Guernsey’s Policy & Resources Committee has submitted a policy letter proposing to reduce the employer contribution rate to the public sector pension fund from 10.3% to 7.5% of pensionable pay, providing a saving of £8 million each year.
This proposal comes after the Committee received the latest actuarial valuation of the fund which shows that the employer contribution required to fund the scheme in the future is now only 7.5%, as a result of the changes made to move to a Career Average Revalued Earnings scheme in 2015. The scheme is currently 99.1% funded, comfortably above the lower boundary level of 90% which was agreed by the States in 2022.
Under the proposals, of the £8 million of savings, £6.8 million would be for general revenue, with the remainder for unincorporated trading assets and social security.
This latest valuation will be fed into the ongoing consideration of a defined contribution scheme which the Committee is under resolution to explore.
Deputy Lyndon Trott (pictured), President of the Policy & Resources Committee, said: “I want to be very clear: our proposals will not in any way impact the benefits available to anyone on a public sector pension scheme. Nor does this have any bearing on the States pension which is an entirely separate matter.
“What we are seeing is the fruit of the changes made to the public sector pension scheme in 2015 to move from a final salary scheme to a career average salary scheme. This means that we are now in a position to propose reduced employer contributions, which crucially would bring a significant annual saving for the taxpayer without impacting public sector pension benefits.”
