That’s in one of the amendments proposed against Guernsey’s Funding and Investment Plan, being debated this week.
The so-called Fairer Alternative – proposed by Deputies Gavin St Pier, Heidi Soulsby, and Sasha Kazantseva-Miller – includes a suggestion that States contributions to the Superannuation Fund – which pays for States employees pensions – be cut to zero for two years from January, freeing up an estimated £76 million.
The trio claimed that this would not adversely affect the pension fund based on its recent valuations.
The unions representing different sections of the public sector wrote to the States last week asking them to reject that amendment as being “foolhardy and reckless”.
Pictured: Unions have already criticised the proposed move to reduce States contributions to their pension fund to zero temporarily.
In a letter, which can be read in full HERE, the unions warned that if the employer rate were to drop to 0% for three years, “this would repeat the disastrous decisions of the 2000s and destroy the sustainable foundation of the scheme”.
They said that it could mean the scheme would change from having a small surplus to a significant deficit that the States would then have to rectify, and which could in turn lead to industrial unrest.
Now, the body representing retired workers has also warned against making such a drastic change.
The Retired States Employees Association said its immediate concerns “are the impact on the Superannuation Fund (the Fund) and the process that has been adopted”.
President of the RSEA, Sean McManus said “the Fund exists to provide pension benefits to the employees of the States of Guernsey under the Rules of the Public Servants’ Pension Scheme (PSPS),” explaining that “PSPS Rule 18 requires that the Policy & Resources Committee: ‘must commission from the Actuary such valuations and reports as it considers appropriate'”.
Mr McManus writes that any claim of a surplus in the Fund is “misleading” with closing balances showing that reducing the States contribution to 0% would lead to the assets depleting.
Mr McManus’s letter explains that “those are snapshot figures at each year end and demonstrate how asset values and liabilities are subject to constant change, which is why the States have wisely approved Rules that require periodic actuarial valuations and enables the Policy & Resources Committee to make recommendations to the States in response to advice received from the Actuary.
“The further that time passes after the valuation date, the more unwise it becomes to treat the actuarial valuations as an indicative measure of the Fund’s current balance.
“In summary, the Superannuation Fund serves a specific purpose and is not there as a convenient resource to meet shorter-term demands for the provision of other States services,” he wrote.
“The proposed amendment also bypasses the procedures in the PSPS Rules, as approved by the States, for making changes to employer contribution rates and for these reasons should, therefore, be rejected.”
READ MORE…
READER LETTER: RSEA responds to pensions proposal
Unions warn public sector pension amendment would “destroy” scheme’s sustainability
