Government employees will now pay 1% less of their pensionable earnings to the public pension scheme while retaining the same benefits to prevent the over-performing fund from building up an unnecessary surplus.
The change to the Public Employees Pension Fund (PEPF) follows actuarial advice and agreement from the Committee of Management.
The decision is expected to save an estimated £10 million for taxpayers in Jersey.
Employers will also contribute 2.2% less to the fund, with money saved contributing to the £29 million savings target for the 2029 budget.
The government claims that, by reducing unnecessary contributions to the already “in surplus” fund, more money will be freed up to contribute to the local economy.
Unite regional representative James Turner said unions were “consulted” and “informed” about the change.
“It is due to the pension fund having a significant surplus,” he explained. “This change will mean the pension benefits our members receive are unaffected and they will ultimately get to keep a little more of their monthly earnings to the tune of 1%.
“Effectively [members will be] having a further 1% pay rise some would say, so we do not see this as a bad thing.”
Teachers and head teachers, though, will not see any change to earnings, as they are part of the Jersey Teachers Superannuation Fund (JTSF).
Minister for Treasury and Resources Elaine Millar referred to “responsible governance” of the PEPF as a driving reason behind the change.
“The reduction in contribution rates reflects the latest independent actuarial valuation, which shows the scheme is in a strong position,” she said.
“This reduction reflects strong investment performance and responsible governance of the fund.
“By carefully adjusting contributions while still retaining a surplus in the fund, we can ensure the fund remains sustainable, without costing members or taxpayers more than is needed.
“Importantly, members’ benefits remain the same.”