Jersey Teachers Superannuation Fund Valuation as at 31 December 2001

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A decision made (24.04.06) to note the results of the Actuarial Valuation as at 31 December 2001 of the Jersey Teachers Superannuation Fund.

Subject:	Jersey Teachers Superannuation Fund (JTSF) Valuation as at 31st December 2001
Decision Reference:	MD-ESC-2006-0028	Exempt clause(s):		None
Type of Report (oral or written):	Written	Person Giving Report (if oral):		n/a
Telephone or e-mail Meeting?	n/a	Report File ref:		ESC/G/MD/MR/JTSF Valuation as at 31 December 2001
Written Report – Title:	As title	Written report – Author:		Assistant Director, Resources
Decision(s): (i) noted the results of the Actuarial Valuation of the JTSF as at 31st December 2001 undertaken by the Government Actuary’s Department. (ii) agreed the attached report for presentation to the States at the earliest opportunity.
Reason(s) for decision: Article 3 (11) of the Teachers’ Superannuation (Jersey) Law 1979 requires that ‘an Actuary, appointed for the purpose by the Committee, shall review the operation of the Fund……….. during the period ending with 31st December in every fifth or earlier year…………..the actuary shall make a report to the Committee on the financial condition of the Fund and the adequacy or otherwise of the contributions payable under this Law to support the pensions and other benefits payable thereunder’. Article 3 (12) provides that ‘a copy of every report under paragraph (11) shall be laid before the States as soon as may be after it is made’ The final valuation report was not signed by the Government Actuary until 22 December 2005 as detailed work was being undertaken to consider the transfer of membership into the Public Employees Contributory Scheme (PECRS). The Council of Ministers has confirmed that an amount of £1.3 million will be added to ESC’s cash limit from 2007 to meet the additional cost of the employer’s contribution so it is now an appropriate time to present the attached to the States in accordance with Article 3 (12) of the Teachers’ Superannuation (Jersey) Law 1979.
Action required:  Provide Teacher Representatives with copies of the attached report to the States and Valuation as at 31/12/01.
Signature:			Date of Decision:

Jersey Teachers Superannuation Fund Valuation as at 31 December 2001

Department for Education, Sport and Culture Report for Minister
Subject:	Jersey Teachers Superannuation Fund (JTSF) Valuation as at 31 December 2001
Exempt Clause:	None	Date:	19 April 2006

Authors:	Liz Middleton – Assistant Director, Resources

1. Introduction

The purpose of this report is to ask the Minister to:

(i) note the results of the Actuarial Valuation of the JTSF as at 31 December 2001 undertaken by the Government Actuary’s Department.

(ii) agree the attached report for presentation to the States at the earliest opportunity.

2. Background

Article 3 (11) of the Teachers’ Superannuation (Jersey) Law 1979 requires that ‘an Actuary, appointed for the purpose by the Committee, shall review the operation of the Fund……….. during the period ending with 31st December in every fifth or earlier year…………..the actuary shall make a report to the Committee on the financial condition of the Fund and the adequacy or otherwise of the contributions payable under this Law to support the pensions and other benefits payable thereunder’.

Article 3 (12) provides that ‘a copy of every report under paragraph (11) shall be laid before the States as soon as may be after it is made’

The final valuation report was not signed by the Government Actuary until 22 December 2005 as detailed work was being undertaken to consider the transfer of membership into the Public Employees Contributory Scheme (PECRS). Consequently the attached report includes an estimate of the financial position of the Fund level as at 31 December 2003.

Under the existing provisions of the Fund as at 31 December 2001, ie no widowers’ benefits in respect of post 1988 service and pension increases funded from the Committee’s revenue budget rather than the Fund, there was a valuation surplus of £16.6 million.

However, the former Education, Sport and Culture Committee has made changes to the Teachers Superannuation (General Provisions) (Jersey) Order 1986, in order to provide for widowers’ benefits in respect of post 1988 service and has been reviewing how future pension increases may be funded from Fund to reduce the increasing demands on the Committee’s revenue budget. Including these provisions into the valuation as at 31 December 2001 there was a valuation deficiency of £64.4 million.

The Minister is aware that at its meeting on 24 October 2005 the Education, Sport and Culture Committee considered the Government Actuary’s Department report in connection with the actuarial valuation of the JTSF as at 31st December 2001, together with proposals for dealing with the deficit revealed if pension increases were to be funded from the Fund. The Committee agreed, in principle, to provide for a Teachers Scheme similar to the Public Employees Contributory Retirement Scheme (PECRS). The cost of this proposal would be an employer’s contribution rate of 16.8% which is 1.2% above that paid in respect of PECRS, however this can be explained by the cost of the delay in increasing employer’s contributions since 1996. (Current employer’s contribution rate is 9.95%). Existing members will retain existing benefits but pension increases from 1 January 2007 will be met from the Fund. New Members from 1 January 2007 will receive benefits in line with the Public Employees (Contributory Retirement Scheme) (New Members) (Amendment No 10) (Jersey) Regulations 2005 which were agreed by the States on 27 September 2005.

The Treasurer was advised of the Committee’s preferred way forward and on 15 November 2005 met with officers of the Department for Education Sport and Culture and Presidents of the Finance and Economics and Education, Sport and Culture Committees to discuss a number of funding issues including the future of the JTSF. As a result the Treasury and Resources Minister wrote to the Minister on 9 December 2005 stating that ‘The new scheme, proposed to come into operation from 1 January 2007, will address future requirements. The Council of Ministers will be the appropriate body to consider how the additional cost of the increased employer’s rate will be met’.

The Council of Ministers has confirmed that an amount of £1.3 million will be added to ESC’s cash limit from 2007 to meet the additional cost of the employer’s contribution so it is now an appropriate time to present the attached to the States in accordance with Article 3 (12) of the Teachers’ Superannuation (Jersey) Law 1979.

3. Recommendation

It is recommended that the Minister:

(i) notes the results of the Actuarial Valuation of the JTSF as at 31 December 2001 undertaken by the Government Actuary’s Department.

(ii) agrees the attached report for presentation to the States at the earliest opportunity.

REPORT FOR PRESENTATION TO THE STATES

MINISTER FOR EDUCATION, SPORT AND CULTURE

JERSEY TEACHERS SUPERANNUATION FUND

ACTUARIAL VALUATION AS AT 31 DECEMBER 2001

At the request of the Education Department the Government Actuary carried out an actuarial review (or valuation) of the Fund as at 31 December 2001. The previous valuation was carried out as at 31 December 1996.

The Government Actuary concluded that ‘the actual recommended employer contribution rate will depend on which changes (if any) to the Scheme provisions are implemented with effect from 1 January 2004 (particularly whether the Fund will meet the cost of pension increases), and the period over which any surplus or deficiency is amortised’.

As negotiations to transfer membership to the Public Employees Contributory Retirement Scheme (PECRS) ceased the former Education, Sport and Culture Committee agreed, in principle, to provide for a Teachers Scheme similar to the Scheme (PECRS), subject to the necessary approvals to the Teachers’ Superannuation (Jersey) Law 1979 and associated Orders which will be brought to the States during 2006. The cost of this proposal would be an employer’s contribution rate of 16.8% which is 1.2% above that paid in respect of PECRS, however this can be explained by the cost of the delay in increasing employer’s contributions since 1996. (Current employer’s contribution rate is 9.95%). Existing members will retain existing benefits but pension increases from 1 January 2007 will be met from the Fund. New Members from 1 January 2007 will receive benefits in line with the Public Employees (Contributory Retirement Scheme) (New Members) (Amendment No 10) (Jersey) Regulations 2005 which were agreed by the States on 27 September 2005.

The Treasurer was advised of the Committee’s preferred way forward and subsequently the Treasury and Resources Minister wrote to the Minister on 9 December 2005 stating that ‘The new scheme, proposed to come into operation from 1 January 2007, will address future requirements. The Council of Ministers will be the appropriate body to consider how the additional cost of the increased employer’s rate will be met’.

The Council of Ministers has confirmed that an amount of £1.3 million will be added to the Department’s cash limit from 2007 to meet the additional cost of the employer’s contribution so it is now an appropriate time for the Minister to advise the States of the results of the earlier valuation.

The next actuarial valuation will be undertaken as at 31 December 2006.