Social Security (Amendment of Law No.2) (Jersey) Regulations 201-

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A decision made on 30 Deember 2011:

Decision Reference: MD-S-2011-0106
Decision Summary Title :	DS – Draft Social Security (Amendment of Law No. 2) (Jersey) Regulations 201-		Date of Decision Summary:	28 December 2011
Decision Summary Author:	Policy and Strategy Director		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	WR - Draft Social Security (Amendment of Law No. 2) (Jersey) Regulations 201-		Date of Written Report:	28 December 2011
Written Report Author:	Policy and Strategy Director		Written Report : Public or Exempt?	Public
Subject: Draft Social Security (Amendment of Law No. 2) (Jersey) Regulations 201-
Decision(s): The Minister decided to lodge ‘au Greffe’ the Draft Social Security (Amendment of Law No. 2) (Jersey) Regulations 201-
Reason(s) for Decision: These regulations amend the Social Security (Jersey) Law 1974. As part of the agreed Fiscal Strategy, a new contribution rate of 2% will be levied on employers and Class 2 contributors in respect of earnings above the current earnings ceiling and up to £150,000 per annum from 1 January 2012. Major changes to the law and subordinate legislation have already been approved through the Social Security (Amendment of Law No. 1) (Jersey) Regulations 201- and a number of Ministerial Orders. These regulations make further minor amendments to the Law and Schedules 1A and 1B to clarify various aspects of the new regime.
Resource Implications: There are no specific resource implications associated with these regulations. The net impact of the increased contributions will be a reduction in the States Grant of approximately £6 million in 2012. There will be a need for increased staffing of up to 5FTE in the short term, in respect of the additional administration of class 2 contributors. The cost of these staff and other administration costs will be met from the Social Security Fund.
Action required: Policy and Strategy Director to request the Greffier of the States to arrange to lodge ‘au Greffe’ the draft legislation and to request a States debate at the earliest opportunity.
Signature:		Position: Minister
Date Signed:		Date of Decision (If different from Date Signed):

Social Security (Amendment of Law No.2) (Jersey) Regulations 201-

Report

On 20 July 2011 the States Assembly approved P.110 - Draft Social Security (Amendment of Law No.1) (Jersey) Regulations 201-. These regulations introduced a new social security contribution rate above the current earnings ceiling, in line with the Fiscal Strategy Review. The new contribution rate of 2% is payable by employers and class 2 individuals from 1 January 2012.

As noted in the report accompanying P.110, additional legislative changes were required to fully implement the agreed policy. Since July, six ministerial orders have been made by the Minister for Social Security to this end.

These new Orders have amended the following existing Orders:

Social Security (Classification) (Jersey) Order 1974

Amended by R&O-123-2011 In Force 10.10.11

Social Security (Collection of Contributions) (Jersey) Order 2001

Amended by R&O-123-2011 In Force 10.10.11

Amended by R&O-159-2011 In Force 1.1.12

Amended by R&O-175-2011 In Force 1.1.12

Social Security (Contributions) (Jersey) Order 1975

Amended by R&O-123-2011 In Force 10.10.11

Amended by R&O-160-2011 In Force 1.1.12

Amended by R&O-176-2011 In Force 1.1.12

Social Security (General Benefit) (Jersey) Order 1975

Amended by R&O-161-2011 In Force 1.1.12

Social Security (Residence and Persons Abroad) (Jersey) Order 1974

Amended by R&O-123-2011 In Force 10.10.11

In addition, one existing order has been repealed:

Social Security (Earnings Limit) (Jersey) Order 2010

Repealed by R&O-123-2011 In Force 10.10.11

The current draft regulations address various minor issues within the existing legislation to finalise the legislative framework for 2012 and the new contribution liability. In addition, the opportunity has been taken to “tidy up” some areas of existing legislation.

Timetable

The existing regulations and orders will all come fully into effect on 1 January 2012 and will create a new liability for employers and class 2 individuals. Contribution liability for the first quarter of 2012 will be determined after the end of the first quarter. These regulations will come into force seven days after they are approved and it is intended that they will be in place before the end of March 2012.

Details of Draft Regulations

Regulations 2, 3 and 4

The changes made by regulations 2,3 and 4 create a new, single article (Article 8A) that sets out the existing rules to define monthly, quarterly, annual and life average contribution factors. These factors are derived from the number of contributions made by an individual and are used to calculate entitlement to benefits and pensions.

Regulation 5

Regulation 5 amends Article 3 to clarify that, if an individual makes a partial contribution that is less than the total liability due, then the contributions that are received are allocated proportionately to the Social Security Fund and the Health Insurance Fund.

Regulation 6

Regulation 6 amends Schedule 1A of the main law. Schedule 1A was introduced by the first set of regulations and it contains details of in respect of class 1 contributors. The revised schedule provides a definition of the standard contribution for class 1 employees. The standard contribution is used to calculate the amount of supplementation, if any, that the individual receives. It is also used to calculate the value of any contribution credits awarded to the individual.

Regulation 7

This regulation amends Schedule 1B of the main law which provides contribution rates and various earnings limits in respect of class 2 contributors. The regulation provides separate definitions for the value of a standard contribution in respect of class 2 individuals with earnings below the standard monthly earnings limit, those with earnings between the standard earnings limit and the upper earnings limit, and those with earnings at or above the upper earnings limit.

Financial and manpower considerations

There are no additional financial or manpower considerations associated with these specific regulations.

The net impact of the increased contributions will be a reduction in the States Grant of approximately £6 million in 2012.

There will be a need for increased staffing of up to 5FTE in the short term, in respect of the additional administration of class 2 contributors. The cost of these staff and other administration costs will be met from the Social Security Fund.