TREASURY AND RESOURCES MINISTER
Public Employees contributory retirement scheme (pecrs)
pre 1987 debt repayment
1. Purpose of Report
1.1. To agree to transfer funds to cover the arrears arising from the shortfall of the States contribution to the Public Employees Contributory Retirement Scheme (PECRS) pre 1987 debt for the period 1 January 2002 to 31 December 2005, from a capital reserve put aside for this purpose.
2. Background
2.1. At its meeting of 22 September 2005 the former Finance and Economics Committee was informed of proposed amendments to the PECRS to address the pre 1987 deficit of the scheme, which were agreed in the States 27 September 2005 (P189/2005 and P190/2005).
2.2. A valuation at 31 December 2001 placed a value on the States’ share of the pre 1987 debt of £177.5 million.
2.3. A framework for dealing with the debt, approved by the former Policy and Resources Committee and the Committee of Management, agreed to increase the employers contribution to the scheme to 15.6% of which a repayment equivalent to 2% of members’ pay would be made over 82 years from 1 January 2002.
3. Comments
3.1. The framework was not agreed until 2005 and, for the period 1 January 2002 to 31 December 2005, the States continued its previous contribution to the PECRS of 15.16%. As a result arrears, amounting to £2.5 million are due on the shortfall of 0.44%, compared to the required 15.6%, plus interest arising for that four year period.
3.2. Funds have been earmarked for this purpose by the then Finance and Economics Committee, and the Treasury and Resources Minister is asked to agree its release from the Capital Reserve to the Chief Minister’s Department’s revenue budget in 2006.
4. Recommendation
4.1. It is recommended that the Minister agrees to transfer £2,461,356 to the Chief Minister’s Department’s revenue budget in 2006.
5. Reason for Decision
5.1. To cover the arrears arising from the shortfall of the States contribution to the Public Employees Contributory Retirement Scheme pre 1987 debt for the period 1 January 2002 to 31 December 2004, and to prevent further interest accruing on the arrears.
States Treasury Corporate Finance
22 March, 2006 for Decision Meeting 20/03/2006