Request
A
Recent transfer out valuation requests in April / May revealed a difference in value of around 20%. It would appear that there has been a change to the rules for transfer out valuations.
Is this the case?
B
If so, what legal framework was used to make this decision and what are the technical workings of these changes?
C
Does this decision require the employee’s representatives support?
D
If not where is this stated in the pension agreement with the employees that these changes can be made arbitrarily?
E
Copies of the minutes from meetings that supported this decision. (If it took place)
F
What communication has been sent to pension members informing them of these changes?
Response
A
The terms for transfers out are determined by the Scheme Actuary using the actuarial funding assumptions.
Following the completion of the 2016 actuarial valuation in February 2018 the Scheme Actuary updated the Public Employees Contributory Retirement Scheme (PECRS) transfer out factors to reflect the best estimate assumptions adopted for the 2016 actuarial valuation. The governing body for the pension scheme, the Committee of Management, agreed these changes. For some members the changes have meant that their transfer out values have increased and for others it means they would have decreased.
B
The amount paid when a member transfers out from the Public Employees Pension Fund (PEPF) is calculated using transfer factors determined by the Scheme Actuary in accordance with the Public Employees (Pension Scheme) (Administration) (Jersey) Regulations 2015. The Regulations require the factors to be based on principles set out in the Funding Strategy Statement and to be approved by the Committee of Management.
A Public Employees Contributory Retirement Scheme (PECRS) transfer value represents the amount of money that it is estimated the Fund would need to invest now to make payment of the member’s accrued benefits. For a PECRS member the amount required now is calculated on the basis of the Scheme Actuary’s best estimate of future investment returns on the PECRS assets.
Each quarter, the Scheme Actuary reviews their best estimate of future PECRS investment returns in the light of up-to-date market conditions and views. The Scheme Actuary supplies a table of “market adjustment factors” to the Administrator to ensure that the transfer value calculation is based on that up-to-date best estimate of future investment returns (the other elements of the calculation remaining unchanged).
C
The PECRS benefits payable to scheme members who take a pension from the scheme have not changed.
Transfer out factors have always been updated regularly to reflect the latest market conditions and views. Changes to transfer factors do not require the agreement of employees.
D
The basis for calculating transfer out values is determined by the Scheme Actuary and agreed by the Committee of Management. It is not a matter for employee agreement.
E
Open minutes for Committee of Management meetings are available from the Public Employees Pension Team (PEPT) and therefore exempt under Article 23 (Accessible by other means) of the Freedom of Information (Jersey) Law 2011.
The PEPT can be contacted via email to pept@gov.je.
F
Transfer out factors have always been changed regularly by the Scheme Actuary to reflect market conditions. The impact of changes in factors can affect different scheme members differently depending on their personal circumstances. Scheme members requesting transfer values receive member specific information at the point of calculation using the transfer factors appropriate at the time of calculation. Transfer values are calculated in a way to ensure that the Fund transfers out an appropriate amount to reflect what the Fund would need to invest now to make payment of a member’s accrued benefits.
Article applied
Article 23 Information accessible to applicant by other means
(1) Information is absolutely exempt information if it is reasonably available to the applicant, otherwise than under this Law, whether or not free of charge.
(2) A scheduled public authority that refuses an application for information on this ground must make reasonable efforts to inform the applicant where the applicant may obtain the information.
