TREASURY AND RESOURCES MINISTER
Departments’ contribution to the Public Employees contributory retirement scheme (pecrs) pre 1987 debt repayment
1. Purpose of Report
1.1. To agree to transfer budget, equivalent to 2% of members’ pay, to the Chief Minister’s Department in order to ring fence the funds required to enable the repayment and servicing of the Public Employees Contributory Retirement Scheme (PECRS) pre 1987 debt.
2. Background
2.1. On 27 September 2005 the States approved amendments to the PECRS to address the pre 1987 deficit of the scheme (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. During the 2006 Budget process Departments’ revenue budgets included a provision to increase their PECRS contribution from 15.16% to the required 15.6%.
3.2. It has been proposed that the budget for the 2% element for repayment and servicing of the debt be transferred from all Departments’ budgets to a central HR vote held within the Chief Minister’s Department. This arrangement will lessen the burden on Departments to make monthly repayments and also insulate Departments should the costs of the repayments increase or staff numbers decrease.
3.3. Alongside this arrangement States Payroll has been adjusted such that Departments will be charged the reduced 13.6% PECRS contributions from January 2006.
4. Recommendation
4.1. It is recommended that the Minister agrees to transfer budget equivalent to 2% of members’ pay, as shown on the attached schedule, to a central HR vote within the Chief Minister’s Department.
5. Reason for Decision
5.1. To ring fence the funds required to enable the repayment and servicing of the Public Employees Contributory Retirement Scheme pre 1987 debt for the period through to 2083.
States Treasury Corporate Finance
22 March, 2006 for Decision Meeting 20/03/2006
Calculation of 2% PECRS contribution for the ongoing repayment of the pre 1987 debt