Social Security Department - Rise in rate of old age pension
Friday 26 August 12:16
Pensioners will shortly receive a letter from Social Security confirming an increase in their old age pension payments from the beginning of October. The increase in the index of average earnings of 2.1% announced today will be fully reflected in the value of the Social Security pension.
A full rate old-age pension is currently worth £199.99 per week and this will rise by £4.20 a week up to £204.19. For a married couple receiving a pension based on the contributions of the husband, the maximum rate will rise by exactly £7 a week from £332 .01 up to £339 .01. These rates will apply from the first Thursday of October.
Deputy Susie Pinel, the Minister for Social Security, explained: "This is good news for pensioners. The cost of living for pensioners is currently running at 1.1%, and the rise of 2.1% in pension payments means that the value of the pension has risen in real terms compared to last year. We will be writing to all pensioners in early September with details of their individual pension."
Between 2010 and 2012, prices rose faster than earnings and the value of the pension did not keep up with the price of goods and services. To protect pensioners from this situation in the future, the States changed the uprating of the old age pension in 2013. The Jersey old-age pension will now always increase by at least the cost of living (RPI pensioner). This protects pensioners when prices are growing faster than wages, typically during an economic downturn. When the economy is growing, the pension will keep pace with the growth in earnings, allowing pensioners to share in the economic prosperity of the island.
The total cost of pension payments made in 2015 was £166.7 million and this figure has increased steadily in recent years, reflecting the growth in the number of pensioners and improved life expectancies. By the end of last year just over 30,000 people were receiving a Social Security pension, up by 3,500 in the last five years.
Pension payments are made from the Social Security Fund and whilst this currently holds a reserve of over £1 billion, the total cost of pensions and other benefits paid out will soon exceed the amount of contributions collected each year. The Social Security Fund was set up in the middle of the last century and to ensure that it remains sustainable over the coming decades, the Social Security Minister has announced a major review which will consider the balance between the value of the contributions that need to be collected, and the cost of pensions and benefits paid out in the future. A public consultation to launch the review will start towards the end of September.