Pension fund reform plan reckless, unions say

The States will debate the proposal later this month

A proposal to cut public sector pension pot contributions to zero for three years has been branded "reckless" by unions.

Several have signed a joint letter against deputies' suggestion to reduce contributions from 1 January 2024 through to 31 December 2026.

Deputies Heidi Soulsby and Gavin St Pier were behind the suggestion and said it was based on the pension pot being 107% funded from the 2020 actuarial valuation.

They said the plan would free up about £76m to fund capital expenditure and the Government Working Plan.

The States are expected to debate the funding and investment plan later this month.

Eight of the island's trade unions have joined forces to fight the plan and described it as "foolhardy and reckless".

They said their concerns centred around the financial stability of the scheme and the lack of consultation.

However deputies Sasha Kazantseva-Miller, Mr St Pier and Ms Soulsby said they understood the unions' reaction but conversations around the fund were needed.

"We believe that there has been an understandable but significant overreaction to this proposition," they said.

The pension fund amounted to an "effective overvaluation of £105m on a current fund value of £1.6bn", they said.

Under the proposal, employee contributions and employer contributions to the defined contribution part of the fund, would continue.

Analysis by John Fernandez, Political Reporter

Policy and Resources, the Chamber of Commerce, the Guernsey Policy and Economics Group (GPEG) and Deputies Heidi Soulsby and Gavin St Pier have all signalled the need for reform of public sector pensions.

Aside from the empty rhetoric of "thousands of civil servants sitting in Frossard House on gold plated pensions", which doesn’t stand up to any scrutiny, there is an acceptance across government that reform is needed.

In a time when savings need to be made, it’s a place where many politicians eyes are diverted, with the hope of some savings for the public purse.

It’s not low-hanging fruit, but it’s a way for some of avoiding the question of an island goods and services tax (GST).

The risk is, much like in 2015, tinkering with a scheme with thousands of members, many of which are signed up to unions, could result in significant disquiet, in an island where significant industrial action is almost an alien concept.