CampaignsVoice For Victims
Voice for Victims is a campaign aimed at promoting the rights of those affected by child sexual abuse.
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Spartacus And if you look at page 2486 of the same 2010 actuarial valuation, you will see the full impact of adopting FRS17, which the valuation is not based on, but which the States of Guernsey is obliged to adhere to in its own audited accounts. The impact of adopting FRS17 is to increase the overall deficit on the combined scheme (we are not given the individual breakdown between the various trading companies on page 2486) by £193m, from £77.338m (91.6% funded without FRS17) to £270.642m (75.7% funded based on FRS17). FRS17 requires the projected investment returns of the scheme to be calculated based on an actual return available in the marketplace, which is specifically a AA-rated Corporate Bond which was then yeilding 2.05% per annum. The actuarial valuation is based on the TARGETED investment returns of 3.25%. Well - the States of Guernsey and the scheme actuaries can set any target they like, but what FRS17 does is force employers to base the fund liabilities on something substantially more ACTUAL than that, so that it is realistic. As any person with even elementary investment knowledge will tell you, chasing higher investment returns results in greater risk, so the projected returns should always be based on the returns available from the appropriate investment, in this case AA-rated Corporate Bonds. Projecting a 3.25% annual return compared with a more realistically attainable 2.05% annual return is a difference of 58.5% on the annual return. Project that over 30-40 years as a pension scheme must do, and the compound effect is massive. Underfunding now, based on an assumed higher rate of return which is not attainable without taking extra risks, builds up funding deficits which cannot ever be recouped without taking even greater risks going forward, which in turn increases the risk of additional capital losses. These are the very fundamental basics of investment management. As the States of Guernsey is obliged to adhere to FRS17, and its assets and liabilities are accounted for on that basis, it is perverse to choose to value a huge portion of its liabilities on a different accounting basis. Nobody in their right mind would deem that to be logical. Your entire flawed argument is that the pension liabilities of the States of Guernsey should be based on a projected rate of investment return which globally accepted international accounting standards deem to be 58.5% higher than is currently attainable.