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It's good news for Jersey's pensioners who will be getting an extra £4.20 a week from the beginning of October.
Social Security are writing to them next month to let them know their pensions are going up in line with the increase in the cost of living and they will be soon be getting £204.19 per week.
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.
Social Security Minister Susie Pinel said: "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."
The increase in the index of average earnings of 2.1% was announced today.
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 so the States changed the uprating of the old age pension in 2013 to allow an increase by at least the cost of living (RPI pensioner) to protect pensioners when prices are growing faster than wages, especially 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 last year was £166.7 million, a figure that has increased steadily in recent years, reflecting the growth in the number of pensioners and the fact that people are living longer.
By the end of last year just over 30,000 people were receiving a Social Security pension, that's up 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 Minister is doing a major review to look at 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 to make sure the Fund remains sustainable over the coming decades.
The review will be launched with a public consultation at the end of September.
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