Calling time on ‘gold-plated’ States pensions is long overdue
Tuesday 24th November 2009, 1:00PM GMT.
THE gold-plated public sector pension scheme should have been closed to new entrants years ago, according to an expert.
Nordben Life and Pension Insurance director Paul Cutter spoke yesterday after the news that it will cost taxpayers £21m. next year to support the States employees’ superannuation scheme.
Mr Cutter (pictured) said government should take action as the defined benefit scheme was disproportionately generous.
‘It is totally out of line with what the private sector is willing to provide,’ he said.
Deputies, including Treasury minister Charles Parkinson and Social Security minister Mark Dorey, have also called for an overhaul.
There were ways to close the scheme, Mr Cutter added.
‘They should say to all new civil servants that they will be put into a new pension scheme – this will be defined contribution so that the cost is known – and this is not a difficult decision to make.’
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And will your Civil Servants then be given the same as the private sector in regards to pay and conditions, i.e. the big bonuses and huge pay increases to get it all on a level playing field.
Doubt it?
No one in the private sector were shouting when the finance industry were handing bonuses of thousands to even the lowest paid!
Different story now though! How the once better off big bonus taking hooray Henrie’s are looking green eyed at the those that took the lower paid jobs with less glamour no big bonuses for the thought of security in their latter years. You big boys with the flash cars and swimming pools are starting to look at those who have saved and planned for the future with envy.
Pre-recession the boot was on the other foot. The private sector held all the cards and had the pick of the bunch when it came to selecting employees. They did not worry about the public sector pension fund then. Now it seems as though the pensionable benefits are a draw and the private sector is perhaps no longer the most attractive employment.
So of course take the pension away, it’ll put the greedy finance industry back in the driving seat.
If the finance industry under the guise of the private sector wants it no doubt our Government will deliver. Weak and green bellied as usual.
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Nicely put Lou but you did miss out the private health insurance and company cars!
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Couldn’t agree more Lou.
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I agree with bitter old Lou. What use is my flash car and swimming pool going to be if I can’t afford to maintain them in a few years. This isn’t about public money spent on Lou’s pension, it’s about my smug pride damn it!
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i don’t know what planet you civil service types are on but you don’t do the same work as finance workers so how can you compare salary packages.
try working in a career outside civil service or finance and then you’ll see how lucky you are.
The low paid in shops,hotels,labourers e.t.c should not be paying one penny towards your pensions. How immoral is it for people with no company pension schemes on low wages to be paying into a pension pot for you lot when they are much more worse off than members of the civil service will ever be. As the saying goes “at least Dick Turpin wore a mask”
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I have worked in public sector and in the finance sector and let me tell you the finance sector is far more cushy and boring. If that trust resolution doesn’t get drafted……so what. But if that drug isn’t ordered, people die. If the £20,000,000 isn’t transferred today…..some rich guy won’t get his extra £1,100 interest for that day…..so what. But if that road isn’t swept properly after a storm, someone could break their leg.
Which job REALLY carries more responsibility??
And Lou is right, Kevin et al, at the moment, salaries are not “competetive” but pensions compensate for that. If you freeze/alter pensions, then salaries will over time adjust to reflect that as the CS strives for the best staff for the island. You’ll still pay the same amount!
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Kevin,
First of all, I am sorry you are not happy in your work. Seriously, have you considered doing some further education which may lead you to other areas of employment and better prospects?
I went through school not really caring if I learnt or not. On leaving school I worked in a shop and factories and worked on an assembly line. One day I decided I had wasted my time at school and thought; I need to change and get a job that will provide for the future. Guess what I went to evening classes improving my English and maths etc and got a better job!
To the other point in your post. If you make the job of a civil servant so unattractive who is going to do it? There are the ones that can do it but don’t want to, because they earn better money in the private sector; or there are the ones that can’t do it and will if there is no one else, if you see what I mean. So if you employ the ones that can’t do the work and the whole system of public sector work stops working or slows to a near stop and the public complain nothing is getting done will that be beneficial to those who are served by these departments.
Just remember not all states employees walk around in pin stripe suits and bowler hats, some go have to do the manual work!
Oh and one last thing. I am not a civil servant but I do have a private pension.
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lou
your post is insulting. At no point did I say I was unhappy in my work.
For your info i left the Grammar school with 9 o levels. Have numerous vocational qualifications and are responsible for some 85 staff and a multi million pound budget. I too have a pension one which i’m paying into and not asking low paid people to contribute.
billythe fish
“civil service salaries are not competitive” compared to what?
your arguements are weak to say the least. i do have some sympathy with lower paid public employees but not one person has answered my question . is it moral for low paid people to pay for pensions for folk who will end up with a pension when those who contribute will not. Please answer and stick to the question please.
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Kevin
If I offended then I apologise sincerely.
Though I suggest you should read both your posts (though I see they have removed your first post).
You start off by writing, quote, ‘I don’t know what planet you civil service types’ unquote. Again, later in your post you wrote, ‘paying into a pension pot for you lot.’
Two assumptions there then?
Further, you wrote’ try working in a career outside civil service or finance and then you’ll see how lucky you are’. Well I have and I still do.
So perhaps you should get the chip off your shoulder and consider how, because you have such a responsible job, you are also fortunate.
Being employed in a position you claim to be, I would imagine you are high earner. I would hope you are otherwise, well lets not go there ah. If, and please don’t accuse of me being insulting again, if you are a high earner, is not your tax capped along with your insurance contributions etc. So in effect the lower paid are assisting you because they pay taxes and insurance on all they earn, do they not, that is with the exception of their normal tax allowance.
As for your question of pay in the private and public sectors, well there is a huge difference. You only have to look at advertised positions to see that.
I think’ Billy the fish’ has a good point about what is important, who’s job carries the most responsibility!
To end, I wonder if your pension is fully funded by yourself or one which your multi million pound employer contributes too. If it is the latter, then I am sure they cost this out to the customers for the service or sales of what they provide? So there it is, possibly the lower paid worker paying more for goods or a service so a pension fund is available to the multi million pound company’s employee!
Dick Turpin was behind a mask, it’s not easy to see who he is really! One or the other.
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Lou, I don’t think some of your points make sense.
“if you are a high earner, is not your tax capped along with your insurance contributions etc. So in effect the lower paid are assisting you because they pay taxes and insurance on all they earn, do they not, that is with the exception of their normal tax allowance.”
How do the lower paid assist people who’s tax and insurance payments are capped? If you are having your payments capped, then you are contributing a huge amount more than the lower paid.
“If it is the latter, then I am sure they cost this out to the customers for the service or sales of what they provide? So there it is, possibly the lower paid worker paying more for goods or a service so a pension fund is available to the multi million pound company’s employee!”
- But the consumer has a choice whether to inadvertently fund the private pension of the employee. If they don’t like the prices charged they can go elswhere. Unlike the tax payer, who is paying for the civil servants pension whether they like it or not!
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Public workers are always the easy target. You don’t see people comparing what private sector workers get in Guernsey with what people get for the same jobs in the UK and demanding they take a pay cut.
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all these posts are missing the point and my posts are just as bad as everyone elses.so here goes
the fact is we as a community cannot afford the public sector pension fund in it’s current form. if any of you guys think we can please say so here and tell us all how.
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Greg,
Come on Greg, its not rocket science. If a high earner of say £60K only pays tax on say 50K and insurance on the same, then are they not getting the remaining 10k free from tax and insurance contributions. This means they pay less tax pro rata than the lower paid worker and therefore benefit in a way the lower paid is unable to.
Surely for an even playing field between high and low earners all should be taxed on all their earnings after the tax free allowance. If not, wouldn’t this give the higher earners an advantage of how finance their retirement! A bit like a pension scheme for the higher earners!
And you are right when you say the customer has an option to purchase or not but the customer would not know they are contributing towards an employees pension unless this is made clear at time of purchase! You all pay inflated prices for your purchases already and you keep on doing so. It won’t change.
My point was if the CS removes the pension how will they make the jobs attractive and what quality of staff will they employ?
It is strange how in a recession noises are being made about this. Prior to this the private sector were bouncing along nicely. Perhaps recruitment is part of the problem; people are looking at the longer term. Now remove the one benefit from the CS/Public Sector and hey presto private sector suddenly looks attractive again!
Now there is an easy option. Just become a communist island. All living in the same sort of house, have a choice of one car, earn the same wage and receive the same benefits.
End of problem or just the begining?
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Lou,
The cap on income tax is GBP 250,000 paid in tax. That means that at 20% tax someone has to earn GBP 1.25 million a year to hit the cap (excluding allowances).
Your example above is totally wrong. There is a cap on Social security, but as that is supposed to be towards your pension and benefits that do not increase if you pay more in then it should be capped. In fact it has already been turned into a stealth tax!
It never ceases to amaze me what self serving rubbish people post on here to prove their point.
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The only relevant point is that it can not be afforded. It’s not (and should never be) about envy, nor is it about trying to create a level playing field between public and private sectors, as that is impossible.
The point is that the island can not afford to sustain this scheme. It’s unfortunate, but it’s a fact.
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These Govt pensions have got to go everyone should have a decent State pension however at 65.
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Andy, I agree everyone should have a state pensionat 65 that is good enough to get by comfortably. However, if that were to be the case and the CS pension was scrapped, what would perspective employees do? Go to the Private sector and get paid £27k pa+say private health care and a possibility of an annual profit share bonus for an admind job or CS and get paid £20k? Of course everyone would want to go to the Private sector – where would the CS be then? Services would disintergrate as staff numbers dwindled. The only way round that is to privatise all services carried out by CS. A dangerous route to take?
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George,
Ouch! You being grumpy or are you always like that!
Perhaps everyone else should stop posting on here as you appear to be the only one entitled to an opinion.
Not the best example, but that what is was supposed to be, I just did not realise working people earned that much! I did say ‘IF a high earner of say 60k’.
Going back to the original topic, Aunty GP you make a good point; I find it hard for people to miss it.
Guernsey can’t afford it? Guernsey can’t afford no to afford it!
Nuff said from me, George you have the floor.
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Whilst reading this headline – has anyone stopped to consider that Mr Cutter might have something of a vested interest or a slightly biased opinion?
He is the director of a major life/pension insurance company after all!
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Unfortunately, Guernsey has been unable to find enough professionally qualified local people to fill all the positions required to deliver the level and volume of services expected by our population.
Consequently, we need to attract and to retain a range of professional staff from elsewhwere.
The majority of potentaial applicants are UK-based and able to benefit from a salary and pensions package which Guernsey must match or better if we are to secure their services.
Should Guernsey remove final salary pension provision from such occupational groups, we would potentially face a significant skills deficit. I feel confident that there is no need for me to elaborate upon the possible consequences for our health, education, care and policing provision.
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Kevin, Nordben are quite possibly the most specific business in the world. The service they provide is purely for the Nordic nations. Why do they have an office in Guernsey, hmmmm? I wonder!
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Auntie GP
I think you will find that Nordben manage international pension schemes for Nordic personnel working all around the world for Nordic multinational companies, and for Nordic expatriates living all over the world.
Guernsey is one of the top locations in the world for running international pension schemes because of their flexibility. Individuals who move around every 2 or 3 years with employment postings prefer to be a member of a portable international scheme than to have pension rights accruing in 10-15 different countries over a 30-40 year career abroad.
And before anybody asks, pension schemes are themselves tax-exempt in virtually every country of the world, so tax is not the driver here, its the excellent legislation which caters for internationally-mobile employees.
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Deputy Sean McManus.
That appears come from an ex civil servant on final salary pension.
Get real, Guernsey is a good place to live or work, why should the tax payer, pay for this when businesses, have had to get rid of it because simply they can not afford it.
You are paid to represent the people of Guernseys interest, look at the bigger picture, not just a small minority.
The people of this Island needs the states to cut back its expenditure, not just to talk the talk, but to walk the walk.
Time is running out, and you have not started to even walk yet.
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Edquet
Your opening remarks are irrefutable.
Your “Why should….?” query is entirely fair and appropriate.
Regarding my role : it might be suggested that raising an important component in the wider consideration of pension provision contributes to the “get real” imperative.
I would be interested to read your response to the potential professional skills deficit in the event of less favourable local pension arrangements for such employee groups. In my view, the States as a “responsible employer” cannot afford to overlook such considerations prior to reaching an informed decision.
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Edquet,
I’m assuming (rightly or wrongly) that you are referring to companies in the finance sector, if this is the case I can’t believe that they cannot afford pension schemes for their employees, they could always use some of the millions of pounds that zero-ten is saving them.
If it wasn’t for the ill fated zero ten scheme I’m sure Guernsey wouldn’t be in anywhere near as bad financial shape as it is now.
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Kevin it was the final salary part ( Gold Plated ) that l meant, not the pension it self.
The simple fact is that this Island can not afford it, and nearly all firms have stopped it.
Can the finance afford it, i was under the impression, that banks have been baled out with tax payers money.
We can debate the reasons, how badly the financial industry has used our money and it still seems too.
Deputy McManus you appear to have a conflict of interest yourself, and you are only the employer on behalf of the people of Guernsey. That is to say it is our money that you spend, and spend in the best interests of the community. There is also the wider community that you should represent as well.
Other local firms here and abroad have this problem of recruiting, but your answer appears to just pay loads of money.
I do not know if you have run a business, but if you have done you will realize throwing money at problems only create more.
On old Guern told me once, when a man goes up the road for better pay, another man with drive comes from down the road and does it cheaper and better.
It will be very difficult for the States in the future, with less income and rising expenditure, that they in my opinion, have not the wiil to control.
The main concern is wages and expenditure in States Dept.
If you where to cut by 1% that would save 3 million pounds per year and increased to 20% it would be 60 million.
I have some friends who are now retired from the civil service, and say that 25 cuts are quite possible and feasible
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The last phase should read. I have some friends retired from the civil service, and now say that 25% cuts are quite possible and feasible and would save 75 million per year.
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Edquet – Perhaps you would have managed to get the last paragraph, sorry “phase”, across more succinctly if you could manage to control your excitement whilst spouting rubbish.
Fortunately it will be sensible people that sort this problem out not those with a chip on their shoulder.
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Edquet, thanks for your detailed response.
I think your penultimate post asked me to respond to three separate points.
In reverse order the answers are :-
* I have never run my own business.
* I don’t recall advocating paying “loads of money”, although I did suggest considering the service delivery implications of failing to offer an attractive remuneration package. (Pensions are simply regarded as deferred pay.)
* My perceived conflict of interest could be a fair point. I have consistently distanced myself from direct involvement with PSRC for that very sound reason.
I do hope this clarification helps and that we can each contribute to a more informed consideration of this very important issue.
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Cliff.
I must have hit a raw nerve with my, comments but you did not say where l was wrong. It is alright to say rubbish, but please point out where it is wrong.
If caring about your Island is having a chip on my shoulder, l will continue, in fact l was used to carrying bags of potatoes.
At least Sean McManus answered my questions and i admire a Deputy who does.
It is not often you get a straight answer, and my thanks go to him for being honest.
One question Cliff.
Was it the sensible people who got us into this mess, overspending, structual budget problems and now more black holes appearing like pot holes in the road?
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Final salary pension schemes have been around for many decades and they come from an era when people did not expect to live much beyond 75. These days life expectancy is much longer which means the pension fund has to carry on paying out very large sums for a far longer period than was ever anticipated. It is a very real problem and is the reason why big private companies like British Airways and Royal Mail are teetering on the edge of bankruptcy.
The same problem applies to the States pension scheme and the black hole can only get worse as life expectancy increases. Times have changed and we need to decide now whether the taxpayer is prepared to carry on with these huge commitments.
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