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Budget Transfer: Pensions: Chief Minister's Department to Treasury and Resources

A formal published “Ministerial Decision” is required as a record of the decision of a Minister (or an Assistant Minister where they have delegated authority) as they exercise their responsibilities and powers.

Ministers are elected by the States Assembly and have legal responsibilities and powers as “corporation sole” under the States of Jersey Law 2005 by virtue of their office and in their areas of responsibility, including entering into agreements, and under any legislation conferring on them powers.

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  • demonstrating that good governance, and clear lines of accountability and authority, are in place around decisions-making – including the reasons and basis on which a decision is made, and the action required to implement a decision

  • providing a record of decisions and actions that will be available for examination by States Members, and Panels and Committees of the States Assembly; the public, organisations, and the media; and as a historical record and point of reference for the conduct of public affairs

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The Freedom of Information Law (Jersey) Law 2011 is used as a guide when determining what information is be published. While there is a presumption toward publication to support of transparency and accountability, detailed information may not be published if, for example, it would constitute a breach of data protection, or disclosure would prejudice commercial interest.

A decision made 14 November 2011:

Decision Reference:  MD-TR-2011-0137

Decision Summary Title:

Transfer of Pensions budgets to Treasury and Resources

Date of Decision Summary:

7 November 2011

Decision Summary Author:

Head of Decision Support

Decision Summary:

Public or Exempt?

Public

Type of Report:

Oral or Written?

Written

Person Giving

Oral Report:

N/A

Written Report

Title:

Transfer of Pensions budgets to Treasury and Resources

Date of Written Report:

3 November 2011

Written Report Author:

Finance Director – Corporate Group

Written Report :

Public or Exempt?

Public

Subject:  

To approve the transfer of recurring revenue pensions budgets in the sum of £4,328,700 from the Chief Minister’s Department to the Treasury and Resources Department with effect from 1 January 2012, in line with the transfer of service responsibility.

Decision(s):

The Treasury and Resources Minister approved the transfer of recurring revenue pensions budgets in the sum of £4,328,700 from the Chief Minister’s Department to the Treasury and Resources Department with effect from 1 January 2012.

Reason(s) for Decision: 

Article 15(1)(a) of the Public Finances (Jersey) Law 2005 states that all or any part of the amount appropriated by a head of expenditure may, with the approval of the Minister for Treasury and Resources, be used for the purposes of another head of expenditure.

Resource Implications:

There is no increase to States spending or manpower as a result of this decision.

Action required:

Head of Decision Support to advise the Finance Director – Corporate Group and the Head of Financial Performance Reporting that the decision has been signed.

Signature:

 

 

 

Position: Senator  P F C Ozouf, Minister for Treasury and Resources

 

Date Signed:

 

Date of Decision:

Hide report
Budget Transfer: Pensions: Chief Minister's Department to Treasury and Resources

 - 1 -

Treasury and Resources Department

Ministerial Decision Report

 

 

 

 

TRANSFER OF PENSIONs BUDGETS TO TREASURY AND RESOURCES

 

  1. Purpose of Report

To recommend the Treasurer approve a recurring revenue budget transfer of £4,328,700 from the Chief Minister’s Department (CMD) to the Treasury and Resources Department (T&R) with effect from 1 January 2012 to reflect the transfer of the service responsibility of PECRS from the Acting Chief Executive to the Treasurer of the States.

 

  1. Background

The States Employment Board (SEB) was established by the Employment of States of Jersey Employees (Jersey) Law 2005 and is the Employer of all States employees and the Principal Employer within the Public Employees Contributory Retirement Scheme (PECRS).

The Scheme is governed by the Public Employees (Contributory Retirement Scheme) (General) (Jersey) Regulations 1989 and the Committee of Management (CoM), was established under these Regulations and comprises of an Independent Chairman, and employer nominees (nominated by the Chief Minister and the Treasury Minister) and member nominees (nominated by the Joint Negotiating Group). The fundamental duty of the CoM is to manage the Scheme in accordance with the regulations.

It is the duty of the Treasurer of the States to administer the scheme in accordance with the Regulations governing the Scheme.

PECRS financial accountability has been split between Treasury and Human Resources historically. Treasury has administered the payment of Pensions on behalf of the PECRS Committee, whilst Human Resources (Chief Minister’s Department from 2012) has held the budget for the PECRS Pre-1987 Debt Repayment, the payment of pre-1967 scheme pensioners, and actuarial advice.

 

  • PECR Pre-1987 Debt Repayment  – 2012 budget £3,810,100

When PECRS was established in its current format in 1987, part of the arrangement was that the Scheme would be responsible for the funding of annual pension increases. This incurred a past service liability later identified as £55.2M, the need for the funding of which has subsequently become known as the “Pre-1987 Debt”. The Employer’s contribution rate was set at 15.6%, part of which was expected over time to deal with the Debt.

Experience over the subsequent 15 years showed that the new arrangements for the dealing with the Pre-1987 Debt were required. In December 2003 the Committee of Management and the Policy and Resources Committee (at that time the Principal Employer) agreed new arrangements. The framework agreed was documented in a ten-point agreement approved by Act of the Policy and Resources Committee dated 20 November 2003.

The provisions of the agreement, subsequently reflected in Regulations, were approved by the States of Jersey on 27 September 2005.  The agreement included additional payments into the PECRS scheme in respect of the pre-1987 debt to be calculated annually by the actuaries on behalf of the PECRS Committee and agreed each year by the Treasurer.

  • Payments to Pre-1967 Scheme pensioners – 2012 budget £518,600

 Prior to the introduction of a contributory pension scheme for employees of the States of Jersey from 1 January 1968, employees had access to a non-contributory pension scheme. The budget of some £518,000 funds the pension payments for the beneficiaries of this closed scheme.

 

  1. Transfer of  Service Responsibility for PECRS

The ageing of society and change in working patterns has been putting increasing pressure on the sustainability of traditional final salary pension schemes over the past twenty years. The recent economic downturn has intensified the drivers to evaluate and redesign the States of Jersey’s Public Employers Contributory Scheme (PECRS) for a sustainable long term future. The Treasurer of the States has taken on accountability for this project as part of the Terms and Conditions workstream of the Comprehensive Spending Review and, with it, the role of representing the employer and responsibility for the PECRS-related budgets.

The Acting Chief Executive is the Accounting Officer for Human Resources who have historically held the PECRS budgets. The Human Resources and PECRS budgets are within the Treasury end Resources Department in 2011 but will transfer to the Chief Minister’s Department from 2012 as a result of P123/2011, the Fourth Amendment to the Draft Annual Business Plan 2012. 

This impact of this Decision is therefore that the transfer of the PECRS budgets to Chief Minister will not take place in 2012 but the PECRS budgets will remain with the Treasury and Resources Minister to reflect the transfer of service responsibility from the Acting Chief Executive to the Treasurer of the States.

 

  1. Recommendation

That the Minister approves the transfer of recurring revenue budget in the sum of £4,348,700 from the Chief Minister’s Department to the Treasury and Resources Department with effect from 1 January 2012.

 

  1. Reason for Decision

Article 15(1)(a) of the Public Finances (Jersey) Law 2005 states that all or any part of the amount appropriated by a head of expenditure may, with the approval of the Minister for Treasury and Resources, be used for the purposes of another head of expenditure.

 

  1. Resource Implications

This transfer does not change the total expenditure approved by the States.

 

Report author : Finance Director  – Corporate Group

Document date : 3.11.2011

Quality Assurance / Review : Chief Executive

File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DSs, WRs and SDs\2011-0137 - Transfer of Pensions budgets to Treasury and Resources - KH\WR - Transfer of Pensions budgets to Treasury and Resources - KH.doc

 

 

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