Transfer of PECRS Funding

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A decision made (16/06/2006) regarding Transfer of PECRS Funding.

Subject:	Transfer of PECRS Funding
Decision Reference:	MD-HSS-2006-0036	Exempt clause(s):
Type of Report: (oral (O) or written (W))	Written
Telephone or email meeting?		Person giving report (if oral):
Written Report title:	Transfer of PECRS Funding
Name of Author:	Jason Turner, Director of Finance and Information
Date of Report:	1st June 2006			Report File ref:
Decision(s): To transfer funding of £1,314,400 in respect of pre-1987 past service liability employer pension contributions for Health and Social Services employees to the Treasury and Resources Department.
Reason(s) for decision: Funding of the increased employer pension contributions at a rate of 15.6% have been included in the Department’s 2006 cash limit. This increased rate reflects a 2% contribution towards meeting pre 1987 liabilities – it is proposed that funding for this liability is held and managed centrally by the Treasury and Resources Department.
Action required: Inform the Treasurer and Treasury and Resources Minister that the sum of £1,314,400 in respect of pre-1987 past service liability pension contributions is to be transferred.
Signature:			Date of Decision: 16 June 2006

Transfer of PECRS Funding

HEALTH AND SOCIAL SERVICES

TRANSFER OF PECRS (PUBLIC EMPLOYEES CONTRIBUTOARY RETIREMENT SCHEME) FUNDING

1. Introduction

This short report details the background to the proposed transfer funding in respect of employer pension contributions to the Treasury and Resources Department.

2. Background

In agreeing P190/2005 on 27 September 2005 the States have confirmed responsibility for the past service liability which arose from restructuring the PECRS arrangements with effect from 1 January 1998.

The provisions to address the past service liability include an increase in employers’ contributions equivalent to 0.44% of members pay as from 1 January 2002, raising the employers contribution rate to 15.6%. Of the employers contribution rate of 15.6% a sum initially equivalent to 2% of the employers’ total pensionable payroll will be paid into the scheme to meet the pre-1987 past service liability.

3. Proposed Transfer

It is proposed that the Department transfers an amount of funding equating to 2% of its pensionable payroll to the Treasury and Resources Department. The employers’ contribution rate charged to each department will then be reduced to 13.6% reflecting the cost of meeting the current service liability.

These two changes together will result in there being no financial impact on Health and Social Services. It will enable the Treasury and Resources Department to manage the liability in respect of the pre-1987 past service liability centrally. The cost of this past service liability will not then be a cost associated with any increase in staff numbers.

For Health and Social Services this transfer amounts to £1,314,400, 2% of the Department’s pensionable payroll.

4. Recommendations

The Minister is recommended to transfer funding of £1,314,400 to the Treasury and Resources Department with effect from 1 January 2006.