitely.

You are basing your argument on an assumption that the growth in 2 will at least equal the growth in 1, despite there being serious reasons to doubt whether this will happen.

You are reckless.

Spartacus

Terry Langlois

The proposed solution to increased life expectancy is to offer employees the option of working for longer.

As others have mentioned this will not be appropriate for all workers but some might be happy to move sideways into a more suitable role and many might be delighted to work an extra 10 years, even if it's only part time. Some would enjoy that lifestyle and income.

I gather there is a falling birth rate which would mean fewer people available for work in the younger age range so this option for older workers is very relevant.

As I have been saying this is the only factor which has actually changed and the obvious solution is to allow people to work longer if they wish.

I would not want our children to meet the bill for the services provided to us today however if this is the reality of the situation I would not have been in favour of the States taking a holiday from contributions for more than a decade.

If that means they need to increase contributions to make up for that holiday and to build up the funding level due to increased uncertainty then so be it. That is a fundamentally fairer way of facing the challenge than trying to wriggle out of obligations to existing employees imho.

I am not basing my argument on the assumption that revenue will grow fast enough (2) to cope with the life expectancy problem (1) that is not what I have been saying at all. However it is logical that revenue and returns will keep pace with factors which affect the calculation of liabilities.

Lucky the Leprechaun

Mr Langlois,

Why would it be illogical? The coffer for pensions is just that for the pensions alone. Whether the fund is 70% or 90%, depending whom you believe, it has enough to keep it ticking over and no body was worrying when it was at 120% and gov.gg were taking pension holidays which they have yet to pay back. I believe the new scheme will be capped at a maximum increase of 5% year on year depending on RPI, I'm sure is are more than one person reading this forum who remember RPI going well into double figures.

As for your grandchildren I hope and pray the island is still a safe haven as it seems a lot of police officers are more likely to slip a disk than catch a crook and we will be burning our 62 year old fire fighters alive.

Let Me Speak Slowly...... I agree something has to be done or a realistic review of pensions is carried out by a true independent body instead of paying lip service to it.

Terry Langlois

but you cannot cap the liabilities of the scheme, they are determined by how many living pensioners there are, and what benefits they were promised many yeasr earlier.

As more members retire, and pensioners live longer, the amount of the current liabilities which need to be met in any given year will increase (in real terms and not just due to inflation). You cannot cap that.

Unless you believe that the trend of longer life will start to reverse, we need to make changes such as:

1. extend retirement age

2. reduce the benefits

3. close the system to new members and switch to a defined contribution scheme

4. reduce the number of eligible employees

Without some or all of these measures, the public bill will rise in real terms, thus affecting the level of tax needed to be claimed from the general population or affecting the ability of the States to continue to provide public services (and therefore employ people in the public sector).

Agree with your last para.

GM

Terry Langlois

You clearly understand it. Spartacus and Lucky clearly don't.

Spartacus

Why do you say that government revenues will rise in the future? Have you not noticed that the finance industry is starting to contract, that LVCR was ended in 2012 and that there are no new industries replacing them? I would say that its very likely that for the first time in many years, the next 2 or 3 years may well see flat or even negative growth of tax revenues. That's another reason why the public sector has to be trimmed.

Spartacus

GM

So your prediction of falling government tax revenues is the whole basis of your argument?

GM

Spartacus

Not al all. It's just that your assumption that tax revenues will rise is extremely questionable at present. That's vital to what the island can afford with its public sector.

Quizzed

@GM

You’re an intelligent guy and seem to understand everything about this whole pension’s thing (I’m not being sarcastic)! You also run your own company? I think? So therefore, are well versed in business needs verses employee needs?

What would be your opinion on the following bearing in mind that this is high profile and will affect people on both sides of the coin?

There is a requirement for reform on the pensions and I don’t think anyone on the forum disputes that however I don’t think the proposals are fair. NO ONE HAS BEEN FAIRLY REPRESENTED!

When employees were taken on as public sector workers, they signed an agreement that they would pay towards a pension contribution and that it is none negotiable. It is well known that the pension formed part of the remuneration package. Therefore does this not make it a pay negotiation?

I believe that if the pension proposal goes through as suggested, the States would need to review the remuneration packages of the high Civil Service employees to ensure that the calibre of these meet Guernsey’s demand for business. So although their pensions have been altered, the top brass will benefit from this in other ways costing the tax payer. However, the manual workers and the lower grade personnel will not be quite so lucky. If the above does happen, it will once again be the low paid grades that will receive the biggest impact. Even you could agree that £400 pound a month pension is in no way Gold Plated!

So as posted above by Lucky The Leprechaun, in some cases, public sector workers are finding that they will need to work an extra 7-12 years in order to receive a pension lower than expected. These pension reforms don’t go far enough to equal out the huge differences between the workers it will affect. How would you propose to deal with your workforce if you were to extend their working career by 7-12 years for fewer benefits and maintain morale?

What is your opinion on the fact that the States took the cream off the top and in doing so have placed the public sector in this predicament. Should it be the responsibility of the average public sector worker to forfeit their pay conditions to reverse a bad decision from the top brass? Spartacus has tried to come up with alternatives here but you seem quite adamant that there is only one way!

How would you feel if Ed Freestone was representing you but did not keep you informed or indeed take on board any of your thoughts on the subject? Judging by the amount of posts by you, it would not be acceptable!

GM, I don’t think it is quite as black and white as you seem to think! The States should be looking at all avenues to make up the deficit, should it be required. Yes thin out the public sector but look at this fairly taking all working conditions into account. I think Guernsey needs to get ready for this one.

Put your seat belts on Committee…….. I think there is going to be a bit of turbulence!!!!

GM

Quizzed

If what has been said about Mr Freestone's lack of communication with members is true, then yes I'd be completely hacked off. It does seem that the lower paid workers would get an unfair deal and that clearly needs to be looked at.

I've said previously that the total public sector payroll of gross remuneration packages (salaries plus pensions and other benefits) of the public sector needs to be reduced. The island is rinning an annual structural deficit and the overall cost of the public sector is too high. The workforce has grown by around 20% in the past 10 years. Why? Improved IT should be resulting in fewer clerical staff needed.

If the cost of the pension scheme doesn't get cut then it seems obvious to me that jobs would need to be cut instead. Those who lost their jobs would no longer be having contributions made on their behalf, whatever happens to the scheme.

There are many who will say that the public sector workforce should be cut and efficiencies improved, as a completely separate topic to the pension scheme.

Quizzed

Yeah I do get that GM but a few thousand people are set to lose their benefits due to a states cock up and are not being represented.

The CARE scheme is meant to be fair but the few thousand who had to agree to the terms originally are about to take a massive hit for the future. How is that at all fair.

Without being fully, and I mean fully represented, how are we expected to agree to the terms. We should be able to talk around the table.

You are a figures man and you are balancing the books from one spread sheet rather than stepping outside the box. The States need to realise that it is not the fault of the few thousand and should be seeking to maintain their side of the bargain. The contract!

You know as well as I do that millions have been squandered in the past paying contracts that remain unfinished with companies running themselves into the ground. Or giving 6% of Guernsey's money to an outsider for an opinion on how to go about making savings. (FTP).

I can understand you not answering my questions reference the staffing issues that are about to surface, i.e.

7-12 years extra

Morale and motivation

Huge individual loss differences

because you don't have those facts and will never be in a position to tell someone that they will be required to work an extra 7-12 years and that for every year they leave early they will lose 5% min for every year left early.

So I don't think it is as simple as balancing one spread sheet. It makes it simple for your argument that's all. It is going to be a much bigger balancing act than that I can assure you.

Bit of a mess if you ask me and it is only going to get worse.

GM

Quizzed

The fact remains that the scheme was excessively over-generous and is unaffordable. Yes, it's going to be a challenge to make changes. But that cannot become the reason for not changing the terms if an unaffordable scheme.

If somebody has to work an extra 7-12 years to achieve the same pension benefits, surely that merely highlights just how over-generous the current scheme is.

Spartacus

GM

Hang on you are now saying the scheme was always excessively generous? That is a completely different thing to saying it is unsustainable/unaffordable. Basic pay has never been generous, the overall package has always been commensurate with the private sector.

You said:

"If somebody has to work an extra 7-12 years to achieve the same pension benefits, surely that merely highlights just how over-generous the current scheme is."

No! it just means that life expectancy has been extended.

GM

Spartacus

Apologies - that it is what I said but isn't what I meant.

The scheme became unaffordable when the major funding problems with final salary schemes were identified from around 2006/7 onwards. It would be wrong to say that it was unaffordable before that.

As a result of it becoming unaffordable, and with the very widespread withdrawal of final salary or defined benefit schemes, it is fair to say that at that point it also became over-generous compared with the marketplace.

Luck the Leprechaun

Beep beep beep beep (reversing beepers there?)

Lets remember that the fund is only in trouble if Guernsy plc decide to shut their doors for business and have to pay its pension commitments, hence why I suggest the scare mongering and taking advantage for current global financial climates. Also a huge cause of this problem is the global finance crisis, caused mainly by greedy bankers (many of whom I suspect have noncontributory pensions, oh the irony)

JJ Lehto

Luck the Leprechaun

Or the fund could be in big trouble if the US, UK and EU put a stop to the various activities of our finance industry, causing a large drop in taxation revenue without a large drop in the liabilities of the pension scheme.

Spartacus

GM

My BS radar is flashing again.

If the public sector remuneration was over generous compared with the marketplace then every vacancy would have hundreds of applicants trying to move from the private sector.

Your claim doesn't stack up.

The consequence of changing the pension scheme would be that public sector salaries would rise to redress the market balance.

GM

Luck the Leprochaun

No, not reversing at all, I made an error in an earlier post and corrected it. Some posters feel secure enough to do that. I know one who wouldn't dream of it.

And no, it isn't ONLY in trouble if it has to be paid out now. That's sheer ignorance. That's Spartacus-talk. In fact, I suspect that you are Spartacus in disguise as I can't imagine that there are too many people who are so stupid as to think that.

And what's a non-contributory scheme got to do with anything? The issue is whether or not its final salary/defined benefits. And no, I don't have either. I fund my own pension scheme entirely out of my own earnings.

Spartacus

GM

And some posters feel secure enough not to insult others.

http://simple.wikipedia.org/wiki/Insult

kevin

GM,

'I fund my own pension scheme entirely out of my own earnings'

Yes, you do, however you are in the fortunate position of being able to afford to do so.

Many of the States manual workers and lower paid employees are not in that position.

When public sector workers signed up to work for the States an important part of the overall package was the pension scheme as it currently stands, in fact this is the very reason why a lot of people accepted the lesser renumeration and perks on offer in comparison to the private sector in years past.

It is therefore hardly surprising that the vast majority of States employees are not exactly enthusiastic about the changes.

GM

Spartacus

I think your BS radar is pointing in the wrong direction.

Once again, please read what I wrote. How many times do you have to be told?

I said that the pension scheme was over-generous. I did NOT say that public sector remuneration was over-generous. There is quite a difference.

One of these says you will learn to understand the meaning of the written words.

I'm beginning to wonder whether English is even your first language.

So, public sector salaries go right up, the States still can't afford the higher public sector payroll costs - extra redundancies inevitable.

GM

Spartacus

If you want to continue to behave in a childish manner, having been proved so spectacularly wrong, then I'm sure that insults will be inevitable.

Spartacus

GM

Re your comment:

"I said that the pension scheme was over-generous. I did NOT say that public sector remuneration was over-generous. There is quite a difference."

You cannot separate the pension from the overall remuneration when making claims about generosity. You have to look at the whole package otherwise it is out of context.

GM

Kevin

Yes, I am fortunate and I do appreciate that. I was merely pointing that out for the benefit of high earners within the public sector.

Low income earners of course need assistance, but its still got to affordable overall. Its clear that the manner in which the lower income earners are looked after in the proposed new scheme is going to be crucial.

GM

Spartacus

Well - I was separating the two things in my comments. Just because you think they can't be separated doesn't change what I wrote!

Try actually reading what people actually wrote. Its really not that difficult if you put your mind to it.

Spartacus

GM

I did read what you wrote and understood it correctly. The point I made was that what you wrote was inaccurate because it is out of context.

GM

Spartacus

As you are clearly unable to translate from standard English into the language that you speak on Planet Spartacus, there's nothing I can do to solve your problem.

Quizzed

Hi GM

Thanks for your reply

Forgetting the slip of the tongue about generosity can you clarify your Much, much much earlier posts last year.

You were saying that in your opinion the Care scheme doesn't go far enough!

Were you implying that all of the Public Sector were still being generously remunerated or saying that it would be right for the high earners but more consideration should be placed on the lower manual workers? its just that you sounded quite adamant that we were all still really lucky to be getting the new proposal.

I still believe it it not as black and white as everyone thinks.

GM

Quizzed

No - my reason for saying that was far more straightforward. The CARE proposals still constitute a defined benefits scheme as opposed to a defined contributions scheme, which in my view would be far more appropriate.

JJ

Can someone please state where they are getting the figures that state the pension fund has just been sent downriver without paddles, I have read a lot (not all) of the stuff posted in here and it states that in reality the income has exceeded the expenditure year on year for the past however many years, the £900m sat in reserve is still there not being touched (again we hope or is this the real reason) in fact its getting topped up annually, some factual evidence would be nice rather than hear say (apologies to those who might know) show us the money

GM

JJ

The States annual audited accounts and actuarial reports are all published on the gov.gg website.

The annual contributions have typically narrowly exceeded the pensions paid out each year, but the assets of the fund have in several years incurred substantial capital losses, which is why the fund hasn't grown while tge liabilities have been rising. For example, in 2011 contributions were £29m, pensions paid out were £27m, but the fund lost £36m of its value on the markets, resulting in a net fall of £34m. In some other years since 2007 the capital losses were considerably larger.

The fact is that the £900m is exposed to movements in the investment markets, while the fund liabilities are exposed to projections based on longevity, number of employees, pensions based on future salary rises etc. If the assets don't keep pace with the liabilities, even if the target is o only cover 90% of those liabilities, then the funding deficit just gets bigger and bigger.

The fund is not being topped up annually. The annual contributions are only just exceeding the annual pensions to be paid. The States are already making an annual budget deficit, so there's simply nothing left to make additional contributions.

Spartacus

"The annual contributions are only just exceeding the annual pensions to be paid" = topped up annually.

GM

Spartacus

Dear oh dear.

So how are future pensions being funded if all current contributions are being used to pay current pensions? Answer - they are not! Contributions in less pensions out equals £2m. Less capital loss of £36m equals minus £34m. Nothing at all to help build the fund to meet future pensions, so the fund is being depleted further. Even without capital losses the annual net balance of £2m doesn't even cover a tiny element of inflation.

We've been here many times before. It goes in one ear and out the other, which is hardly surprising as there is clearly nothing in between. That's a Ponzi scheme.

Spartacus

GM

The current contribution rate is 14.1%. That represents 14.1% of CURRENT employees wages not the pensioners.

You keep going on about the capital losses. The fund is a long term investment not short term.

The fund real return target is RPI+4%.

I can choose to listen to whomever I wish.

Spartacus

GM

Define ponzi scheme in your own words.

GM

Spartacus

What on earth are you talking about? Once again its like arguing with a petulant 5-year-old with the IQ of an amoeba.

OF COURSE I WORRY ABOUT THE CAPITAL LOSSES - THE CAPITAL FUND IS WHAT'S SUPPOSED TO BE INVESTED TO FUND THE PENSIONS OF THE NEXT WAVE OF PENSIONERS - THOSE WORKING TODAY AND RETIRING IN THE FUTURE! THE FUND IS FALLING WELL SHORT OF ITS FUNDING TARGETS - IT IS IN A MESS!

It would be easier to teach a monkey to talk Mandarin than to get you to undertand basic concepts like this.

I despair.

GM

In the most simplistic terms, although I should probably draw a diagram as you are evidently not intelligent enough to understand the written word:

Paying returns (pensions) to existing investors (pensioners) out of new money received from new investors (new contributions), so that the fund soon runs out of enough money to be able to pay the future returns (pensions) due to the existing and new investors (current and future pensioners), who naively believe that the fund is being invested to produce their future returns (pensions).

Clear enough for you?

Spartacus

GM

Re the investment returns, the fund has been cruising in the Caribbean for a couple of decades and you are now wetting your pants after a couple of storms in the Atlantic on the way to the Indian ocean.

Re Ponzi scheme. The pensioners are paid from their vested share of the £900M surely? If there was no new money the existing pensioners would still get paid and in the unlikely event the liabilities eventually exceeded the assets (which is a £900M figure which WILL grow) then the shortfall would be covered by the employer (taxpayer) as part of their pre agreed deferred salary negotiation. I know you don't like this situation but this is NOT a ponzi scheme.

What is being proposed will turn it into a ponzi scheme. By changing the terms the States would be saying to investors (employees) "no sorry there's no more money for the returns we promised so the deal's off". That's what Madoff did. States of Guernsey should stick to the deal. The money to meet any shortfall is there in the public coffers. If there is any chance a problem might materialise down the line they should be hiking up the contributions NOW but no one has recommended that.

GM

Spartacus

Garbage. You clearly don't understand and have no appetite to even try to understand.

You say: "In the unlikely event the liabilities eventually exceeded the assets (which is a £900M figure which WILL grow) then the shortfall would be covered by the employer (taxpayer) as part of their pre agreed deferred salary negotiation".

What do you mean "In the unlikely event the liabilities eventually exceeded the assets...", are you serious? The liabilities ALREADY exceed the assets by well over £300m, as you well know.

The States of Guernsey as employer will not be able to afford to cover the shortfall.

You are now just trolling. Grow up.

Spartacus

GM

The liabilities do not have to be paid NOW. That's ridiculous. They will get paid out over time and the fund is expected to grow in the long term.

You think you can bully people so they will agree with you but you can't bully me. You are insulting me again because you know that what I said in my previous post is spot on and you have no answer to it.

GM

Spartacus

What are you talking about?

When did I say or even infer that the liabilities were payable now? You are clearly too thick to realise that the stated liabilities figure as at today is the present value of the existing accrued and projected future obligations of the employer.

The fund's future growth will be required to meet the additional future liabilities which will accrue, so won't be available to meet the current shortfall, yet the fund is already over £300m short of being able to fund the existing accrued liabilities. So if future annual contributions are used to pay future annual pensions, how is the current £300m-plus shortfall ever going to be made up? Its impossible. The fund WILL run out of money.

Your hilarious and seriously deluded comment that your previous post was "spot on" sums you up.

Spartacus

GM

You said the liabilities already exceed the assets. But you are referring to contingent liabilities which are not due and payable yet.

I know they are accrued and PROJECTED obligations. I know it is the present valuation of those projected future obligations. You are mistaking me for someone who is thick - YOUR MISTAKE!

The other thing you are mistaking is that they are contingent liabilities payable to the survivor members.

The fund’s future growth will not be required to meet the additional future liabilities as contributions to current workers will continue to be paid too. Are you too stupid to realise that?

The contributions which are being paid NOW as a percentage of workers salaries will be in the fund and returned to those same workers in pensions.

No wonder you think the fund will run out of money. No wonder you are confused.

Jimbo

Spartacus

I am with GM on this one. Your claims just don't stack up. At the moment it is clear that the annual contributions are being used to pay the annual pensions. GM's detailed breakdown yesterday of the annual receipts and payments was pretty clear to me. So if the money comes in and goes out again, how can you say that the new contributions will be in the fund and used to pay future pensions? It can't be the case because those contributions have already been used. There is nothing left to go into the fund each year to build the fund to pay the future pensions.

If say £29m comes in and £27m goes out in a year, ignoring capital gains or losses on the fund, then there can only be £2m going into the fund towards the payment of future pensions. And according to GM's figures which come from the States annual audited accounts, in 4 out of the last 5 years there hasn't even been a net annual balance to go into the fund. That does not reconcile at all with what you are saying.

Spartacus

Jimbo

You're entitled to your opinion, however it does seem as though you are relying on what GM is telling you. Big mistake, sorry.

If £29m comes in and £27m goes out in a year, ignoring capital gains or losses on the fund, then there is £29m going into the fund towards the payment of future pensions not £2M. The £27M going out was paid into the fund during the working life of those employees. How do you think a fund of £900M has managed to accumulate if only £2M per year has been going into the scheme?

Jimbo I did not bother to challenge GM's figures because I have done so before many times and you may have noticed I have tolerated a considerable amount of personal abuse, due to my efforts to try to keep the facts straight.

Anyway for your benefit I will repeat myself again at the risk of personal abuse again.

So, you can see from GM figures that the incomings rose dramatically from 2010. This was no accident, the deficit in the previous years was deliberate.

The reason why the contributions rose significantly is because the employer contribution RATE was strategically increased with effect from 2010.

Employer contributions -

2007 £16,027,000 rate = 7.85%

2008 £16,641,000 rate = 7.85%

2009 £17,821,000 rate = 7.85%

2010 £25,910,000 rate = 14.1%

2011 £27,450,000 rate = 14.1%

The previous low rate was due to a decision to eliminate a substantial funding SURPLUS that had built up in the fund and this was explained in the billet which incorporated the actuarial report of 2007. The billet is here:

http://www.gov.gg/CHttpHandler.ashx?id=3864&p=0

It says on page 1300 ” Whilst this recommended employer contribution rate is a substantial increase on the current rate, it is similar to the rate paid during the 1980′s and early 1990′s. During the mid 1990s the Superannuation fund had a substantial surplus primarily due to a very strong investment performance and, following the Actuaries advice, the employer contributions were set at a level which eliminated the surplus over a period of time.”

It is annoying for GM when I point out that his portrayal of the facts are grossly misleading and this leads to his/her childish outbursts of personal insults. It is extremely tiresome.

Jimbo

Spartacus

Sorry but your explanation is flawed.

Surely it doesn't matter whether the £27m outgoings come out of the new contributions or out of the existing fund. There is only one overall pot of money. In 4 out of 5 years the outgoings exceeded the contributions, and only in 2011 after contributions were raised did the contributions exceed the outgoings. Therefore there has been no net new monies adding to the fund over the past 5 years which means that the fund has decreased based on the annual ins and outs.

That means,surely, that the fund can only grow if there is capital growth. As GM's figures show, this is extremely volatile and over 5 years the fund has only grown net by just over 1% per annum. That's not even keeping touch with inflation. But its clear that liabilities are rising at a much faster rate than that.

The £900m fund surely got there through many years of capital growth throughout the 80s, 90s and early part of this decade, when high returns were common. It looks like the scheme was ok up until 2008 when the world's economy came tumbling down. All the problems with the scheme appear to have occurred since then.

Without the strong capital growth seen in the past, I cannot see how the scheme is remotely sustainable, so I just don't buy your argument at all.

Spartacus

Jimbo

No problem, we will just have to agree to disagree.

You seem to have missed the point that the States intended to shrink the fund. They slashed the contribution rate for over ten years to bring the total value down to their 90% funding target.

In spite of this, and in spite of the worse financial crisis in recent history, the fund still managed to grow by £49.683M.

The funding is controlled by the States it is not demand based. They decide on the contribution rate under the actuaries' advice.

You should not be using GM's figures or interpretation as a guide of investment performance. BIG mistake.

To calculate performance you would need to factor in all the additions and withdrawals over the time period taking into account the timing of all payments. All transactions need to be taken into the equation because, for example a withdrawal from the fund is a completely different thing than a loss on revaluation of investments.

You cannot claim as GM is doing, that a withdrawal of cash represents poor performance of the investments. That is entirely false. It is a very complex task to analyse investment performance. You can't just look at what the fund was in 2007 and in 2011 and say the difference between the two numbers is the performance. That is absurd.

The actuarial valuation is carried out every 3 years. In 2010 Charles Parkinson explained that

Actual returns were:

• 2008 – (19.32%)

• 2009 – 16.46%

• 2010 – 12.69%

As you can see and as you would expect the fund took a big hit in 2008. You have said this is when problems surfaced. Of course that's right, but the negative impact was a small dent in comparison to the massive gains of the 90s. In any case, the portfolio structure has since been adjusted and the return target is now RPI+ 4%. The funding target is 90% and is on track.

The 2010 actuarial valuation is here. I would encourage anyone to look at it themselves and read what is actually said by the experts.

http://www.gov.gg/CHttpHandler.ashx?id=3953&p=0

The fund can grow due to two reasons, contributions exceeding outgoings (controllable) and capital growth (controllable to an extent but with risks).

Liabilities are not rising at the rate which has been implied. Again there are specific reasons for the increases, it is wrong to assume the liabilities are snowballing at an alarming rate as GM would have you believe.

I disagree with your assessment that the scheme is unsustainable without strong capital growth. On the contrary, I suspect that strong capital growth would negate the requirement for the States to continue funding the scheme at the current contribution rate of 14.1%. The actuaries and expert analysts have determined that 14.1% is currently adequate to sustain the scheme and this advice is clearly stated in the actuarial valuation.

Jimbo

Spartacus

Sorry but I don't buy any of that. Your logic is flawed on multiple fronts but I have no desire to get embroiled in a debate with you like GM did. He countered all of those arguments, very successfully too, and you are simply trying to regurgitate them to me. I'm afraid that wont work.

I can see though why GM got so frustrated with your arguments. I really don't think you understand the situation correctly at all. I don't think anybody else yet has remotely agreed with your views.

We will have to agree to disagree.

Spartacus

Jimbo

Yep now I am convinced, you are GM using a different name/gravatar.

Jimbo

Spartacus

Sorry to disappoint you. I have no idea who GM is, but I happen to agree with him. I don't like his style of debate nor do I like yours, but I agree with his side of the argument.

JJ

is it also fair to say that in some years the fund might of made a return, only speculating as tbh i dont read what the states publish, I think the issue for many is seeing the size of the pot and then trying to imagine it could run out

GM

JJ

Yes - the fund has made good returns in some years. The period though since 2008 has been extremely turbulent, with more volatility of performance and with more negative than positive years. Now we are in a period of sustained low interest rates and not yet pulling out of the global recession, we are unlikely to see many big years of performance, so that asset/liability gap will get bigger.

I will try to dig out the year-by-year pensions performance for the past 5 years or so.

GM

JJ

2007

Incomings £29.209m

Outgoings £31.635m

Deficit -£2.426m

Returns on investments +£51.980

Net increase of fund +£48.664m

2008

Incomings £30.856m

Outgoings £36.281m

Deficit -£5.425m

Returns on investments -£176.651m

Net decrease of fund -£182.076m

2009

Incomings £34.173m

Outgoings £37.689m

Deficit -£2.976m

Returns on investments +£117.168m

Net increase of fund +£114.192m

2010

Incomings £41.026m

Outgoings £42.092m

Deficit -£1.066m

Returns on investments +£102.491m

Net increase of fund +£101.426m

2011

Incomings £45.286m

Outgoings £42.692m

Surplus +£2.594m

Returns on investments -£36.036m

Net decrease of fund -£33.442m

SUMMARY

In 4 out of the 5 years, the fund did not manage to "wash its face" in terms of incomings v outgoings. The cumulative annual deficits come to £9.269m. So, not only has nothing been put away to help fund future pensions, the fund has actually been eaten into to the tune of £9.269m to meet its annual running costs.

In terms of investment performance, the fund has had 3 positive years and 2 negative years. The positive years total £271.639m, and the negative years total £212.687m, giving a net gain of £58,952m. Factor in the need to dip into by £9.269m, and that leaves a net increase of £49.683m in the fund during the 5-year period since 2007.

Based on an opening fund value of £846.884 on 1st January 2007, and a closing fund value of £896.527m at at 31st December 2011, the fund rose by just 5.86% in that 5-year period, which is an average of just under 1.2% per annum.

Unfortunately, the liabilities of the scheme rose at a far higher rate than 1.2% per annum, which is why the fund's actuarially-calculated liabilities as at 31st December 2011 of £1,216 billion, meaning that the fund had a deficit of nearly £320m as at 31st December 2011.

Based on these figures, then in order to meet the States' funding target of around 90% (actually 90% of 2007 liabilities and 100% of subsequent post-2007 liabilities, so in fact the target should be slightly higher than 90% of the current projected liabilities, then the fund would have needed to grow by 29.23% in that same 5-year period, or at an average of just under 6% per annum. That shortfall in performance of £197.873m (an average of around 4.8% per annum) is a massive gulf to now try to make up through future investment performance, so its clear that to get anywhere close to achieving the 90% funding target, the States will have to pile in a lot of extra funding.

To put it into perspective, a shortfall at the end of 2011 of £197.873 (based on the 90% target)

equates to an annual contribution shortfall of £39.575m for 5 years. In 2011 the States' own share of the contributions for that year was £27.45M. That figure would have needed to be over £67m for that year alone.

Its totally unaffordable from a contributions angle, and so is totally reliant on gambling massively on exceptional investment performance. Well, pension schemes should NEVER be reliant on exceptional investment performance, as chasing greater returns also increases the risk of capital losses. In any event, the market outlook for the next 5 years looks being nothing like "exceptional".

Terry Langlois

And to add to GM's post, we have a demographic timebomb ahead of us in that the public sector has grown in past decade or so, and so the number of pensioners will further increase as that larger workforce retires.

So if we are simply relying on the contributions covering the current liabilities, and not worrying about the size of the fund propping the whole thing up, then we are going to be faced with much higher contributions from the public coffers in the future.

GM

Terry

You've got it.

Its only Spartacus who is incapable of understanding such basic principles.

Personally I don't think anybody could be that dense after its been explained so often to them. It can only be unwillingness to accept or admit it for reasons best known to Spartacus.

Spartacus

GM

I understand perfectly. Just because I don't suck up your propaganda doesn't mean I'm dense, quite the opposite. People are living longer so the overall cost of pensions is higher than it used to be. So what? That was predictable from the year dot. You and Terry are making out as if something has changed but nothing has.

Do us all a favour and leave the analysis to the actuaries. They know what they are doing you are just a right wing alarmist.

Terry Langlois

Sparty – what a bizarre response to say that there is no problem because "nothing has changed", but this is a line which you have used several times already in this debate.

Whether anything has changed or not is completely irrelevant.

The Leaning Tower of Pisa began leaning many, many years ago. Nothing in particular had changed but it would probably have fallen over by now if had been left alone. Having you standing on the sidelines saying “there’s nothing to worry about everyone, it has been gradually tipping over for years and nothing has changed” would not have stopped it from reaching the critical point and collapsing. Thankfully, people with more vision than you decided that it was time to do something, and so they undertook a major engineering project to shore up its foundations, tilt it upright a bit and stop it leaning any more. And now the tower should remain there to provide pleasure and wonder to many more generations.

"right wing alarmist" - if only you knew how wrong you are! Politics has nothing to do with this, it is simple and prudent financial management.

Spartacus

Terry Langlois

I would not have said that about the leaning tower of Pisa! Not a good analogy. The eiffel tower sways back and forth with the wind but is constructionally sound.

This is absolutely political.

The sole most important thing is doing what is RIGHT for Guernsey's public sector workers.

GM

Spartacus

Oh yes, let's do what's right for the public sector workers, regardless of whether or not the island can afford it. Why don't we just put income tax up to 30% or introduce GST so that everybody can feel so good about themselves for having kept the unaffordable scheme going?

No - let's do something really simple. Let's have a public sector pension scheme which is affordable and reasonable.

Spartacus

GM

Define affordable.

We should always do what's RIGHT. Justice must prevail on this island.

bcb

Spartacus i think part of the problem from your perspective is that you just accecpt the analysis of the actuaries and will argue they are right but to do so you would have to have the knowledge and experience yourself to make that judgement? Are you suggesting they can`t possibly be wrong or your understanding of it could be wrong? i`m not sure which.. GM and Terry i believe work in the industry and i think can see the bigger picture and all the finer detail within complex situations such as this. We should not just leave ANYTHING to the so called experts and not debate or challenge there findings and its good that there are those who will debate these issues.

Take a look around you to see the mess the world is in because of the "EXPERTS" and all their financial wisdom. Having said that there are many in the financial word who are honest enough to tell us like it is and expose all the bull from those who would have us believe everything is just fine until its to late .

GM

Spartacus

Sorry, that doesn't wash with me. If you "understand perfectly" then you wouldn't be making such ridiculous comments, which suggests completely the opposite. I stick with "dense", and I'm being polite.

What's changed is that FRS17 more accurately values the scheme's liabilities than the basis on which it was valued previously. That has become the most appropriate measure of those liabilities. And we know that this method results in a figure which is much, much, higher than was previously being benchmarked against. And its a gaping hole.

The actuaries HAVE analysed the scheme's liabilities. It is THEY who came up with the £1.216 billion liabilities figure which YOU want to ignore and pretend that it doesn't exist.

And no, I'm not a "rightwing alarmist" at all. I'm merely a taxpayer. Thank God I'm not also a scheme member as then I'd be even more worried.

Spartacus - not a SINGLE person on these threads has come out and supported your stance on this matter. Whereas I think 6 posters have sides with my stance. I know precisely what that tells me.

Spartacus

GM

Do you really think that it matters to me that half a dozen numpties hang on your every word and believe your drivel?

There are several people who have challenged your perspective and you have been dismissive, rude and derogatory to them. And we all know why.

The clever ones are keeping quite and waiting to see what is revealed when the answers to the review are published and the debate really starts.

The pension scheme IS sustainable but the previous circumstances which allowed it to continue as a mechanism for reduced overall staffing costs have changed. Will the recommendations for reform solve this problem? Absolutely not.

GM

Spartacus

There isn't a single other poster who has been challenging the technical arguments over the liabilities and affordability of the scheme, which has been the sole basis of your argument.

There are posters who (understandably) don't like the effect of the existing benefits being taken away from there. There is a huge difference. Their arguments are based on logic. Your arguments are based on nothing remotely coherent. I don't believe I have been dismissive, rude or derogatory to them as well. Strangely enough, it's only you who seems to have suffered. I can't think why.

You clearly need a very sheltered life on Planet Spartacus. It must be fascinating to live in a place so removed from reality, logic and common sense.

Oh yes, it's going to be a fascinating debate when it happens. Fasten your seatbelt.

bcb

The clever ones are keeping quiet? haha does that rule you out sparty? and calling others numpties because they share the view (or maybe i should say believe) of two people who know how the system works is a bit much dont you think?. After all its only an opinion?.

Spartacus

bcb :-)

There are a few definitions of numpty. I believe a numpty is someone who doesn't think for himself and who believes everything someone else tells him.

I'm not sure whether you are a numpty maybe you just don't know what to believe.

I'm not clever enough to avoid being called an idiot 25 different ways but I'm clever enough to understand that the reason I am being insulted is because I might be right.

Spartacus

GM

Re technical argument. Define affordable.

GM

Spartacus

You might be right. Unfortunately you are not.

The reason you are insulted is because you ask for it.

GM

Spartacus

Look it up in that dictionary of yours.

Spartacus

GM

I ask for it? You are such a troll.

Clearly you can't define affordable.

GM

Spartacus

Just grow up.

Quizzed

Hi GM

You can't spout numbers of Sparty supporters for two main reasons.

1 people are reviewing the proposal and discussing the affects that they bring, in order that they can then satisfy number 2

2 once the proposals have been reviewed and people understand the affects, there will be further discussions with the high ups.

I should think that most of those are behind closed doors just like the pension review!

Give it time GM. you'll see more Sparty supporters I'm sure.

No public sector worker is going to air their (real) views on this forum when there are discussions to be had with the people that make the real differences.

GM

Quizzed

As I've previously stated, I'm not interested in what the public sector workers think. That's not intended to be disrespectful in any way, Its just human nature that they will be 100% against any changes, which is totally understandable. It's like asking everyone whether they would like to pay more tax.

But you miss the point. This debate isn't about whether its right to change the scheme.

It's about whether to continue the scheme will sink the island as its unaffordable.

It's about whether or not the fact that the scheme is currently in deficit to the tune of £380m is a problem for the island, given that the States aim for a 90% funding target but which has fallen some £200m short of that in just 5 years.

It's about whether taxpayers will happily see taxpayer-funded contributions needing to be raised massively to fund the scheme, almost certainly resulting in a GST being introduced just to fund it.

There will be at least 4,500 public sector workers in favour of retaining it. There are likely to be 20,000-odd taxpayers against it.

It will be "interesting" to say the least.

Spartacus

"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." Bethan Haines. Chief accountant. Page 8 of the 2011 States of Guernsey accounts.

http://www.gov.gg/CHttpHandler.ashx?id=75207&p=0

I agree with Rodney Benjamin that the States would need to present a case for change and that it would need to be amicable. He knows his stuff.

http://www.thisisguernsey.com/news/2012/01/24/pensions-issue-‘can-only-have-amicable-so

No way will the States proceed without agreement of the workers.

GM

Unfortunately it was 91.6% of an inappropriate and outdated liabilities figure. The actuaries themselves stated in their actuarial valuation that the projected liabilities figure was actually £1.216 billion, and £900m is less than 75% of that figure.

To hit the 90% target of the correct liabilities figure, the fund would need to have stood at £1.094 billion, so it was nearly £200m short of that target figure at that date.

Ignoring the correct liabilities figure completely masks the problem. FRS17 was introduced for a reason, and the States has negligently chosen to ignore it. As a result, a massive and burgeoning funding problem has been simply swept under the carpet where it will continue to grow, and will eventually bankrupt Guernsey, unless it is confronted and dealt with.

And by the way, did the same Beth Haines not state on the front page of the GP that the liabilities of the scheme had risen by £200m during the year? Why would she have said that, I wonder?

Spartacus

GM

Who should decide what is the "correct" liabilities figure? The States publishes both figures so what is the problem?

The States have not ignored FRS17 at all they have included it in the notes. They could adopt FRS17 in full and put the liabilities on the balance sheet but what difference would it make?

There is no funding problem, they have only recently completed the long term task of addressing the overfunding problem.

Which year did the estimated value of the scheme's liabilities rise by £200M? Was it 2008? That would make sense as I gather that was the year that the States switched to Incorporate FRS17. Therefore the liabilities did not "rise" they were just previously calculated under different assumptions. Hope that answers your question.

GM

Spartacus

The States of Guernsey (T&R) makes that decision. Yes, they published the £1,216 billion liabiliies figure, but they elected not to change their funding target from the old basis to the FRS17 basis, presumably because it would merely highlight the size of the whole.

I cannot find the electronic version of Beth Haines' comment but I recall the printed newspaper version. I am sure that it was later than 2008 though. I believe it was in 2010 or 2011. I may be wrong but I think Neil Forman may have previously provided the link to it, but my online search efforts have not found it.

I have yet to hear any coherent comment from anybody as to why the projected liabilities figure under FRS17 has been conveniently disregarded for the purposes of the funding target. Sorry, I know your explanation and I don't buy it at all. The explanatory notes re FRS17 in the 2010 and 2011 audited States accounts merely state where and when FRS17 has been adopted. It was NOT adopted in full. The big question is of course why.

Spartacus

GM

Million not billion!

kevin

GM,

What happened to no more discussions on pensions with your old friend Spartacus?

Gave in to temptation did you?

GM

Spartacus

Well spotted.

I did actually mean billion, but the comma was meant to be a decimal point, so £1.216 billion.

It makes quite a big difference, I grant you that!

Mind you, give it another 20 years and those liabilities will have rocketed ....:)

Beercan

Spartacus, it's not.

Doing what's right for the taxpayer takes precedence.

Not being unfair to public sector staff comes second

kevin

Public sector staff are also taxpayers which some people seem to forget.

Whatever is decided with the pension public sector staff will be paying both a contribution to their employer and a contribution as a taxpayer.

GM

Kevin

Exactly.

Imagine then paying for it twice, once as a taxpayer and once as an employee making contributions from your salary, and then the fund runs out of money before you start to draw your pension.

Spartacus

It won't run out of money. They will stick to the funding target and raise contributions if they have to.

The public sector are being asked to take a massive reduction in their remuneration. Where is the evidence to justify this? Guernsey is not broke.

GM

Spartacus

If left as it is, then it would run out of money.

If you think that the Guernsey coffers will come up with an extra £20m, £30m or even more per annum to fund this scheme as required, then you are insane.

Spartacus

GM

No it won't.

Where did you get £20-£30M from? More numbers you have just plucked from no where.

kevin

GM,

I would rather take a hit on my final pension whilst continuing with my current 6.5% contribution from my salary and keeping my existing retirement age.

What I (and I think most other) public sector employees take exception to is being asked to pay more and work longer to receive a considerably reduced pension.

There has to be a better answer than the one that is being proposed.

GM

Kevin

For many reasons the CARE scheme proposals just don't seem to be the solution.

I'd rather see pension contributions being made into a defined contributions scheme which then enables the employee to have far more flexibility. This does, however, mean that it would be at the employee's risk if he/she outlived their fund. But that's no different from the situation faced by the rest of us!

Spartacus

GM

Rodney Benjamin, one of Guernsey's top pension experts, thinks defined contribution schemes are flawed. He said "chickens would come home to roost" for those schemes.

Many private sector employees have been sold down the river by agreeing to change to defined contribution schemes. Most people's personal pensions are enormously underfunded. What will they do when there is too much life left at the end of their money?

The States should not make the same mistake with their own employees.

Jimbo

Spartacus

Doesn't that just make us a nanny state? Surely its the individual's right to receive pension contributions, and his obligation to use it appropriately and supplement it if necessary?

There are many cases in the UK where employees have gone bust because of their defined benefit scheme obligations, leaving the employees without a pension at all. They were far worse off than if they had a defined contributions scheme!

Spartacus

Jimbo

Yes I agree with the point that it is nannying however I personally believe that when it comes to pensions it is justifiable, especially for lower earners.

We should be doing everything we can to reduce the burden on Social security in future years. That's where the REAL time bomb will occur.

I understand what happened in the private sector, the change to accounting standard FRS17 was highly controversial. Don't you think that firms that went under would have done so anyway?

I'm just pointing out what Rodney Benjamin has said about defined contribution schemes. I think he is right.

Jimbo

Spartacus

Interesting that you agree about my "nanny state" point. I don't think we can afford to fund a nanny state. Why should we wrap anybody in cotton wool? That just encourages people to waste money rather than spend, knowing that the state will bail them out. Totally unfair on those who take responsibility for their own actions.

No I don't necessarily think many of those companies would have gone under anyway. But I guess we will never know.

I don't believe we know what point Rodney Bemjamin was alluding to re defined contribution schemes as he didn't explain his comment. I suspect that around 95% of employees have defined contribution schemes so just about everyone is in the same boat.

Spartacus

Jimbo

I don't think we want a nanny state but with the demographic time bomb plus the vulnerable position most people now face due to private defined contribution schemes I don't think its a situation the government can ignore. I understand what Rodney Benjamin said.

The State WILL bail out those who have been unable to save adequately and SSD is already facing a demographic time bomb. The Public sector pension proposals would add to that problem. Better to have a mechanism which saves adequately during the employees' working lives.

Jimbo, forgive me if I am mistaken but you have suddenly popped up from nowhere, and I suspect you actually are GM under a different guise.

If you are new to the debate I suggest you read through the pension threads since last November. It is very irritating for me and others to be repeating the same evidence time and again.

Jimbo

Spartacus

I've been around for a while. I started posting on TIG a few weeks before Xmas. It's easy enough for you to check that. You don't need to repeat anything that you have previously stated for my benefit. Repeating it again won't change my interpretation of it. I maintain that I think its you who has got it very wrong.

I haven't seen any expansion of Rodney Benjamin's comments anywhere, so I'm not sure how you know what he was alluding to.

Spartacus

Jimbo/GM

GM it is obvious that this is you.

It is also obvious what Rodney Benjamin was alluding to, there is no ambiguity whatsoever in what he said in the press.

This is a debating forum,who cares who is right or wrong? It’s just opinions being aired and stimulation of thoughts. It's not as if either of us have any decision making power or influence.

Our opinions differ and there is nothing new to add so we must agree to disagree and leave it there, again.

Jimbo

Spartacus

I can assure you that I'm not GM, but its up to you whether you believe me or not. I can't control what you believe.

Rodney Benjamin merely said that the chickens would come home to roost in relation to defined contributions schemes. That's all he said, so how could you possibly know what he meant? You seem to be reading more into that than its possible to "know". I'm intrigued.

GM

Spartacus

Sorry to disappoint you but I'm not also "Jimbo". There are obviously others out there who believe you are completely wrong.

Spartacus

GM

Well done Einstein. I would add to that the genius insight that others out there believe YOU are completely wrong too.

Some agree with BWCI, others agree with you, I'm in the former camp.

GM

Spartacus

Well, the mythical ones who apparently agree with you have not shown their faces on this blog yet! That speaks volumes.

Spartacus

GM

There are many who also agree with BWCI's advice, however it is inevitable that in some cases your abusive attitude towards those who do not agree with you has undermined free speech. Congratulations.

GM

Spartacus

Don't be so ridiculous. There are delicate little flowers out there who are afraid to anonymously post in support of your drivel? Really?

Spartacus

GM

I suspect so, you are very spiteful. Most human beings do not wish to be personally abused, not just delicate flowers. If this is the way you behave to all people who disagree with you, you seriously ought to see a doctor to find out what the underlying reason is for this behaviour. You may well feel I represent a threat to your world view but it's anti social and unjustifiable to repeatedly attack a person. You must be deeply insecure to need to do this. Get help.

I suspect that around 4,000 States workers do not have any support for you either. Many have posted in opposition to you over the last 3 months.

I support the workers getting a fair deal. The States need to put forward an evidence based case for change. The workers need to agree to it and the solution MUST be amicable. I wholeheartedly agree with Rodney Benjamin on this.

The full details of the review findings have not been published yet. In the meantime your flawed interpretation of the accounting records does not constitute evidence that the scheme is unsustainable.

The life expectancy issue could be addressed but the solution needs to be fair. Living longer means it will cost more to sustain each human being during retirement, the proposed solution to this problem is to give each person less money. Doesn't make sense.

GM

Spartacus

Strangely enough, I have never experienced such a problem with anybody else. What does that tell you?

Your definitions of "spiteful" and "personal abuse" are seemingly like many of your other definitions. Oh, I see, you just don't like people countering YOUR views.

Of course the public sector workers don't like it. It's a bit like asking "would you like to pay more tax"? It's human nature to protect what you've already got. And no, there haven't been "many" of those who have posted. 3 perhaps? Those with neutral views, ie not public sector workers but mere taxpayers, can fortunately see the true position. You had your ar*e kicked by neutrals on this topic. I made it 8-0 excluding your view and my view. Does that tell you something? It tells me that are plenty of people out there who saw that my interpretation was a darn sight more feasible than yours.

You can bleat and whinge all you like but the facts have been laid bare and you just don't like it. Your problem, not mine, but please don't whinge when you take a hammering. It's really pathetic.

I'm going to save my energy on this topic now for when the proper debate happens.

Spartacus

GM

By all means counter my views I welcome counter arguments and by all means call me all the insults you feel necessary but have a little read of this and you will begin to understand that your behaviour is not healthy.

http://en.wikipedia.org/wiki/Verbal_abuse

Public sector employees who have posted on this subject have probably done so in breach of their employment conditions and they should be speaking to their unions in private, so it is no surprise that so few have posted.

All I have done is offer explanations and encourage people to research for themselves or wait until the States debate before forming conclusions. I am proud of doing so and do not see there will be any need for me to participate in future debates on this topic when it goes to the states.

GM

Spartacus

Good - that will mean silence at last. The irony of your last post is once again lost on you. You think it's me who has the problem?

Never mind dear, take a chill pill and focus on a subject that you actually know something about. There must surely be one out there.

GM

Spartacus

I am no longer going to continue to respond to any of your posts on this topic. Its clear that to do so is a complete and utter waste of my time. Against my better judgement, I have foolishly allowed myself to continue "debating" with you.

Your comments have become totally childish and show you up as not only being thick and deluded, but also extremely immature.

Your understanding of pensions, assets and liabilities, investments and actuaries is so evidently lacking that it is simply pointless to continue the "debate". Whatever causes you to think that you can hold any debate on this topic is completely beyond me.

I will of course respond to other posters, and will obviously point out to them why you are wrong, but I will not be responding to you.

Now, I suggest that you go and play very nicely with the other children from your kindergarten.

Oh, and by the way, I think you are about to be "outed" very shortly. Good luck with that.

JJ Lehto

Fair play GM, there is little point continuing to try and explain the situation to someone who will never understand.

It will be interesting to see who Sparty actually is in the real world.

Jimbo

GM

I don't blame you. I am amazed that you stuck it at as long as you did.

For what its worth, I think you have got it spot on.

Spartacus just isn't worth wasting time on. You've been far more polite than I would have been. By the way, why are you so sure that Spartacus is a "she"?

Island Wide Voting

GM

Don't forget Sparty's 11.33pm post on 1/12/12

"This is a debating forum,who cares who is right or wrong? It's just opinions being aired and stimulation of thoughts"

It's worth writing down somewhere for future reference

Ex-watcher

For pity' s sake, GEP please, please draw a line under these two argumentative, self-opinionated and verbose characters who have dragged TIG to the brink of extinction. "Out" both of them and give them a phone box to meet in before we start seeing suicides!

Dani

I would take no joy from anyone being outed. In fact I would prefer it if people kept the knowledge of who you two are to themselves. You have both chosen to remain anonymous as speaking in your own names could negatively impact your personal/professional lives. This should be respected.

Island Wide Voting

Dani

Agreed.Being anonymous allows many contributors with genuine inside knowledge of a subject to put right bad guesswork or downright malicious rumours

I am sure that several civil servants / public sector workers contribute some good stuff on here ...stuff which would be impossible ( and possibly illegal) for them to discuss openly in their own name

TIG would become very bland indeed if pseudonyms were to be banned.

JJ

GM/Spartacus

TBH you both have views one for, one against we live in a democracy that is fine, I do not know either of you that I am aware of although it's not outside the realms of probability, but lets be honest shut up already the pair of you, what a bunch of keyboard heroes hiding behind pseudonym's and yes we all benefit from this ability to hide, some people abuse this others do it with good intent and perhaps both of you do the latter but each in your own way, but enough is enough one of you be the bigger man and walk away

Peace out :)

GM

JJ

I already did - see my post yesterday. A month later than I should have done.

Spartacus

JJ

On 2nd January I told GM "I will agree to disagree and leave it there" then the press launched their headline that day and the debate resumed. I have good intentions.

I believe what is best for Guernsey is to do right by its valued public sector workers, including teachers, nurses, police, civil servants, manual workers etc. I believe the proposals are not a solution to the problem, they are an appeasement to those who have misplaced concerns. The proposals would entail a high price tag and I have yet to see any evidence that the changes are necessary.

islander

Spartacus.

Hope you will be very happy in your pensionable retirement.

Spartacus

islander

Thanks I am a member of a private sector defined contribution employee scheme and I also have a RATS. I pay as much as I can afford into both but nevertheless I fear it will be inadequate for my needs and I plan to increase the contributions as much as I can as soon as I can.

Other things seem to take priority when you are young, getting on the housing ladder, raising a family. Pension worries come later but they should be taken seriously by everyone, especially the young.

Iron Maiden

Spartacus,ihave not seen much support for you're side as well.i Am going with gm on this as well Neil came to a meeting this week briefy and this subject was talked about he also agree with gm

Arnald

If "GM" has your support, "Iron Maiden", then "GM" and the mentioned "Neil" obviously have the support of the keyboard unenabled.

That pedantry done, Spartacus has tried to explain what 'affordable' means, with respect to pensions.

The facts that there are deficits is entirely due to management of said instruments, not the fault of the thousands that do work, that you and the rest, take for granted.

People can wish all they like for the supposed 'burden' of the public sector to be 'less', but then, ultimately, you support the lowering of living standards for everyone, public or private sector.

It is truly laughable that any budget deficit caused by pandering to the private sector can be reversed by public sector, front-line cuts. Yes, pensions are front-line. The incentive to work for the strategic development of Guernsey is not done by the private sector.

A caveat is that I know that there has been some 'parachuting' of benefits for end-of-term CS's, but seriously, that isn't the issue.

As for the funding of a pension fund..? It became unmanageable in the UK because of the sheer scale of it. (Also it was scorched under politically motivated short-termism), over here we are supposed to have the best expertise for fund management.

The liabilities are not claimable all at once. The numbers thrown around mean nothing with respect to reality.

Distressing the public sector about their future is simply ignorant political nonsense. There are plenty of intelligent people that could find a decent solution, the problem is the poisonous mindset of people like "GM", they can spout disaster scenarios in order to satisfy their inbuilt bias against public sector workers.

The argument "GM" forwards, as well as those by a past prospective deputy is simply an extension of their politics of envy.

A simple incentive for people to do work for the greater good of our society should be supported, not condemned.

Anything, for a country that we pertain to be, is affordable. The rhetoric is sheer and absolute ideoligical rubbish.

Protect public pride in the public sector, it will outlast the private sector bubbles.

GM

Arnald

A typical socialist view - lets carry on trying to fund a scheme which Guernsey can't remotely afford, just so that we can have a public sector of a size that we don't need? "Anything is affordable". Really? How do you work that out? Raising tax rates to 50% perhaps to pay for it? Can't see that one flying.

As for "politics of envy", I've only just stopped laughing.

Spartacus and Arnald - is this the left wing dream team? A new political party for Guernsey perhaps? That certainly will be interesting!

Spartacus

I'm still waiting for you to define affordable. Truth is we can't afford not to look after our public sector workers.

"Raise tax by 50% " ha ha you do like plucking out random numbers from nowhere.

GM

Spartacus

"affordable" = is there enough money in the government coffers to pay for it?

Sorry - I ignored your request as I didn't think anybody with an IQ above their shoe size would need to ask for such an obvious definition.

Of course we need to look after our public service workers, but not at the expense of bankrupting the island as a direct result.

In case you hadn't noticed, there was a question mark after my 50% comment. That means its a question, not a statement. And I said "raise tax to 50%", not "raise tax by 50%", but we already know that reading what's actually written isn't your strength.