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REVIEW OF PUBLIC SECTOR PENSIONS 2009
STARTING POINTS
Government’s 4 Principles
• SIMPLICITY
• AFFORDABILITY
• GOVERNANCE
• TOTAL REMUNERATION
3 STRANDS OF DEVELOPMENT
• SUPERANNUATION ACT 1984
Breaks link with UK
• GOVERNANCE ARRANGEMENTS
2009 – we must apply UK Governance
• PUBLIC SECTOR REVIEW OF PENSIONS
4 principles/unified pension scheme
How does the current review approach the
issues?
Review/Superann Act 1984
4 Principles
New Scheme Consultation
Benefits of current approach?
• Revolutionary?
• Achieves Government Aims?
• Immediate?
• Simple?
Disadvantages?
• Too quick?
• Industrial Relations Issues?
• Untried/tested?
• On island expertise?
• Sustainable/affordable?
How are we proposing to change that
approach?
Review/Superann Act 1984
4 Principles
Negotiation on the Approach
Consultation on the detail
Superannuation Act 1984/
Break with UK
Governance/Self sustaining
schemes
Public Sector Review/
New pensionscheme
Benefits of our approach?
• Evolutionary?
• Achieves Govt aims?
• Protects our members & the public purse?
• Resolves major IR issues?
• Flexible/pick n mix?
• Additional rationale for change?
Disadvantages?
• Cash flow in short term?
• NHS?
• Slower/more conservative change?
• Still needs expertise?
• More complex than current proposals?
Superannuation Act 1984
• Change not just around breaking UK link
• But it has become about that
• Members and politicians want decision making
on major change to remain primarily with
Tynwald
• Breaking the link with the UK
Problems/Transfer Club
Governance• Change - determined by valuations/viability of the
scheme• Governance groups agree change on an ongoing basis• Groups - 10 people - equal employer/employee
representation • UK schemes are run or are moving towards being run on
this basis• Over 99% of Prospect members voted in favour of
Governance groups• Why? Fair and self sustaining
Governance - if we follow the UK
Harbours1.5%
LeisureServices
5%
FSC1.5%
IPA1.5% Officers
Of theBoards1.5%
NatTransport
5%
Whitley5%
MEA6%
ManxRadio6.5%
PCSPS1.5%
GovGroups
Too many groups
Differing valuations
Different from UK
Different outcomes
We break the link with the UK
10 groups
3 sections
Leisure Services has 1 member
Same scheme – Different % rates
Governance – if we follow the UK
PCSPS – 3 sections
•10 schemes
•10 valuations
•10 Governance groups = 100 people
•Valuations will differ/differ from the UK
•So change will be different from the UK
•Inbuilt and irreconcilable factor
Governance
THE BREAK WITH THE UK MUST HAPPEN
REGARDLESS OF ALL OTHER DEVELOPMENTS
THE LINK WITH THE UK MAKES THIS
PARADOXICALLY
AN ABSOLUTE REQUIREMENT
But we can then modify to…
Over 1.5%schemes
New scheme
1.5% schemes
GovGroups
These groups could be one group?
Manx Governance
•Retain the schemes
•Close them to new entrants
•Change the SA 1984
•Adopt Governance - a modified UK model
•1 or 2 Governance groups max
•Apply to other schemes e.g. NHS/Teachers
•A new scheme…..
Public Sector review
• Based on the outcome of the current review
• Permanently open to anyone who wishes to join
• Movement may be generated by numerous
factors
E.g. NUVOS members – this scheme worse
than that currently proposed
• Governance group for new scheme
Pensions Office/Board
Governance Groups
Treasury
Employers
Tynwald
Pensions Board
Pensions Office/Board
•An independent body to oversee and liaise on
• Pensions strategic development & management
• Administration and operational delivery
• Strategic workings of the different interest groups
i.e. Governance groups, Tynwald, employer groups
etc.
• UK resources/development/expertise
Copying the Principle
•Apply the approach to other schemes
e.g NHS/Teachers
•Take account of specific issues
e.g. recruitment/retention/transfer club
•We are moving towards uniform schemes
e.g. Teachers becoming like PCSPS
Conclusions
• Evolved & consensus approach
• Voluntary and staggered approach
• Integrated approach
• Pick n mix approach
choose the best
exclude the worst
draw on UK expertise/experience
Conclusions
• SIMPLICITY less schemes, long term – ONE
• AFFORDABILITY self sustaining
• GOVERNANCE robust, partnership approach
• TOTAL REMUNERATION flexible enough to meet the needs of differing
groups