Pension Contributions for Family Nursing & Home Care Pre-1987 PECRS Past Service Debt
- Purpose of the Report
1.1 The Chief Minister is asked to accept the transfer of budget from Health & Social Services, in relation to the pension contributions for Family Nursing & Home Care’s Pre-1987 PECRS past service debt.
1.2 That the Finance Director be requested to action the budget transfer.
- Background
2.1 In agreeing P.190/2005 on 27th September 2005, the States confirmed responsibility for the Pre-1987 Debt past service liability which arose when restructuring the PECRS arrangements with effect from 1st January 1988. It involves repayment of the Debt by 31st December 2083 via monthly payments indexed on each 1st January in line with the average increase to States employees’ pay. The liability also applies to admitted bodies, including Family Nursing and Home Care (FNHC). FNHC repayments for its share of the Debt are £7,463 per month and are currently funded through a grant from the Health and Social Services Department (HSSD).
2.2 FNHC do not hold significant reserves and have been advised by their auditors that they are required to include the debt within their balance sheet. This presents problems to them in respect of fund raising, as most organisations will not provide financial grants to charities with negative reserves. Repayment of the Debt does not present any problems to FNHC, as it is funded through their HSSD grant.
2.3 To resolve this issue in order to maintain FNHC’s financial stability, on 13th May 2008 the States approved proposition P.46/2008 concerning the debt of Family Nursing and Home Care Service and agreed to take responsibility for the pre-1987 PECRS past service debt.
2.4 At 31st December 2007 the debt had a capitalised value of £3,052,444.
2.5 By approving proposition P.46/2008 the States agreed to:
· Pay monthly instalments of £7,463 (subject to annual indexation) so that the debt is satisfied by 31st December 2083 (or earlier).
· Assume the same obligations in relation to the debt currently attributed to Family Nursing and Home Care under P.190/2005.
· Reduce the Grant payment to Family Nursing and Home Care by £89,556 per annum, £44,778 in 2008 (part year/6 months), subject to annual indexation.
- Comments
3.1 By reducing the Grant to Family Nursing and Home Care, Health and Social Services is releasing the budget for transfer to the Chief Minister’s Department. Therefore, the net effect on States expenditure will be zero.
- Recommendation
4.1 That the Chief Minister accepts the budget from Health and Social Services, as indicated above and requests that the Finance Director actions the transfer.
- Reason for the Decision
5.1 The budget transfer is taking place to permanently transfer funding for the FNHC Pre-1987 pension contributions to the Department making the payments, thus simplifying the administration process for both the States and Family Nursing and Home Care Services.
Loretta Outhwaite
Finance Director
Chief Minister’s Department
25.07.08