11 October 2016
The Minister for Social Security has today (11 October 2016) launched the first part of a major review into income in retirement and the Social Security scheme.
“Living Longer: Thinking Ahead” asks for public feedback on the issues of income in retirement and the Social Security Scheme. This is the start of a public conversation that will help to set the direction of Jersey’s Social Security scheme and retirement income system for the next thirty years.
People are generally living longer and healthier lives, and many more people enjoy active lives into their 80s and 90s. This is a great achievement, but it means that we face new challenges. One of these challenges is making sure that we will have enough income and savings to look after ourselves after we have stopped working.
Minister for Social Security, Deputy Susie Pinel, said: “We need to understand the public’s views on living longer and having a longer retirement so that the government can play the right role in helping people to save for their retirement in the future. This is an opportunity for government, employers and citizens to work together and ensure we find the right solution for Jersey.”
Alongside this general examination of income in retirement, this part of the review will consider the role of the Social Security pension. The Social Security scheme is based on a ‘pay as you go’ principle, which means your contributions are not saved in your own pension pot. Instead they are used to pay out the Scheme’s benefits, which is mostly the Social Security pension. Each generation relies on the next to pay for their Social Security pension.
Over the next 20 years, the number of people over 65 will double while the number of people under 65 will stay roughly the same. This will mean that the number of working age people supporting each pensioner will fall and, without any changes, the cost of pensions will outstrip the value of contributions. Most other developed countries are also facing this challenge now.
Over the next four years, the review will also examine other aspects of the Social Security scheme and the benefits it provides.
Minister for Social Security, Deputy Susie Pinel, said: “Action is needed, but the Social Security Fund is in a healthy position and there is no need to make any hasty decisions. If it is decided to make changes to the scheme they can be phased in during the 2020s.”