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Taxpayers will soon fork out another £432,000 to top up pension schemes that are still paying out to deputies that held seats more than a decade ago.
The last States members pensions schemes was closed in May 2012 and pay increased by 15% instead to compensate, but the legacy is still being felt, in a way a microcosm of the generous wider final salary pensions schemes that were the norm for so long for States employees.
Since the States members' schemes were shut, capital payments have been made every year between 2013 and 2021 and now again next year to keep enough money in the pot to cover their combined liability.
Including the £432,000 payment that has been set aside in next year’s Budget, these have totalled £1.613m.
Some current deputies were members when the schemes were in operation and so could be in line for taking a payment from them, but they would have had the option to opt out.
Capital payments into the States members pension post since they closed:
There are States member schemes that date from pre-May 2004 and post-May 2004 which had different contribution rates.
A report in 2006 that established the latter set out the payments at the time.
Deputies who left by the end of 1989 could claim £3.38 per week for each year of service.
Those who left office by the end of April 2004 could claim £6.76 per week for each year of service from 1990, in addition to their earlier payment if that was relevant.
Those who became former members after 1 May 2004 could claim £9.25 a week for each year,, plus those earlier allowances, if applicable.
The changes happened after the Assembly agreed that States members should be paid from 2004.
The minimum age to receive a States members pension was set at 65 following retirement from the Assembly.
States members contributed at 6% of basic pay and the public purse than put in 25%.
At the time the States contribution was expected to be £200,000 a year.
The latest actuarial valuation of the scheme is included in a wider regular review of public sector pensions, a report with the position as a the end of 2023 that will go to the States shortly.
The States members’ pension fund had a shortfall of £432,000 at the end of 2023, a funding level of 88.6%.
At the previous valuation for the end of 2020, there shortfall was £108,000.
BWCI’s actuarial review says that the past service position has deteriorated mainly due to a combination of investment returns being worse than expected over the inter valuation period, by around £500,000; and pension increases in deferment and in payment were greater than expected.
“This was largely offset by the capital payment received during 2021, the updating of the mortality assumptions, and the removal of the impact of the UK RPI reform which had artificially reduced the discount rate assumption at the previous valuation and led to a higher value being placed on the liabilities of the Fund.”
It said there was no requirement to make regular contributions to provide benefits in relation to future service as the Fund is closed.
“Therefore, the shortfall will need to be met by capital payments,” it said.
“The shortfall could be eliminated by a single lump sum payment of £460,000 paid at the end of 2024 (allowing for interest on the shortfall).
“However, it should be noted that the States Members’ Pension Fund would only remain fully funded if experience is in line with the valuation assumptions. Additional shortfall contributions may be required at future valuations in the event of any adverse future experience.”
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