RCN Isle of Man branch may be aware that The Public Sector Pensions Authority (PSPA) carried out a consultation exercise in 2019 in relation to Cost Sharing for Public Sector Pension Schemes in 2019 to obtain views about the principles of cost sharing that will be applied across all PSPA public sector pension schemes.
After extensive discussion and deliberation, the PSPA concluded that it will progress an option of the 75%:25% split with a small 0.5% of pay buffer.
The full consultation can be found here.
However, while staffside organisations are in favour of cost sharing should it result in making pension scheme sustainable, stable and fair, they have several concerns about the selected option which include:
- The proposals introduce unnecessary instability into the pension scheme
- There is potentially an open-ended increase for employers.
- The proposal for a 0.5 per cent buffer does not provide sufficient protection against unnecessary change to the design of the scheme.
Staffside organisations believe that a preferable course of action is the earlier proposal for a 2 per cent buffer and a 12-15 year recovery period rather than eight years because:
- This would cap the cost of the scheme to taxpayers which ensures that the scheme is sustainable.
- It would also minimise the number of times that changes have to be made to the scheme following a cost sharing valuation.
- A shorter recovery period will lead to unnecessary volatility which could lead to a situation where contributions are increased to unaffordable levels for members.
Staffside organisations have drafted a response to the PSPA which we would grateful if you could send by Monday 2 March 2020 when feedback will be considered by the PSPA and then the Council of Ministers before finalising the statutory documents for Tynwald approval soon after . The template can be found here.
