Where does our pension money go?

1. If we are paying into a State pension, knowing that there will be no repayment ... for which we could be a further burden to the States, where does that money go instead?

2. Must we pay into a scheme that does deliver an end result?

3. Can we not pay that 'pension' money into an entity that will guarantee a return, and lessen the burden on the States at our retirement, and the younger workers at that time?

4. What measures are they taking 'now' to reduce payments to extend the inevitable?

5. Contrary to question 2 above, is the only way to ensure a States pension to be an employee of the States with an employment contract?

PAUL LE TISSIER,

La Haina,

Rue de la Mare,

St Sampson's, GY2 4PG.

Editor's footnote: Deputy Allister Langlois, Social Security minister, responds: 'The Social Security Department firmly believes that Guernsey old age pension should be paid to anyone who has made the necessary contributions over their working life. We think it would be quite wrong to make it means-tested. We believe that the pension should increase by at least RPIX each year, ideally a little more. In the recent consultation and States debate on the Personal Tax and Benefit review, these views were supported by most, if not all, States members.

Measures are already being taken to keep the pension scheme sustainable in the long term, most notably the gradual increase in pension age from 65 to 70 over the 30-year period 2020 to 2049.

Today's pensions are mostly being paid by today's contributors. The shortfall that we do have on the income and expenditure account is being met by drawing down on the reserves of the Guernsey Insurance Fund. Those reserves are approximately five-times our annual expenditure. We plan to draw down to no lower than two-times annual expenditure. It would be a misunderstanding to think that when the reserves of the fund have been much reduced, that the pensions cannot be paid. Even when the fund reaches that lower level, the pensions will still be being paid mostly by the contributors of the day.

We see old age pension continuing to provide a basic platform for people's income in retirement, preferably supplemented by other sources of income or savings.

Your correspondent, and Mr Berry's comments which prompted his letter, both mention paying into separate or additional pension schemes to lessen the burden on the States in retirement. The Social Security Department will be reporting to the States early next year on the merits of what we are calling 'secondary pensions'. This would enable people to improve their retirement income by building up additional personal savings. We are about to issue a consultation paper on the subject and encourage people to give us their views. We agree that it is important for people to make provision over and above what they will receive from their old age pension.'