Social security and pension contributions (FOI)
Social security and pension contributions (FOI)Produced by the Freedom of Information office
Authored by States of Jersey and published on 05 October 2015.
Prepared internally, no external costs.
I would like to know for certain if the pension portion of my social security payments was at one time ring fenced and protected by law.
I have been advised in recent years that this protection in law had been removed and the fund built up is being used for other purposes.
If this is the case I would like to know the value of the fund at the time the restriction was lifted, how much has been removed from the fund that previously could not have been removed prior to the lifting of restrictions.
In addition I would like to know what it has been spent on, not down to the penny as I appreciate the question if valid will take resources, I would therefore ask for details of funds taken that exceed £100,000 for any specific purpose.
Social Security manages three funds, the Heath Insurance Fund, the Social Security Fund and the Long Term Care Fund.
Each have been established for purposes which are defined and governed by law.
The Health Insurance Fund and the Social Security Fund are funded by the Social Security contributions of working age people.
Employees pay 0.8% of their earnings towards the Health Insurance Fund, and employers add a further 1.2%.
Similarly, employees pay 5% of their earnings towards the Social Security Fund and employers pay 5.5%.
A further 2% contribution rate is collected from employers in respect of staff who earn above an upper earnings limit.
Self and non employed people are responsible for the full 12.5% contribution themselves (and 2% contribution if it is appropriate to their level of earnings) although the law does set out exemptions for certain circumstances.
The Health Insurance Fund pays for medical benefit, pathology benefit, and pharmaceutical benefit and can be used to enter into contracts with GPs and pharmacists to provide medical services.
The use of the fund is restricted to these purposes by the Health Insurance Law, but the states have brought forward legislation that has enabled transfers from the Health Insurance Fund to Health and Social Services to support primary health care services.
These services have included those such as childhood immunisations, smoking cessation and an ‘out of hours’ GP service.
A transfer of £6.131 million was made in 2011 and 2012 to help fund primary care services and the States Financial Medium Terms Financial Plan in 2012 agreed further transfers of £2 million in 2013 and £6 million in 2014 and 2015, again to support the Health and Social Services department with the delivery of primary care.
More detail about these states decisions can be found on the States Assembly site:
Transfers in 2011 and 2012 are detailed in Proposition 125/2010
Download draft health insurance fund (size 87.7kb)
Transfers in 2013, 2014 and 2015 are detailed in Proposition 88/2012
Download draft health insurance fund 2012 (size 62.7kb)
These transfers have no impact on the funds available to pay the States old age pension.
The Social Security department also administer the Social Security Fund which pays for a number of contributory benefits set out in the Social Security (Jersey) Law 1974.
The use of this fund is restricted to:
- incapacity benefit
- maternity benefit
- adoptive parent grant
- survivor’s benefit
- old age pension
- 2014 old age pension adjustment
- death grant
- insolvency benefit
- home carer’s allowance
In this respect, the fund may be described as ‘ring fenced’ since it can only be used to pay and administer the listed benefits, but there is no ring fencing within the fund to control what proportion can be spent on old age pensions versus the other benefits, and pensions have never been ring fenced within this fund.
The third fund administered by the Social Security Department is the Long Term Care Fund.
This fund offers a benefit to support to people who need long term care (either at home or in a residential setting).
The fund is in its first year and is being built up by Social Security contributions collected through income tax, by adding an extra 1% to people’s income tax bill.
This means all people with a sufficient income to pay tax will also pay towards the Long Term Care Fund, whereas only working age people contribute to the Health Insurance Fund and the Social Security fund.
More detailed information about the funds administered by the Social Security department can be found in the department's annual report below.