The inconvenient truth about public sector pensions

I REFER to the opinion piece by Digby Jones in the Guernsey Press on 4 September and do so in a private capacity as a member of the Public Servants’ Pension Scheme to which he refers.

I want to see if I can tease a few actual facts out of the hyperbole your contributor, Gpeg and others regularly spew out on the subject of public sector pensions. If that turn of phrase sounds excessive, let me just pick up on his use of the word ‘apartheid’. It’s baffling to me how anyone could believe that state-sponsored racial segregation and discrimination in South Africa, that controlled where people could live, work, go to school and whom they could marry – and led to many deaths – has any correlation with whether or not someone in Guernsey has an occupational pension.

But back to the hunt for facts. Let’s start with who is actually being talked about in this opinion piece. There’s early mention of ‘public sector’ pensions which, in Guernsey terms, actually means the pensions of nurses, teachers, police and other uniformed employees, lecturers, manual workers, ancillary staff in hospitals and schools and dozens of specialised posts that the Bailiwick often needs to recruit to from off-island, such as air traffic controllers, various therapists and probation officers as well as those who work in finance and administrative posts. In total they number roughly 5,000 employees, of whom the majority are members of a pension scheme with fairly common provisions. But thereafter, his comments relate mainly to ‘civil servants’, the low-hanging fruit when it comes to public criticism and the easiest to snipe at. So, we really need to pin down our labelling and be clear who is being talked about. Just as an aside, if you take those 5,000 employees, add the more than 5,000 retired people who are currently receiving Guernsey public servants’ pensions, and also add in their spouses and family members – you get a sizeable group, many of whom will be voting in future elections and won’t respond well to candidates who espouse poorly formed policies bereft of factual evidence.

Here’s another inconvenient truth which rarely sees the light of day. The Superannuation Fund from which payments are made to existing pensioners consists of their own past contributions, plus the contractually-required contributions of current employees and their employer. These pensions in payment could therefore properly be described as ‘deferred salary’. And the Superannuation Fund only needs topping up when actuaries calculate that it might not meet its obligations. It is not like other jurisdictions where public sector employers may not have managed their pension funds so wisely and now have to pay pensions from general revenue every year. Incidentally, these are facts which are in the public domain because the rules of the Public Servants’ Pension Scheme are published, unlike those of the private sector schemes to which your contributor, and others, seek to make comparisons.

Another balloon burst that may not go down so well with commentators and pressure groups is the fact that over half of pensions paid under the Guernsey scheme are actually less than £10,000 per annum and almost 80% are less than the equivalent of Guernsey’s minimum wage. Doesn’t look gold-plated to me.

In the world according to your commentator, ‘pay in the public sector has grown level with comparative jobs in the private sector’. Really? What evidence is there for that? A man with his experience should know that simply saying things does not make them so. Assertion without evidence is just hot air and you shouldn’t make policy based on conjecture.

And, apparently, the public sector has ‘more favourable working conditions’. Again, where is the evidence and, in fact, what on earth does that even mean? You shouldn’t be making policy based on vagaries either!

I’m not against changes to pension arrangements for public employees in Guernsey. Pension schemes, like many other things, change with the times. Heavens, I can remember when the finance sector in Guernsey offered employment packages which included cheap mortgages and loans, comprehensive health insurance, contribution-free pensions and so on. Maybe a little less common now, but the fact is that there have already been substantial changes to the public scheme in the last couple of decades and the way to achieve more is not by inventing facts, purveying generalisations and singling out a section of the island’s workforce for scorn and finger-wagging.

Your commentator’s proposal is naive and misleading and fails to deal with a significant issue – if you close the local pension scheme, how will the States recruit the hundreds of staff, across all public sector pay groups, that come from places which still have broadly similar pension schemes? Why would they want to come here and how will we run our services without them? There is already a big recruitment problem in some areas of the public sector, closing the pension scheme will just make things worse.

So back to my teaching days, and I’d have to mark your contributor’s effort as long on hyperbole but short on facts. The real big problem, though, is that I fear that without proper reasoned facts and argument laid before it, the States of Deliberation might jump to the same populist conclusions.

andyjcastle@hotmail.com