Public Sector Pensions (Cost Sharing) Scheme 2020
As part of the ongoing programme to ensure that the island’s unfunded public sector pension schemes remain sustainable into the future, the PSPA established a cost sharing mechanism as the means by which future sustainability will be achieved when it introduced the Public Sector Pensions (Cost Sharing) Scheme 2020.
To do this, the PSPA will measure cost changes over a period of time relating to “member costs” (salary changes, longevity, benefit options and demographic changes) and thereafter, sharing any cost changes above a 0.5% of a pensionable pay “buffer” - 75% with scheme members and 25% with Employers/Government. Cost changes include both cost increases and cost decreases.
The first cost sharing valuation of the Schemes will take place on 31 March 2022 with results due mid to late 2023 with any resultant change to member future pension accrual rates or contribution rates likely to be made in 2024.
The Cost Sharing process has started with the PSPA setting the “Cost Sharing Baseline” position from which future cost sharing changes will be assessed. The Cost Sharing “Baseline Position” has been set using the scheme member data as at 31 March 2016 and a set of financial and demographic assumptions applied to an actuarial methodology as set out in the Public Sector Pensions (Cost Sharing) Scheme 2020.
To find out more about Cost Sharing, including the information used to calculate the Cost Sharing Baseline Results and how Cost Sharing may impact on your future pension benefits and what you pay as a contribution, then please refer to the PSPA’s Cost Sharing page on its website at www.pspa.im
Issued by the PSPA