States aims for £8m. public sector pension saving

Policy & Resources has submitted a policy letter proposing to reduce the employer contribution rate to the fund from 10.3% to 7.5% of pensionable pay.

This proposal comes after the committee received the latest actuarial valuation, which shows that the employer contribution required to fund the scheme in the future is now only 7.5%, as a result of the changes made to move to a career average revalued earnings scheme in 2015.

The scheme is currently 99.1% funded.

P&R president Lyndon Trott reassured islanders that it would not affect the benefits available to anyone on a public sector pension, and would have no bearing on the States pension, which is separate.

‘What we are seeing is the fruit of the changes made to the public sector pension scheme in 2015 to move from a final salary scheme to a career average salary scheme,’ he said.

‘This means that we are now in a position to propose reduced employer contributions, which crucially would bring a significant annual saving for the taxpayer without impacting public sector pension benefits.’

The career average revalued earnings scheme looked at average earnings over the course of a career, rather than just a final salary. It was reported in 2019 that this meant staff would see an accrual of 1/43.1 of pensionable salary for each year of service. Under the new contribution proposals, there would be £8m. of savings.

Of this, £6.8m. would be from general revenue, with the remainder for unincorporated trading assets and social security.