EVERY penny – and then some – that is to be taken from islanders in the 2010 Budget is to be handed directly back to civil servants so they can have a retirement that is more financially secure than the people who paid them.
The sheer unaffordability of the current final salary scheme for public sector employees, and States members, is vividly brought home in Treasury and Resources’ own Billet d’Etat.
While what it calls a conservative Budget seeks to raise no more than £3m., taxpayers now know that they have to find just under £7m. next year alone to prop up an unsustainable scheme.
Treasury and Resources advised as long ago as 2005 that the current arrangements were unaffordable.
It warned as recently as last November that no matter how much taxpayers’ money was thrown at the scheme, ‘members will accrue benefits which there will be a future obligation to pay’.
The only way to cut the cycle would be still further to increase how much islanders contribute as employer – or cut the benefits of the scheme.
Yet still nothing has been done to tackle this financial hand grenade at the centre of Guernsey’s finances.
Why the situation is so grave, as we report today, is that not only does £6.9m. have to be used to shore up an unsustainable scheme, it is already demanding an annual contribution of £14m. each and every year but that is not enough.
The full, unacceptable, horror of the situation, as T&R reported last year, is that the current cost of giving every States employee a pension based on their last year’s pay cheque should actually be £27m.
‘This option is not being recommended as it is considered to be unaffordable,’ T&R noted at the time. Yet still there is no action to resolve this millstone for the taxpayer.
The longer T&R and the States leave what is literally a ticking time bomb, the worse the debt they are leaving for islanders as pay rates and individual longevity increase.
Treasury says that its 2010 Budget is conservative.
In reality, it’s a do-nothing one which leaves one of the worst obstacles to Guernsey balancing its books completely untouched.
Facing up to the real black hole
EVERY penny – and then some – that is to be taken from islanders in the 2010 Budget is to be handed directly back to civil servants so they can have a retirement that is more financially secure than the people who paid them.
The sheer unaffordability of the current final salary scheme for public sector employees, and States members, is vividly brought home in Treasury and Resources’ own Billet d’Etat.
While what it calls a conservative Budget seeks to raise no more than £3m., taxpayers now know that they have to find just under £7m. next year alone to prop up an unsustainable scheme.
Treasury and Resources advised as long ago as 2005 that the current arrangements were unaffordable.
It warned as recently as last November that no matter how much taxpayers’ money was thrown at the scheme, ‘members will accrue benefits which there will be a future obligation to pay’.
The only way to cut the cycle would be still further to increase how much islanders contribute as employer – or cut the benefits of the scheme.
Yet still nothing has been done to tackle this financial hand grenade at the centre of Guernsey’s finances.
Why the situation is so grave, as we report today, is that not only does £6.9m. have to be used to shore up an unsustainable scheme, it is already demanding an annual contribution of £14m. each and every year but that is not enough.
The full, unacceptable, horror of the situation, as T&R reported last year, is that the current cost of giving every States employee a pension based on their last year’s pay cheque should actually be £27m.
‘This option is not being recommended as it is considered to be unaffordable,’ T&R noted at the time. Yet still there is no action to resolve this millstone for the taxpayer.
The longer T&R and the States leave what is literally a ticking time bomb, the worse the debt they are leaving for islanders as pay rates and individual longevity increase.
Treasury says that its 2010 Budget is conservative.
In reality, it’s a do-nothing one which leaves one of the worst obstacles to Guernsey balancing its books completely untouched.
Article posted on 23rd November, 2009 - 3.44pm