PUBLIC SECTOR PENSION SCHEME

Introduction
The States of Guernsey provides a defined benefit pension scheme on a Career Average Revalued
Earnings (CARE) basis, which provides a benefit based on your average earnings over the whole
period of your career.
Main benefits
The Scheme provides:

a pension linked to your pensionable earnings (up to 85,552*) over your whole career, increased
each year in line with inflation (up to 6%) together with a lump sum at retirement equal to 3 times
your pension

an option to take additional tax free cash in exchange for part of your pension (subject to Income
Tax limits)

special early retirement terms (subject to certain conditions) if you have to retire early because of
ill health

a death benefit of 3 times your final pay if you die in service

a pension for your spouse or qualifying dependant after your death

How is my pension calculated?

Your pension builds up at 1/80th of your pensionable earnings (up to 85,552*) each year. When you
retire, these yearly amounts (revalued to retirement in line with RPIX price inflation capped at 6% pa)
are added together to calculate your retirement pension.
Consider the following example:
Year 2016

pensionable pay = 25,000

pension accrued in 2016 = 25,000 x 1/80 = 312.50 pa

Year 2017

pensionable pay = 25,750

pension accrued in 2017 = 25,750 x 1/80 = 321.88 pa
inflation for 2017 = 3%
pension accrued at the end of 2017 =
(312.50 x 1.03) + 321.88 = 643.76 pa

Year 2018

pensionable pay = 26,523

pension accrued in 2018 = 26,523 x 1/80 = 331.54 pa
inflation for 2018 = 3%
pension accrued at the end of 2018 =
(643.76 x 1.03) + 331.54 = 994.61 pa

The pension will continue to accrue in the same way for each year of employment.
In addition to the pension, a lump sum of 3 times the pension would be payable at retirement. You
also have the option to swap part of your pension for additional tax free cash at retirement.
Contributions on pensionable earnings above 85,552* are paid into a defined contribution section of
the Scheme.

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When can I retire?

Your Normal Pension Date (NPD) is the State Pension Age (SPA). This is the age at which you can
draw your benefits in full.
The SPA is currently age 65. However it will increase to age 67 by 2031. It will start to increase in
2020 and will increase by 2 months each year until it reaches age 67. The SPA may increase further
in the future as the States have announced that the intention is to raise it to age 70 by 2049. If the
SPA changes, your NPD will change also.
You do not have to work until your NPD. You can choose to retire earlier but your pension will be
reduced because it would be paid for longer than anticipated, unless you have to retire on health
grounds.
How much do I pay?
You pay contributions of 7.5% of your pensionable earnings. You will receive tax relief on your
contributions.
The contribution from your employer is higher than this. The employers contribution for future service
benefits can reach 14% of pensionable earnings. If it reaches this ceiling, members future benefits
and/or contributions have to be adjusted.
What benefits would be payable when I die?
If you die in service, a lump sum would be payable equal to 3 times your pensionable earnings.
In addition a spouse/qualifying dependants pension would be payable equal to half your accrued
pension, plus one quarter of the pension you would have accrued had you remained in service until
Normal Pension Date, based upon your salary at death.
If you die after retirement, a spouse/qualifying dependants pension would be payable equal to half
your own pension.
In addition, if you die within 5 years of retirement, a lump sum would be payable equal to the unpaid
balance of 5 years pension payments.
What benefits do I get if I leave the Scheme?
If you leave the Scheme having completed 2 years service, your accrued benefits can remain in the
Scheme and be paid to you at retirement. Alternatively you can transfer your accrued benefits to a
new employers scheme or a personal pension arrangement or receive a refund of your own
contributions (less tax). If you have less than 2 years service when you leave you are entitled to a
transfer value or a refund only.
Can I increase my pension?
You will be able to pay additional voluntary contributions to a defined contribution section in the
Scheme, once this has been established, to make additional savings for your retirement. Further
details will be provided once this facility is available.
Further details
Further details will be set out in the Rules of the CARE section and in an Explanatory Booklet. This
will be available online once it has been produced.

* this amount is linked to civil service pay grade SO6

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