A Guernsey Deputy has rubbished claims Guernsey’s pension fund is “running out” as “silly”, pointing out that the pension fund has grown to nearly £800m.
Deputy Garry Collins said Deputy Tina Bury’s recent claims that our reserves were running out risked “misleading the public, creating concerns and the wrong narrative”.
Deputy Bury, President of Employment and Social Security (ESS), said changes were needed to keep the pension fund sustainable, after revealing it could only afford to pay out pensions for 3.8 years without any further contributions, down from six years’ in 2010.
However, Deputy Collins rejected the idea, saying: “What a silly thing to say pension reserves are running out.”
“Why say if contributions stop we run out on money? If you stop putting fuel in your car at some point you are walking to the garage,” he added.
Growing fund
He argued that the 3.8-year figure did not mean the fund was close to being exhausted, pointing out that contributions continue to be paid into the scheme and that investment returns were helping to cover rising costs.
“Yes the pension fund has 3.8 years of outgoings, but only because more people are retiring and drawing their pension,” he said.
“I would have concerns if the overall fund was decreasing, but in 2019 it had a balance of £740m and at the end of 2025 it had a balance of £796m, because investment returns easily cover the extra outgoings.”
Overdue review
Deputy Collins also questioned whether the latest warnings gave a complete picture, arguing that the most recent actuarial review was now six years out of date, as it was delayed because of a lack of up-to-date population data.
He said the last report covered the period from 2015 to 2019 and suggested the fund could eventually be depleted if contribution rates were not increased.
However, he pointed out that contribution rates have risen several times since then, arguing those increases had yet to be reflected in updated modelling.
“The last report suggested the fund would deplete if rates weren’t increased,” he said.
“Rates have been increased a further three times and now [stand at] 7.5% for employed, 7.1% employer and 12.2% self-employed.
“Until these are factored in the new report, saying funds are running out is very misleading.”
’44 months of reserves is amazing’
Deputy Collins also argued Guernsey’s reserves compare favourably with many other pension systems.
He said the UK operates a pay-as-you-go state pension system, where current National Insurance contributions fund current pensioners, rather than relying on a large reserve fund.
“The UK Treasury [told me] having three months’ reserves was the average, [while] having six months was good,” he said.
“The fact Guernsey has 44 months of reserves is amazing,” he added.
Is Guernsey different?
Deputy Collins also questioned whether long-term modelling fully reflected the island’s workforce.
He said many people move to Guernsey for a period of time before leaving again, meaning they do not qualify for a full pension.
“Only about 40% get a full pension,” he said.
“My concern has always been the modelling done for the actuarial pension report.
“If it models 100% full pension liability, that’s wrong.
“Guernsey is different and I don’t see the fund running out anytime soon.”
Ageing population
Deputy Collins acknowledged the challenges posed by an ageing population, noting that contribution rates have risen over time and that the pension age has already increased from 65 to 70.
He said demographic changes meant a wider review of the pension system was still needed, despite rejecting suggestions the reserve fund was close to running out.
“When I started work in 1997, I paid 4.5% and now if employed, I would be paying 7.5%,” he said.
“But I reject the narrative we only have four years’ worth of pension payments left.”
“It’s total rubbish.”
