This Is Guernsey

By Nick Mann

STATES employees benefit from a ‘Rolls-Royce’ pension scheme, the House heard yesterday. Members agreed to the Public Sector Remuneration Committee’s proposals for changes, including raising the retirement age for new entrants to 65. But fears were raised about a £12m. ‘black hole’ because of a shortfall in States funding.

PSRC chairman Jonathan Le Tocq said it was estimated the package would reduce the true cost of providing pensions for States employees by £800,000 per annum, rising to £2.1m. over 15 years.

‘If the States as an employer wishes to continue to recruit and retain the best-quality staff - teachers, nurses - this pension scheme can play a major part in attracting them,’ said Deputy Le Tocq.

Deputy Charles Parkinson was the first to ask what was being done to address the £12m. shortfall in what the States contributes to the superannuation fund and the estimated true cost.

‘I hope at some stage someone will tell us what will be done about this,’ he said.

‘Is it simply going to be ignored, the scheme allowed to go on accumulating deficits subject to what happens in the stock market, or are we going to address this issue?’

Deputy Peter Roffey described it as a black hole that needed to be addressed.

Both Treasury minister Lyndon Trott and Deputy Le Tocq played down these concerns. Deputy Trott pointed out that three years ago, Treasury had allocated a higher percentage of the assets in the superannuation fund into equities, generating an extra £50m.

Deputy Le Tocq said that even if nothing was put into the fund, it could still pay pensions for 30 years. ‘It’s not a crisis we’re having now,’ he said.

Deputy Barry Brehaut said departments were facing recruitment and retention issues.

Former fireman Deputy Graham Guille supported the proposals, but issued a warning. ‘We run the risk of having a greying fire service with these proposals. This is a job best done by young men and women,’ he said.

Deputy Ivan Rihoy added that he had been approached by members of the Fire and Rescue Service with concerns about the retirement age because there were not as many desk jobs available in Guernsey as in the UK.

The new scheme means that the majority of people will have to pay 6.5% contributions instead of 6%. Some, including the police, are already paying more because of additional benefits.

‘Some people will say this is unreasonable, but Barry Fawcett ‘head of pensions for the National Union of Teachers’ has said on two occasions that this is a Rolls-Royce scheme. It’s not bettered by any private-sector scheme,’ said Deputy Hunter Adam.

Deputy Mark Dorey wanted the existing scheme scrapped because the States was taking too much of the financial risk and there was support from Deputy Bernard Flouquet for the introduction of an incentive scheme.