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