The public sector pension scheme (Public Employees Contributory Retirement Scheme, or PECRS) is being reviewed with the aim of ensuring it is sustainable, affordable and fair in the future.
The review is needed because:
- people are living longer and claiming pensions for longer - since the late 1980s paying a pension has become some 30% more expensive
- the scheme’s actuary has reduced estimates on future investment returns - this means the cost of PECRS benefits will increase and may continue to increase further
- while lifespans have increased and costs have risen, the pension contribution rate has remained the same since the 1980s - the actuary has confirmed the contribution rate is too low
- the scheme’s regulations were set in 1989 and are now considered outdated, due to lifestyle and employment changes
Another aspect that will be reviewed is how benefits are distributed, as some groups of employees currently receive a more valuable pension package than their colleagues, despite paying the same contribution rate.
In conducting this review, the States of Jersey will work closely with the Public Employees Pension Scheme Joint Negotiating Group, which negotiates pension provision for the majority of public sector employees.
The Chief Minister, Senator Ian Gorst, who chairs the States Employment Board, said “Around the world, many governments are having to consider the sustainability and affordability of their pensions systems, and the same is true of Jersey.
“The aim of this review it to find a way to revise the existing scheme so it is sustainable, affordable and fair and will not require further major amendments in the near future.”
It is hoped that, following the review, changes to the scheme will be implemented from January 2015.