Retirement age rise looms as pension fund reaches tipping point

Friday 02 October 2015

Jersey’s old-age pensions fund is about to reach the tipping point at which more money is flowing out in than is coming in – leaving Social Security to consider whether to increase contributions or drop benefits.

The funds paid for by Social Security contributions stand at £1.4 billion, but Jersey has just reached the “tipping point” at which more money is coming out than is being paid in, meaning that at some point in the coming years the funds will run out.

Social Security Minister Susie Pinel says that a review of the options with UK experts starts before the end of the year, and hinted that Jersey might follow Guernsey by raising the pension age from 67 to 70.

“We are in the process of increasing the age to 67,” she said.

“Guernsey have increased it to 70, and we might have to look at that, it’s one of the things in the equation.

“People are living 20 years longer now and there’s just not the money to pay for that – I think that the public have got to face the reality. The idea is to encourage people to look after their elderly welfare as opposed to looking to the state, we don’t want to be a nanny state.”

Last year the Health Insurance Fund – which pays for free prescriptions, amongst other things – reached the tipping point, and the main Social Security Reserve is expected to reach the same point next year.

“I would want to take something to the States before the end of the political term [in 2018],” said Deputy Pinel.

“We need to think about our childrens’ and grandchildrens’ future.

“At the moment there are four people working and paying in for every person aged 65. By 2035 we will be looking at two people paying in for every one pensioner. Somehow, we have to find the money.

“I think that a lot of pensioners are receiving what is statistically and financially probably the best pension anyone has ever had and probably the best anyone will ever get. We have to really address this situation.”