Ministers accused of "plundering" pension pot to balance books

Thursday 19 October 2023

The Government has been accused of “plundering” the public pension pot to balance its own books.

In its draft spending plans for the next four years, which will be debated by the Assembly in December, the Government proposes transferring money between its current account and funds which are ring-fenced to pay the state pension to islanders.

In essence, it proposes taking £40m from social security reserves over the next two years and repaying it back in 2027. 

But Deputy Philip Bailhache has said that this is an attempt by Ministers to balance its books by dipping into reserves which do not belong to them.

This week, he has lodged the first amendment to the Government Plan 2024-2027, which calls for the Ministers to take money from its Strategic Reserve – the ‘Rainy Day Fund’ – rather than social security funds.

Pictured: Deputy Philip Bailhache has accused the Government of “plundering” the public pension pot to balance its own books.

He said: “This amendment is brought to defend an important principle. The principle is that the monies in the Social Security Fund and the Social Security (Reserve) Fund belong to the island’s pensioners and prospective pensioners, or to the people of Jersey. 

“They do not belong to the States or to the Government. They should not be used as a convenient pot into which the Government can dip to borrow with a view to balancing the Government’s books.”

Every earning islander contributes to the Social Security Fund, which is topped up by the States so that everyone gets the pension they are entitled to. This is based on a formula defined in law.

Deputy Bailhache argues that the proposed transfer of funds by the Government is to enable Ministers to reduce this 'supplementation' then make up the difference with the borrowing.

In his amendment, Deputy Bailhache quotes Ministers from a debate earlier this year, when he said they gave “clear assurances” that the full supplementation would be paid into the Social Security Fund in 2024.

Pictured: “It is time that the Government finally acknowledged that Social Security Funds are not a convenient piggy bank upon which it can draw at will."

He concluded: “What a shame that Ministers, so soon after the solemn assurances [...] given to get the draft Regulations through the States in February 2023, should have discovered that they are not yet weaned off the plundering of Social Security Funds after all. 

“It is time that the Government finally acknowledged that Social Security Funds are not a convenient piggy bank upon which it can draw at will.”

It is not the first time the Government has been accused of moving money around its balance sheet inappropriately.

During last year's Government Plan debate, a successful backbench amendment prevented Ministers using the Health Insurance Fund – which is used to subside the cost of GP visits – to pay for wider healthcare projects.

Afterwards, Chief Minister Kristina Moore called that defeat a “a full-blown, massive nose-bleed” for the Government.