Guernsey and Jersey social security funds lose £161 million

[moot]

I don't think we should let this subject rest until we know all the facts.
Sofar we know that Jersey has 3 main States funds:
Social Security Fund which has lost £61.000.000  but we do not know what percentage this represents of the total fund nor do we know over which period this was lost
The Stabilisation fund which holds £71.000.000 as of this week
The Strategic Reserve Fund or Rainy day fund which held £521.000.000 on 30th Sept 2008, just before the stock market really started to nosedive
Then of cours there is the Stated pension fund - we don't know how this is holding up in the current financial crisis but we know the the Guernsey  States pension fund has lost £250.000.000 recently (and probably more by now)
Shockingly two thirds of this fund was held in equity
We should watch out for further snippets of news as they come and seem to disappear very quickly

Hidden on page 7 of the JEP of 27th Nov is an article which heads SAVE NOW TO AVOID FUTURE DEBT . The date is again significent as it is the day after the deputy elections and perhaps they hoped no one noticed it. The header should be blown up,framed and hung up in the offices of Ozouf, Le Sueur and MacClean ( The BIG SPENDERS )

The article is half page and exerts are:
An expert panel that advises the Treasury Minister on fiscal policy has concluded that the States need to save money to avoid getting into serious debt over the next five yearsIt warned that the island could run up deficits totalling £250 million over the next five years it States spending rises and income stays flatThe panel advises that £63 million be transferred quickly, from the consolidated account- The States current account- to the stabilisation fund, which is effectively a medium term reserve account
It also advises that there should be no more withdrawals from the the consolidated fund as cash may be needed to fund emergency measures in the future to prop up the economy in the event of ill effects from a major downturn
Senator Le Sueur accepts the panel's recommendations and is likely to incorporate the updated views in next month's budget. ( Did he ? )
The panel expressed concern about the longer-term effects of a States decision to spend more than £50 million over the next five years to boost benefits to the island's poorest
A previous panel recommendation that there be no changes to the long term strategic reserve stays in place
They also believe that the economy is likely to grow in 2009 but at a much slower rate than the seven percent real growth seen in each of the last two years
It predicted that inflation will fall in Jersey
Fiscal Policy Panel chairman Joly Nixon said that the island would not be immune from the effects of a prolonged downturn in the UK and wider global economies
He warned that should expenditure increase beyond that currently expected then there is a real risk that States finances could deteriorate significantly in the medium term
So there you are Ministers, you have been told, hands off the consolidated fund which according to my above quote should now only hold approx £8 million ( 71 - 63 ) that is if Terry has done what the panel recommended. Everyone should keep an eye on Ozouf as he is terrible with money and is now in charge of all of it !!!!
If the States ever loses a large amount of our money due to bad investment etc remember we will be the last to know
Sarh F if you are still here please keep them on their toes on behalf of all us tax payers and don't let them get away with nothing !

[moot]

I don't think we should let this subject rest until we know all the facts.
Sofar we know that Jersey has 3 main States funds:
Social Security Fund which has lost £61.000.000  but we do not know what percentage this represents of the total fund nor do we know over which period this was lost

An article in JEP of 28th Nov is headed : STATES RESERVES FALL BY UP TO 22%
It reads as follows : States reserves have been hit by the share price crash
Social Security reserves have fallen by 22% to £529 million and the Strategic Reserve has dropped by 4% to £502 million since the start of the year
Funds were hit because shares they have invested in have dipped dramatically in value over the course of the year. ( Nothing new there ! )
The London FTSE index dropped by 32% between the start of the year and the end of October, but the loss in the funds is smaller because only a proportion of them is invested in shares ( what percentage please ! )
Earlier this week it was revealed that the States pension fund - The Public Employee Contributory Scheme - had fallen by 20% over the course of the year, wiping £240 million off the its value
T Le Sueur said that, despite the drop, he was comfortable ( complacent ? ) with the way the funds were managedHe said : In the current financial markets I am satisfied with the strategy within which the funds are being managed.Although the performance of the funds must be assesed over the longer term we are not complacent and both the Treasurer of the States and I will continue to monitor the situation and take appropiate action from our investment manager ( I hope he is the best ! )
Social Security payments are currently being met by contributions and not money held in the reserve fund. There is therefore no need to release any of the assets held in these funds to meet ongoing payments. Although the value of the Social Security Fund has fallen by 22% there is no immediate problem
All payments out of the fund tp retired States employees are being covered by payments coming in from existing staff. According to the last actuarial review that can continue for another five yearsAll good and well but from my quote above we know that the Social Security fund lost £61 million and we now know that this represent 22%
So if it now holds £529 million it must have lost £142 million and the total before loss must have been £645 million. That is very different from the £61 million
Is the wool being pooled over our eyes ?

[moot]

Doesn't look good to me, but I'm not an accountant. I don't think things are going to get any better, if anything they could get a lot worse. What happens then anyone?

Does anyone know if the new treasury minister has any banking/accountancy qualifications?

I believe the then Treasury Minister and now Chief Minister is a fully qualified chartered accountant and I must say that when he was chief at Social Security he did manage the fund very well but they were very different and much easier times !

[moot]

I have a horrible feeling the lid is about to blow off the whole thing. If it does everyone is in the ****.

If there ever was a lid !

[moot]

An article JEP of 29th Nov heads : STATES PENSION FUND CAN RIDE OUT STOCK MARKET CRASH

The article reads as follows:
The stock market crash has wiped out more than £240 million off the value of the States workers fund. The independent chairman of the fund confirmed that 20% of the value of the fund was lost between the start of the year and October. Since the start of the month, however, The London Stock Exchange has fallen more than 11% wiping even more of the value of the fund
The chairman of the committee of management for the Public Employees Contributory Retirement Scheme , Ron Amy, said that the loss is not necessary a problem because the shares that make up the loss will not have to be sold for ten years
By that time, he said they are likely to have regained their value ( he hopes !)
Last week the JEP reported that the fund was likely to be down by up to £218 million because shares held by the fund have plummeted in value. But the actual loss is even bigger. The fund is down 20%, said Mr Amy. It is down from £1.18 billion which was the last asset at the end of last year and the asset value at the end of October was £940 million. The Public Employee Contribution Retirement Scheme ( PECRS) fund is a final salary scheme for States employees. It is not guaranteed by the States and shortfalls have to be made up by reduced pensions or increased contributions from members among the States workforce. A committee of representatives, which is comprised of members from both the States and the employee sides, manages the scheme, with the help of advice from professionalsMr Amy is the States appointed chairman of the committee and he said that, despite the losses the scheme is secure (oh yes ! )
Over five years, it has gone up 30%. Although we have seen a decline we had an exceptional period of returns over the last five years, he said
The important point we have been making is that because we don't have to sell assets, and that will probably be the case over the next ten years, we are in a position to ride this  out Hopefully the asset values will recover. It's not all doom and gloom, as long as in due course the market gets back to more sensible levels
 

Scary stuff for sure !

[danrok]

I have no confidence in this, "you pay for me now and someone else will pay for you later" scheme. What happens if no one pays for me? Have others thought about this yet or are they happy and contented trusting the establishment to honour their pledges?

That's just it.  What we have is nothing more than a legalised Ponzi scheme.

Hoping that share prices will just recover to where they were is a fool's game.  The sit back and do nothing approach!  How much are we paying someone to do that?

Unless the pool of people paying in to the States' pension scheme keeps on increasing, then it will all fall apart.  No wonder they keep making up new jobs, for no good reason.  Playing that card only means that the inevitable failure will only be worse when it does happen.

[moot]

That's just it.  What we have is nothing more than a legalised Ponzi scheme.

Who do you think will "Madoff" with the money ?

[newmac]

The problem is the now Chief minister mucked up so many things because he always believed he new better than anyone else and the new Treasury minister can't help spending money on his beloved finance industry.

I think between the two of them and Senator Maclean they'll bankrupt the Island

[moot]

The problem is the now Chief minister mucked up so many things because he always believed he new better than anyone else and the new Treasury minister can't help spending money on his beloved finance industry.
I think between the two of them and Senator Maclean they'll bankrupt the Island

Remember the BIG SPENDERS ! Old habits die hard as they say...
Give them an excuse they will continue spending our hard earned dosh
£12.000.000
in just 3 years
by just 12 small time politicians !
http://www.thisisjersey.com/2008/10/27/big-spenders/

[Mr Susan]

So capitalism has 'cost' the Jersey tax payer considerably more than Lenny Harper or 'those people' that live off the state...I wonder what the resident motormouth tory would make of it? If only he wasn't banned and could give us the wisdom of his years in finance *sighs wistfully* 

[moot]

Article JEP – 01/02/03

Pensions ‘could bankrupt Jersey’ STATES pension liabilities could bankrupt the Island, the Jersey Life and Pensions Society has warned.
The society says that both the Social Security Fund and the Public Employees Contributory Retirement Scheme (PECRS) are facing significant shortfalls, in part due to poor stock market performance. Finance president Senator Terry Le Sueur (pictured) acknowledges there are ‘warning clouds on the horizon’. He says the value of the underlying assets of the Social Security Fund which pays out States old age pensions has fallen by around one-third in the past two to three years, in line with the FTSE index. Senator Le Sueur said that although in June the triennial report from the government actuary had been ‘encouraging’, he did not expect future reports to reflect the same optimism. He said: ‘Pension funds are a long-term operation and it’s a problem for everyone. As I have said in the past, the Social Security Fund is really the bottom line on which people are encouraged to make their own provisions for old age.’ Ian Shepherd, the president of the Jersey Life and Pensions Society, said: ‘If people think they can rely on the state, they are sadly mistaken. Unless they put aside savings themselves, no one else is going to do it for them.

[moot]

TAX PAYERS TO FUND PENSION SHORTFALL  - JEP 03/05/06

SHORTFALLS in the teachers’ pension fund are to be met by an annual injection of £1.3m a year from taxpayers’ money.

The Council of Ministers has agreed to meet the cost of the shortfall but Chief Minister Frank Walker said the money was already included in financial forecasts and would not have an adverse effect on future budgeting.

‘We are budgeting for it and we can cope with it,’ said Senator Walker.

The Council of Ministers has confirmed that £1.3 million will be added to the cash limits of the Education department in 2007 to meet the additional cost of the employer’s contribution.

Meanwhile Senator Walker said that two decisions taken by the States last year relating to the main pension scheme of States workers firmly dealt with any possible future black hole.

[moot]

'No way out' of pension shortfall  Article JEP 09-04-08

THE States is effectively stuck with nearly £200m of public sector pensions deficit, according to new reports issued today
Comptroller and Auditor General Chris Swinson believes it would not be in the wider interests of the Island to radically change the schemes, as it would make it very difficult to recruit essential front-line service personnel from the UK.
In effect he concludes that switching to schemes that would be less of a burden on taxpayers based on contributions rather than benefits would make it virtually impossible to recruit enough doctors, nurses, police officers and teachers from the UK.

[fryertucker]

The whole scheme is a mess.

[danrok]

'No way out' of pension shortfall  Article JEP 09-04-08

THE States is effectively stuck with nearly £200m of public sector pensions deficit, according to new reports issued today
Comptroller and Auditor General Chris Swinson believes it would not be in the wider interests of the Island to radically change the schemes, as it would make it very difficult to recruit essential front-line service personnel from the UK.
In effect he concludes that switching to schemes that would be less of a burden on taxpayers based on contributions rather than benefits would make it virtually impossible to recruit enough doctors, nurses, police officers and teachers from the UK.

Yet, they can still afford to suspend Chief of Police Graham Power!