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It might seem like a “playground spat” to you, but its something that will bury Guernsey if not addressed!

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To be in this ‘back at square one’ position after a well constituted working party review process is a complete debacle.

Nobody comes out of this with much credit but tops marks for incompetence must surely go to the union reps who “didn’t realise what was happening”…

Good grief – in a nutshell this exemplifies everything that is wrong with the public sector. They could not organise a p*ss up in a brewery and expect the hard-working Guern to pick up the tab for their unrealistic pension expectations.

Well I have news for them – the public has no sympathy, we have our own problems to worry about and they need to get real before the reality of FTP transforms them all out of a job.

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I’ve already explained it. What don’t you understand?

We will ALL be living longer. We will ALL be pensioners. We ALL need to save more for our retirement. Some will be unable to do so and will need to be taken care of by the state. But I don’t believe that the state should have to bail out those who COULD save extra for their retirement but who choose to spend their potential savings today on other things. They have the opportunity to do something about it. Those that have no opportunity to something about it will become a burden on the state.

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Why explain a DC scheme in response to my concerns about the proposed CARE scheme? Makes no sense.

I know you don’t want a nanny state but you have not identified a solution to the problem pensioners will be left with which is that they will be living longer and so will need more money. You seem content to sail into a future where old age poverty will be a serious problem.

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Get with the programme!

I know perfectly well that I’ve described a defined contributions scheme and that it’s not what’s been proposed. It was in response to YOUR comment that under the CARE scheme there would still need to be an additional cash sum payable to employees, and also that they could still be left short on retirement. I had already repeatedly said that it’s not the government’s job to run a nanny state in making sure that they made extra savings towards their retirement.

Of course I know what a long tail liability is!

Looks like you are reverting to type after a few days of almost normal behaviour.

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You have described a typical DC scheme. That is NOT what is being recommended.

I don’t think you know what a long tail liability is either.

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It’s dead simple.

End contributions to the current scheme. Create a new defined contributions scheme.

Employer pays an annual sum equal to a percentage of salary(amount to be negotiated/agreed) into the new scheme. That discharges the employer’s pension obligations.

Employee makes additional contributions of any level he/she wishes to the scheme, within tax office limits. That provides the employee with as much flexibility as possible re personal contributions -nothing is mandatory.

No long tail deferred liability builds for the employer. That particular problem is solved.

Employees obtain a cash value calculated on an actuarial basis for his/her accrued defined benefits within the existing scheme, and that cash sum is transferred out of the existing £900m fund to the new scheme for the individual’s pension pot.

All people who are still working would have to do this. Those who are no longer working would remain in the current scheme and would continue to receive their defined benefits.

Clear enough?

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Again I don’t understand the point you are trying to make. The CARE scheme would mean employees receive a lot less pension, the contribution rate will then be slashed because the value of the projected liabilities will be much lower. So that would be a direct cut to salary expenditure.

It is also proposed they will pay more into the scheme themselves so will have less disposable income available to save. They will also bear all the risks of the scheme and expect to live longer so will need to save more in order to protect themselves against old age poverty. The proposed solution to this problem gives them LESS money now and in retirement. How does that represent a solution?

I’m sorry but I do not value your dismissive attitude towards the expertise of the actuaries. Your ideas are unsubstantiated conjecture, theirs is a professional expert opinion.

It is funny that you are willing to share all these opinions claiming to be knowledgeable, however when the evidence crops up that the problem you are concerned about is being addressed suddenly you are claiming to know nothing.

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You seem to be ignoring a key and very obvious option. Of course the States don’t have to give cash to public sector workers and see them fail to put it towards their retirement. They can simply make a contribution to a defined contributions scheme on the employee’s behalf. You know, like the rest of us have. That will prevent the storing up of massive future liabilities for the taxpayer. Easy.

I have never said or suggested that Guernsey is currently insolvent. I have always said that I am extremely worried about Guernsey becoming insolvent in the future because of the scheme’s liabilities. That has not changed one iota.

Once again you assume too much about the investment expertise of actuaries and the scope of their role.

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Look, if you would rather have teachers and other states workers on higher salaries to make up for the cut to their pension that is another matter. This would give them the opportunity to save to make up the shortfall in their pension needs but the States would then have no control if they chose to spend that money on other things. Making a cut to their pensions and expecting them to then find extra hundreds a month in savings without any extra salary is unrealistic.

I am pleased that you agree with me that Guernsey is solvent. There is no evidence that liabilities will outgrow economic growth and growth of the assets. The actuaries are employed to advise on this and have made no such predictions.

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It was you who referred to teachers, suggesting that they would be incapable of saving to supplement their pension under the proposed CARE scheme.

The States of Guernsey is indeed solvent today, but it won’t be in 20-30 years time if the current scheme continues as is, as the liabilities will keep growing at a far faster rate than the assets are likely to grow on an annualised basis.

The island cannot afford to go into a much larger annual deficit each year by making much bigger annual contributions to help eradicate the current £300m shortfall. To do so means eating even further into the capital reserve fund, which would be depleted and then what?

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Exactly…the taxpayer is currently on the hook, and the taxpayer is not keen to see taxes go up just to pay for the shortfall.

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I don’t understand what point you are trying to make, a teacher who retires on the current final salary pension will not need bailing out by anyone that’s my point. That is what they signed up to and what they have been saving towards through their contributions. You want that to change so that the teacher would incur the risk that he/she may need bailing out. Are you now arguing against your own position?

We will have to agree to disagree on the solvency of Guernsey. I believe it is financially solvent by any measure it just needs to organise its finances better to fill the zero ten black hole and this will be done.

I believe the education and health services can be maintained and indeed enhanced in years to come. You are suggesting the public sector pension joepardises these services but I have seen no evidence whatsoever from any official source to substantiate that claim.

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