Social Security Department: Minister’s Report and Financial Statements – 2011.

Social Security Department

Minister s Report & Financial Statements 2011

Social Security Department

Centre for work, pensions and benefits

MINISTER

F. LE GRESLEY, MBE Senator

ASSISTANT MINISTER

S. J. PINEL

Deputy of St. Clement

CHIEF OFFICER R.W.BELL

Presented to the States by the Minister for Social Security.

CONTENTS

Contents

Minister s Report  5 Social Security Fund  26

 Social Security (Reserve) Fund  45

Health Insurance Fund  65 Statistical Appendix  84

CONTENTS

FOREWORD

Minister s Report Foreword

This report explains the activities of the Department that fall under the Social Security Law, the Health Insurance Law and the three funds set up under these laws the Social Security Fund, the Social Security (Reserve) Fund and the Health Insurance Fund. It accompanies the financial statements of these three funds. Separate reports

have been published in 2011 covering the work of the Health and Safety Inspectorate1 and a new annual report on Income Support activities2. Next year, I hope to produce a single annual report covering all departmental activities.

This report focuses on activities and expenditure within the three funds and contains additional information this year to provide greater transparency in respect of the collection of contributions, the provision of benefits, and the investment of surpluses.

The continuing economic downturn provided a background of increasing pressure on the Department in 2011, with significant growth in the number of individuals registering as unemployed and actively seeking work. Total contribution income fell by approximately 1% to £177 million and there was a similar small decline in the average number of contributors during the year.

Including the value of the States Grant, contributions into the Social Security Fund continue to exceed expenditure but the surplus in 2011 was just over £24 million compared to £30.5 million in 2010. Overall, Social Security Fund benefit spend increased by 2.8% from £178 million in 2010 to £183 million in 2011, with pension payments making up just over three-quarters of the total. The main trend in benefit costs is the continuing increase in the pensioner population. The number of pensions in payment has increased by 12% between 2007 and 2011 including an increase of just under 3% during 2011.

The cost of Health Insurance Fund benefits increased by 16.7% from £24 million in 2010 to £28 million in 2011 after an adjustment was made for medical benefit incorrectly charged to Income Support in previous years amounting

to £1.8 million. Another driver was the full year impact of the increase in medical benefit from May 2010, as part of the preparation for the local governance of GPs.

Despite the increased activity in response to the economic situation, during 2011 the Department also successfully planned and implemented a major programme of change in both Social Security and Health Insurance legislation.

The Fiscal Strategy Review undertaken by the Minister for Treasury and Resources in 2010 identified the need to introduce a new Social Security contribution rate above the earnings ceiling. The new rate of 2% for employers and Class 2 contributors was achieved against a very tight timetable, with legislation, IT and operational changes all completed to meet the deadline of 1 January 2012. Further changes are needed in this area and I will be bringing forward additional amendments to the Social Security Law during 2012 and 2013.

The major review by the Minister for Health and Social Services of the future delivery of healthcare and the requirement for a local governance framework to be established for GPs practising in Jersey created the need for changes to the Health Insurance Law. Towards the end of 2011, building on plans discussed by the States Assembly in 2010, the States approved changes to primary legislation to introduce a performers list for Jersey GPs

1.  http://www.gov.je/Government/Pages/StatesReports.aspx?ReportID=815

FOREWORD

and extended the Health Insurance Law to allow payments to be made under contracts. Separately, the States agreed to transfer just over £6 million to the Consolidated Fund to fund some areas of primary healthcare provided by Health and Social Services.

The increasing impact of an ageing population is one of the key themes driving departmental policy. During 2011 the States agreed a proposition increasing the State Pension Age from 65 to 67 years in two month steps over

a 12 year period between 2020 and 2031. Forward planning of this nature is vital to maintain the viability of the Social Security Fund and to ensure that a Social Security pension will continue to be available to the working age contributors who are funding the pensions of the current generation of pensioners. The Department will monitor trends in life expectancy very carefully and it is likely that there will be further adjustments to pension age in the coming decades.

The total value of all three funds at the end of 2011 was just under £1 billion, split between the Social Security Fund £50 million, the Social Security (Reserve) Fund £854 million and the Health Insurance Fund £78 million. This build up of reserves is a necessary and prudent approach to the provision of future pensions and benefits. Our current position is robust, and few other jurisdictions can look to such a solid base. However, there is no room for complacency with total benefit expenditure of £208 million per annum and costs rising steadily in the future, these reserves represent less than five years expenditure.

During 2011 the UK Government Actuary reviewed the performance of the Social Security Fund and the Health Insurance Fund and confirmed the continuing healthy position of these funds. Contributions at the current total

rate of 12.5% continue to build up reserves with the value of the Social Security (Reserve) Fund anticipated to peak sometime before 2020. The actuarial review confirmed that, without any changes to the contribution rate, the Social Security Reserve Fund will be completely exhausted by the early 2040s. Previous Social Security Ministers and Committee Presidents have taken a very long term view of the three funds and made decisions to protect their long term viability and I intend to maintain this approach.

Before any decisions need to be taken, there is time to gather accurate and up-to-date information. The

Department will be working closely with the UK Government Actuary towards the end of this year to prepare

for a joint review of the Social Security Fund and the Health Insurance Fund, incorporating the new population model, to commence early in 2013. The results of this review will be available by the end of 2013 and will inform the decisions that need to be taken on the future of these funds.

Although 2011 has been a challenging year, the Department has continued to provide a high quality service to its customers. At the same time, significant progress has been made in a number of important policy areas. The three ring fenced funds continue to provide a substantial buffer against the inevitable increase in the cost of pensions, benefits and healthcare as our population ages.

This success is only achieved through the hard work and dedication of the staff at the department. I would like to take this opportunity to express my sincere gratitude to them and in particular to thank the front-line staff who have dealt cheerfully and efficiently with an ever-increasing workload throughout the year.

Signature

Senator Francis Le Gresley, MBE

INTRODUCTION

Introduction

The Financial Statements discussed in this document report on the Social Security Fund, the Social Security (Reserve) Fund and the Health Insurance Fund. In addition, the Social Security Department has responsibility for the distribution of a range of benefits funded by the States of Jersey. These costs are reported separately and included with those of other States funded bodies in the States of Jersey Financial Report and Accounts. The Statistical Appendix of this report sets out the detailed income and expenditure of all of the Social Security Department s activities.

Compulsory contributions are levied on working age residents and their employers through the Social Security Law. A proportion of the contributions received are paid into the Health Insurance Fund with the remainder, plus an additional sum provided by the States, being paid into the Social Security Fund. The Social Security Law also provides for a Social Security (Reserve) Fund and surpluses from the Social Security Fund are transferred to the Reserve Fund. Since 2010 both the Health Insurance Fund and the Social Security (Reserve) Fund have participated in the Common Investment Fund (CIF) administered through the Treasury and Resources Department.

The Social Security Law and the Health Insurance Law provide for a range of benefits available to individuals who have made the necessary contributions.

A high level summary of the 2011 results for the three funds is shown in Table 1 below:

Social Security  Social Security  Health Insurance

Fund  (Reserve) Fund  Fund

£000 £000 £000

Income 214,633 (13,443) 29,915

Expenditure 190,312 485 35,272

Surplus / (Deficit) 24,321 (13,928) (5,357)

Net Assets at 31 December 2011 49,787 854,318 77,696 Table 1:  Fund Results for 2011

These financial figures and the underlying activity are explored in more detail in the following sections.

Fund Income

Contributions

Contributions from working age adults are due on all earnings up to an earnings ceiling. Up to and including 2011, a single earnings ceiling has been set and has been increased each year in line with the rise in the earnings index from the previous year. The ceiling for 2011 was £3,686 per month, an increase of 1.1 % from the previous year.

The total contribution rate is 12.5%. For employees (Class 1 contributors), this is split between the liability of the employer (6.5%) and the employee (6%). For self-employed individuals and others not in paid employment, a single Class 2 rate of 12.5% is levied.

FUND INCOME

Income Received from Contributors

Table 2 provides an overview of the contributions received and the number of contributors:

2007 2008 2009 2010 2011

Total of Class 1 Contributions (£000) 143,542 156,455 163,206 161,463 161,187 Total of Class 2 Contributions (£000) 15,878 15,728 17,493 17,659 16,169 Total Value Contributions (£000) 159,421 172,183 180,699 179,122 177,356 Average No of Class 1 Contributors during year 48,352 49,255 48,618 48,275 48,359 Average No of Class 2 Contributors during year 4,297 4,337 4,291 4,176 3,877 Average Class 1 Contribution per annum (£) 2,969 3,176 3,357 3,345 3,333 Average Class 2 Contribution per annum (£) 3,695 3,626 4,077 4,229 4,171

Table 2:  Contribution Table.

Table 2 and Figures 1 and 2 show a rise in contribution income followed by a decline for both Class 1 and Class 2 contributions over the last five years.

£165 £160 £155 £150 £145 £140

2007 2008 2009 2010 2011

Figure 1: Total Class 1 Contributions

£30 £25 £20 £15 £10 £5

2007 2008 2009 2010 2011

Figure 2: Total Class 2 Contributions.

FUND INCOME

Level of Contributions

In 2011, on average approximately 52% of Class 2 contributors paid at the earnings ceiling each month. By contrast, on average, about 21% of Class 1 contributors in 2011 paid the maximum monthly contribution. Figure 3 shows that proportionately more Class 1 contributors paid at the ceiling in March and December.

24% 23% 22% 21% 20% 19% 18% 17%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Figure 3: Class 1 Contributors at the Earnings Ceiling by month in 2011

Class 1 and Class 2 contributors with earnings below the earnings ceiling in a given month, but above a lower earnings threshold of £776 per month, normally receive a supplement to make up the shortfall in their contribution record. This is known as supplementation and ensures that lower and middle income earners are able to claim pensions and benefits in the future. The cost of this supplementation is met by the States.

From 2012 onwards, a second ceiling has been established, referred to as the Upper Earnings Limit, of £12,500 per month and a new rate of 2% is now levied on employer and Class 2 contributions on earnings above the earnings ceiling (now renamed the Standard Earnings Limit) and up to the Upper Earnings Limit.

Number of Contributors

Contributions are recorded monthly and the number of class one contributors shows a variation in line with the seasonal activities within the Jersey economy, as indicated in Figure 4:

51,000

50,000

49,000

48,000

47,000

46,000

45,000

44,000

  Jan-11  Feb  Mar  Apr  May Figure 4: Class 1 Contributor Numbers by month in 2011.

Jun  Jul  Aug  Sep  Oct  Nov  Dec  Jan-12

FUND INCOME

The number of class one contributors in January 2012 (47,347) showed a slight increase over the January 2011 figure (46,312).

The workforce in Jersey is drawn from many countries. Nationality information is available for a large proportion of employees (Class 1 contributors). Figure 5 below shows that 73% of these employees in December 2011 were British nationals. This can be compared with the place of birth recorded during the 2011 Census for working age people in Figure 6.

4% 2% 3%

6%

Jersey / British Isles

Portugal / Madeira 12% Poland

Ireland (Republic) Other EU Country Elsewhere in the world

73%

Figure 5:  Social Security Class 1 Contributors by Nationality in December 2011[3]

4% 4%

2%

5% Jersey / British Isles Portugal / Madeira

10% Poland

Ireland (Republic) Other EU Country Elsewhere in the world

75%

Figure 6:  Working Age Population by Place of Birth4

Allocation of Contribution Income

Class 1 and Class 2 contributions are allocated to the Health Insurance Fund and the Social Security Fund according to fixed percentages.

Fund Employer Class 1 Employee Class 1 Class 2

Health Insurance Fund 1.2% 0.8% 2.0% Social Security Fund 5.3% 5.2% 10.5% Total 6.5% 6.0% 12.5%

SOCIAL SECURITY FUND BENEFITS

Over the last five years, the value of the States Grant has represented around 30% of the total income into the Social Security Fund (excluding investment income).

2007 2008 2009 2010 2011 Year

£000 £000 £000 £000 £000

States Grant Value 58,627 61,842 64,995 66,667 65,348 Contributions Received (Social Security Fund) 133,913 144,634 151,787 150,462 148,837 Total 192,540 206,476 216,782 217,129 214,185 States Grant as Proportion of Total 30% 30% 30% 31% 31%

Table 4: States Grant in respect of the cost of Supplementation over the past five years

Summary of Funding

Income Received  Health  Social Security

Insurance Fund Fund

in 2011* £000 £000

Class 1 Employees 10,166 67,190 Class 1 Employers 15,766 68,065 Class 2 2,587 13,582 States Grant N/A 65,348 Total 28,519 214,185

Table 5: Summary of Contribution Income & States Grant

* Note: Income Received excludes Investment Income

HIF Employee 4%

HIF Employer SSF States Grant 6%

27%

HIF Class 2 1%

SSF Class 2

6%

SSF Employee 28%

SSF Employer 28%

Figure 7: Summary of Contributions & States Grant

Social Security Fund Benefits

Range of Benefits

The Social Security Law provides benefits to contributors who have made appropriate contributions and satisfy other specific conditions. The amounts paid across the full range of benefits available through the Social Security Fund in 2011 are as follows:

STIA Survivor s

£12,692 LTIA  Allowance

£12,635 £679 Maternity Invalidity  Allowance

Benefit £2,189 £11,239

Survivor s £O8t,h38er0 Pension

£4,361

Maternity

& Adoption

OAP Grants £137,956 £587

Incapacity  Death Pension Grant

£92 £472 Figure 8: Social Security Benefit Spend (£000) in 2011

SOCIAL SECURITY FUND BENEFITS

Old Age Pensions (OAP)

Just over three-quarters of Social Security benefit expenditure is in respect of old-age pensions, and this cost is growing year on year as the number of pensioners increases, due to the combined effects of the baby boom generation reaching pension age and increased life expectancy.

In 2011 the States agreed to increase the pension age in Jersey from 2020. At present some women continue to have a pension age of 60 (if they were registered for Social Security purposes before 1975). Otherwise the current pension age is 65, with an option to take a reduced rate pension up to two years early. From 2020, the pension age will rise by two months per year, increasing the age from 65 to 67 by 2031.

Old age pensions can be claimed by anyone over pension age who has worked in Jersey and has a contribution record of at least 4 years. A pro-rata pension is also payable where there is an aggregate of 4 years between Jersey and a reciprocal country. The maximum, full rate of pension is paid to those with a contribution record of at least 45 years. The value of the pension depends on the number of years of contributions recorded. In October 2011 the value of the full single pension rate rose from £179.79 per week to £184.45 per week. For couples married before April 2001, a married pension is available, based on the contribution record of the husband and paid at 166% of the single rate.

Pensions are paid throughout the world. The following Figure shows the range of countries where pensions are paid:

UK Australasia Other European

5,342 662 Africa 68 Asia

87

57

EU Country

4,216 Other

S. America Channel

Other 9 Islands 154

951

Ireland

181

N. America

Jersey 395 16,196

Figure 9: Number of Old Age Pensions in payment at 31/12/11 by Country of Residence

Nearly six out of ten of all pensions are paid in Jersey. Just over three out of ten pensions paid in Jersey are paid

at the maximum rate and a further one-third are paid at between 75% and 99% of the full rate. Only one in 20 of pensions paid in Jersey have a rate of below 25%. In contrast, many pensions paid overseas are paid at a lower rate, in respect of workers who have lived and worked in Jersey for a number of years and then returned to their home country. This is demonstrated in Figures 10 and 11:

6,000

5,000

4,000

3,000

2,000

1,000

-

0-9% 10-25% 26-50% 51-75% 76-99% 100% Old Age Pension Rate: % of Full Pension

Figure 10: Number of Old Age Pensions in payment at 31/12/11 to Jersey Residents by percentage rate of full pension

[3]SOCIAL SECURITY FUND BENEFITS

2,500 2,000 1,500

1,000

500

-

0-9% 10-25% 26-50% 51-75% 76-99% 100% Old Age Pension Rate: % of Full Old Age Pension

Figure 11: Number of Old Age Pensions in payment at 31/12/11 paid outside Jersey by percentage rate of full pension

Some pensions are paid in respect of couples. The 27,367 pensions in payment at the end of 2011 covered 28,647 people. Of these, 17,096 were resident in Jersey. This compares with the 2011 Census figure of 17,291 persons identified as over working age  [4] in March 2011.

Growth in Old Age Pensions

Year 2007 2008 2009 2010 2011

No of Old Age Pensions in payment at year end 24,505 25,216 25,973 26,594 27,367 Value of Old Age Pensions Paid £000 111,788 119,779 126,390 132,760 137,956 Weekly Full (100%) Old Age Pension Rate at year end [5] £165.76 £172.83 £178.01 £179.97 £184.45

SOCIAL SECURITY FUND BENEFITS

Survivor benefits are paid worldwide as shown in Figure 12. The majority of survivor s benefits are paid to women (88%), as shown in Figure 13:

Other 4%

UK 14%

EU Country Jersey

25% 57%

Figure 12:  Survivor s Benefits by Location in payment

on 31 December 2011

Male 12%

Female 88%

Figure 13:  Survivor s Benefits by Gender in payment

on 31 December 2011

A contributory death grant is available in respect of most deaths in Jersey. The value of the grant increased from £719.88 to £737.88 on 1 October 2011. Grants are also paid in respect of individuals living outside Jersey at the time of their death, if they were receiving a full-rate benefit, such as an old age pension, immediately prior to the date of death or their departure from Jersey was less than six months prior to the date of death.

In the small number of cases where a death grant is not payable under the contributory system, a non-contributory grant can be provided using a tax funded budget.

2007 2008 2009 2010 2011

Total Death Grants paid during the year [3] 590 664 705 739 678 No of Deaths recorded in Jersey during the year [4] 707 743 758 797 716

Table 7: Total death grants paid and recorded deaths over past 5 years

Short Term Incapacity Allowance

Short term incapacity allowance (STIA) is paid to working age claimants who satisfy the necessary contribution conditions for periods of incapacity lasting between 2 and 364 days. Most STIA claims are paid at the standard rate of benefit. This was £179.79 per week at the beginning of 2011, rising to £184.45 a week from 1 October 2011.

Table 8 details the number of claims paid and the total number of days covered by STIA claims over the past five years. Figure 14 shows the total number of STIA claims and the average (mean) length of claim in days:

2007 2008 2009 2010 2011 Spend (£000) 11,198 11,664 12,553 12,736 12,692 No. of Claims Paid 28,752 29,497 30,711 29,269 28,652 No. of Days Paid 505,212 505,143 527,782 527,563 520,157 Average Length of Claim (days) 17.6 17.1 17.2 18.0 18.2

Table 8: Annual STIA Claims Paid

SOCIAL SECURITY FUND BENEFITS

31,000 18.4 30,500 18.2

18.0 30,000

17.8 29,500 17.6

29,000 17.4

17.2 28,500

17.0 28,000 16.8

27,500 16.6

2007 2008 2009 2010 2011 Claims Paid Average Length of Claim

Figure 14: Total Number of STIA claims paid for year & Average (mean) Length of claim

The average (mean) length of claims across all STIA claims in 2011 was 18 days; however, the most common (mode) length of an STIA claim was 10 days. Benefit is paid for 7 days in a week, and not just for working days.

STIA covers a wide range of short term illnesses and injuries: 27% of all claims during the year related to infectious illnesses. These claims lasted on average seven to eight days. By contrast depression, stress and anxiety accounted for 8% of the claims but 20% of the number of days, with an average duration of over six weeks per claim. Table 9 details some of the most common reasons for STIA claims in 2011:

% of all 2011  No.  Average Claim

2011 STIA Common Ailments: No. Claims Paid

Claims Paid Days Paid Length (Days)

Infections 27% 7,628 57,786 7.6 Hospital Treatment 16% 4,601 104,421 22.7 Back/Neck Pain/Injury 10% 2,972 49,316 16.6 Depression, Stress & Anxiety 8% 2,335 101,795 43.6

Table 9: STIA Common Ailments in 2011

A small minority of individuals have claims that extend for longer periods and are associated with a long term loss

of faculty. These claimants can apply for long term incapacity allowance (LTIA). Whereas STIA can only be paid if an individual is not working (on the day the benefit is claimed), LTIA claimants can return to work or stay in work and continue to claim the benefit.

Long Term Incapacity Allowance

This benefit is paid to working age people who satisfy the necessary contribution conditions and who have a

long term loss of faculty10. The amount of benefit is determined on a percentage basis. The maximum value of the benefit (100%) is set at the same level as a full rate old age pension. In October 2011 the rate rose from £179.79 per week to £184.45 per week.

10.  The extent of incapacity is assessed by reference to the loss of faculty arising from a disease or injury

SOCIAL SECURITY FUND BENEFITS

A minority of claimants will be assessed at 100% for a major loss of faculty. Most claimants are assessed at a lower percentage, in 5% bands. Figure 15 illustrates that awards of 10%, 20% and 30% are the most common. Awards of up to 15% are paid as lump sum payments.

500 450 400 350 300 250 200 150 100 50 0

  0%  10%  20%  30%  40%  50%  60%  70%  80%  90%  100% Figure 15: Number of LTIA Claims in payment at 31 December 2011 by Rate %

The average percentage rate of assessment for LTIA claims in payment at 31 December 2011 is 37% and this percentage has remained more or less constant over the last four years. The most common incapacity associated with LTIA is depression, which accounted for 15% of open claims at the end of 2011. From a total of 158 conditions listed on LTIA claims, the Table 10 identifies the most common conditions at the end of 2011.

LTIA Condition No. of claims open at 31 December 2011 % of all open claims at 31 December 2011 Depression 567 15% Pain - Back 311 8% Injury - Back 189 5% Accident/Injury (Unspecified) 165 4% Injury - Leg 165 4% Injury - Shoulder 130 3% Anxiety 105 3% Stress 95 2%

Table 10: Most Common LTIA Conditions at 31 December 2011

LTIA was introduced in 2004 to replace invalidity benefit and disablement benefit and the number of LTIA claims continues to increase from year to year as older claimants who choose to continue to receive invalidity benefit reach pension age and new claimants receive LTIA. Table 11 illustrates this trend over the last four years:

2008 2009 2010 2011

No. of Invalidity claims in payment at year end 1,352 1,219 1,086 967 Cost for Year (£000) 14,861 13,818 12,457 11,239 No. of LTIA claims in payment at year end 3,015 3,195 3,422 3,533 Cost for year (£000) 10,462 11,107 11,901 12,635

Table 11: Number and Cost of Invalidity & LTIA claims 2008 2011

[3]SOCIAL SECURITY FUND TRANSFERS

Maternity and Adoption Benefits

A Maternity Grant (or Adoptive Parent Grant) is available as a lump sum to either the father or mother who satisfies the contribution conditions. The value in 2011 was £539.91, rising to £553.41 from 1 October. Multiple grants are provided in the case of multiple births. The great majority of parents having a baby in 2011 received a maternity grant from the Department. 1,100 births were recorded in 2011 with 1,056 maternity grants being paid by the Department in 2011. The following Figure shows the nationality of those in receipt of maternity grants in 2011:

6% 3%

4%

10% 14%

63%

Jersey / British Isles Portugal / Madeira Poland

Ireland (Republic) Other EU Country Elsewhere in the world

Figure 16: Maternity Grants by Nationality

Just under two-thirds of parents receiving maternity grants have British nationality, with the remainder reflecting the nationalities of the local workforce. The average age of a woman in receipt of maternity benefit in 2011 was 32. Grants were paid in respect of 24 multiple births in 2011.

A maternity allowance is also payable to the mother, based on her own contribution record. This can be paid for up to 18 weeks, at the same rate as STIA, but based on the mother s contribution record before she became pregnant.

Indicator  2007 2008 2009 2010 2011 No. of Maternity Allowance claims starting in the year 944 897 869 940 944 No. of Maternity Grant claims starting in the year  967 994 968 1,014 1,056 No of Births Recorded [3] 1,104 1,064 1,169 1,194 1,100

HEALTH INSURANCE FUND BENEFITS

Health Insurance Fund Benefits

The Health Insurance Fund provides benefits to contributors who have made appropriate contributions and satisfy other specific conditions. The full range of benefits and the cost of these benefits over the last two years are as follows:

2010 2011 £000 £000

Medical Benefit GP Consultations  5,624 6,850 Medical Benefit GP Letters of Referral 758 943 Medical Benefit Pathology Benefit 720 765 Pharmaceutical Benefit 16,703 17,002 Gluten-Free Vouchers 180 185 Total Benefit Expenditure 23,985 25,745*

Table 13: Value of Health Insurance Fund Benefits

* This total excludes analysis of the £1.808 million recharge in respect of medical benefit for years prior to 2011.

Medical Benefit GP Consultations & Letters of Referral

A standard benefit is available in respect of each GP consultation covered by the Health Insurance Fund. In May 2010 the value of the benefit was set at £19, which was then increased to £19.59 from 8 July 2011.

In addition, a separate benefit, paid at the same rate, is available in respect of the cost of a letter of referral written by a GP to a hospital consultant or other specialist.

Indicator 2007 2008 2009 2010 2011

No of Medical Benefit GP Consultations paid

359,141 359,222 379,377 355,094 363,089 during year

No of Medical Benefit GP Letters of Referral paid

38,275 41,349 43,933 43,996 48,684 during year

Value of Medical Benefit at 31 December 2011 £15 £15 £15 £19 £19.59 Table 14: Number of Medical Benefit claims paid during year

The increase in the value of the medical benefit in 2010 was agreed as part of a comprehensive project to improve the governance of local GPs in line with the requirements of the UK General Medical Council.

Medical Benefit Pathology Laboratory Benefit

A new benefit was introduced in January 2010, to cover the cost of GPs taking blood samples for analysis. The benefit covers blood samples taken for haematology testing and for clinical chemistry testing and it is paid at a standard rate of £10. Improved processing of claims in 2011 led to an increase in the number of successful claims as

seen in Table 15:

2010 2011 No. of Pathology Laboratory benefit claims paid during year  73,872 80,075 Value of Pathology Laboratory benefit at year end  £10 £10

Table 15:  Comparison of Pathology Laboratory Benefit, 2010 2011

[3]HEALTH INSURANCE FUND BENEFITS

Although these medical benefits are paid in respect of individuals who qualify under the Health Insurance Law, the benefits are always assigned to the provider of the service to simplify administration. The benefits are used to reduce or remove charges that patients would otherwise need to pay.

Pharmaceutical Benefit

Pharmaceutical benefit covers the full cost of prescription drugs prescribed by GPs and includes a dispensing fee paid to community pharmacists, in respect of each item dispensed. The Minister for Social Security is responsible for maintaining the list of drugs that are available on prescription from GPs.

2007 2008 2009 2010 2011

Pharmaceutical Benefit Drug Costs (£000) 8,033 11,024 11,682 11,566 11,640 Pharmaceutical Benefit Dispensing Fees (£000) 3,702 4,355 4,803 5,137 5,362 Total Cost (£000) 11,735 15,379 16,485 16,703 17,002

Table 16:  Pharmaceutical Benefit Costs, 2007 2011

Comparison of Medical and Pharmaceutical Benefit

A comparison of prescription numbers and GP consultations suggests little change in the number of GP consultations per person over the last five years, but an increase in the number of prescriptions per person.

Year 2007 2008 2009 2010 2011

Population [4] 94,000 95,400 96,200 97,100 97,857 Total No. of Prescriptions during year 1,324,335 1,489,319 1,590,227 1,651,355 1,707,644 Total No. of GP Visits during year  359,141 359,222 379,377 355,094 363,089 No. of Prescriptions per head of population 14 16 17 17 17 No. of GP Visits per head of population 3.8 3.9 3.7 3.7 3.7

Table 17:  Comparison of Prescriptions and GP Visits

Gluten-Free Beneficiaries

Individuals who require a gluten-free diet can receive vouchers towards the cost of purchasing gluten-free products. The current value of the vouchers is £14 per week. Table 18 details the number of gluten-free beneficiaries over the past five years:

Year 2007 2008 2009 2010 2011

HEALTH INSURANCE FUND TRANSFERS

Health Insurance Fund Transfers

Contribution income into the Health Insurance Fund exceeded the cost of benefits paid out in 2011. However, following a decision of the States Assembly at the end of 2010, it was agreed that a transfer of £6.13 million should be made from the Health Insurance Fund to the Consolidated Fund in 2011 with the possibility of a further transfer in 2012. Since then, a second transfer has been authorised for 2012, at the same value of £6.13 million.

The sums transferred are being used by the Health and Social Services Department to fund some areas of primary health care currently provided by that Department. After adjusting for the prior year recharge for medical benefit, the transfer in 2011 placed the Fund in a current year deficit of £5.4 million pounds. The total net asset value of the Health Insurance Fund at the end of the year was £77.7 million.

The most recent report[5] by the UK Government Actuary, covering the period 2003 to 2007, confirmed that (excluding one-off transfers) the Fund is forecast to produce an annual surplus until 2017. By drawing on accumulated surpluses, the Fund is also forecast to be able to provide for existing benefits until the end of the actuarial review period in 2027. These forecasts are subject to a number of factors that affect the balance between contribution income and benefit spend. The next actuarial review will take place in 2013 covering the years 2008 to 2012. A decision on the future contribution rate will be taken following the publication of that review.

Investments

A high level summary of the results of the Funds investments performance is shown in Figure 18.

Social Security (Reserve) Fund

The Social Security (Reserve) Fund (the Reserve Fund ) is the mechanism by which contribution rates and ceiling changes which fund pension and benefit costs of the Social Security Fund are smoothed over time and acts as

a buffer to contribute towards the rising burden of pension costs as the Island faces up to the pressures brought on by an ageing population.

One of the main aims of the Reserve Fund is long term growth. It is expected that there will be no requirement to draw on the assets of the Reserve Fund in the near term and during this period there will continue to be net cash inflows to the Reserve Fund.

The Reserve Fund seeks to earn long term capital returns by allocating a higher proportion of its assets to a well diversified mix of global equities. The published investment strategy of the Reserve Fund is to invest 80% of its portfolio in equities, 10% in bonds with the remaining 10% in alternative asset classes. This Investment strategy was reviewed in 2012 with no material change.

Method of Investment

The Reserve Fund may pursue its investment strategy through direct investment or investment through the States of Jersey Common Investment Fund (CIF).

INVESTMENTS

The net asset value of the Reserve Fund was £854 million at 31 December 2011 £484 million invested with Legal and General through unit trusts and the remaining £370 million invested in the CIF. The analysis of investments is illustrated in Figure 17.

The CIF is an administrative arrangement by which States of Jersey Funds are provided with the opportunity to pool their resources to benefit from greater investment opportunities and economies of scale such as the negotiation of lower investment manager fees.

The CIF is arranged into various Pools , each pool representing an asset class and managed independently by

an investment manager. A Fund such as the Reserve Fund is able to invest in individual Pools in line with its own investment strategy.

Investment Asset Split within the Social Security (Reserve) Fund

Figure 17 below illustrates the split of core assets held by the Reserve Fund as at 31 December 2011. Funds held within the CIF are actively managed i.e. the investment managers are actively seeking to outperform a benchmark. Funds held with Legal and General outside the CIF are passively managed. These funds follow a benchmark passively without seeking to outperform, but seek to do so at lower cost.

The Reserve Fund invested in the CIF from the 1 October 2010 and by the 31 December 2011 holdings in the CIF accounted for 43% of the Fund s total value. As at the year end monies allocated for investment in the alternative asset class were retained in cash and bonds until the alternative asset pools of the CIF become operational.

L&G Bonds

£122.8m CIF Global

Equity

£273.0m

Equity Investments:

L&G Cash

£53.0m Actively managed

Passively managed  

Cash and Cash Equivalent Government Bonds

L&G Passive Equity  CIF UK Equity £308.8m £96.8m

Figure 17: Social Security (Reserve) Fund Investment Asset Holdings 31 December 2011

2011 Performance

In line with its investment strategy, the Reserve Fund holds the majority of its portfolio in equity, a return seeking class of asset. Equity is expected to generate, on average, a higher level of return and grow the value of the Reserve Fund in real terms though, in the short term, it can exhibit a higher level of volatility due to market fluctuations.

The performance of each investment manager is monitored against a benchmark set in accordance with the market in which that manager is investing. Although performance varies between investment classes and between managers, the overall performance of the Fund can be assessed against an apportionment of these underlying benchmarks.

INVESTMENTS

In 2011 the actual performance of the Reserve Fund was negative, but it exceeded the overall benchmark,

indicating that the Reserve Fund performed well relative to the market during a difficult year in the investment markets. In 2011 equity markets saw considerable volatility with global equity markets, as illustrated by the MSCI World Index, falling by just over 4.8%. As 80% of the portfolio is held in equity, this had a significant impact on the portfolio value with the overall benchmark for the Reserve Fund falling by just over 3%.

The higher performance of the Reserve Fund benchmark compared with equity markets alone reflects the strategic diversification of the Fund into cash and bonds. These risk-reducing assets served to partially offset the volatility seen in the equity markets reducing their negative effect on the overall portfolio.

The performance over the year for the Reserve Fund was a negative return of 1.6%; this is in excess of the benchmark which fell by 3%. As the passive investments of the Reserve Fund successfully tracked their relative benchmarks, the 1.4% outperformance was generated almost entirely by the active CIF managers, who outperformed their market benchmarks by between 2% and 4%. Since inception of the Common Investment Fund the overall fund has seen annualised returns of 2.9%, which is around 1% in excess of benchmark. The relative performance for the year of the investments inside and outside the CIF has been detailed in the diagram below:

10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0%

Figure 18: Performance of Investments (01 January 2011 31 December 2011).

10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0%

-10.0%

Figure 19: Overall Performance of the Social Security (Reserve) Fund since transfer to CIF (01/10/10 31/12/11).

Post year end performance

The year s negative performance was mostly driven by falls in the equity markets at the end of the third quarter, which saw global markets fall by around 14%. Much of this lost ground was recovered in Q1 2012 when markets began to improve, increasing annualised returns since inception of the CIF to in excess of 7% per year.

INVESTMENTS

Health Insurance Fund

The Health Insurance Fund (the Health Fund ) is established under the Health Insurance (Jersey) Law 1967. The Health Fund receives allocations from Social Security Contributions for the purpose of paying claims for medical benefits and pharmaceutical benefit as defined in the above law.

To best meet the Health Fund s requirements, a balanced investment strategy is followed that seeks to provide a degree of capital growth and income generation while maintaining an appropriate degree of capital preservation. The strategic aim of the Health Fund is to invest 40% of the portfolio value in return, seeking assets (equities) to produce long term returns, with the remaining 60% in risk-reducing assets seeking to provide increased stability and income returns. The risk-reducing assets are split so 15% of the overall portfolio value is invested in cash and cash equivalent with the remaining 45% in bonds.

Method of Investment

Although the Health Insurance Fund may pursue its investment strategy via direct investment or investment through the States of Jersey CIF, throughout 2011 its whole investment portfolio has been invested through the CIF.

The total value of investments held in the Health Fund at 31 December 2011 was £67.8 million and all of this was invested in the CIF. The analysis of investments is illustrated in Figure 20.

The CIF is an administrative arrangement by which States of Jersey Funds are provided with the opportunity to pool their resources to benefit from greater and diverse investment opportunities and economies of scale (such as the negotiation of lower investment manager fees).

The CIF is arranged into various Pools , each pool representing an asset class and managed by an independent investment manager. A Fund such as the Health Fund is able to invest in individual Pools in line with its own investment strategy.

Further information with regard to the CIF is published in the States of Jersey Financial Accounts.

Investment Asset Split within the Health Insurance Fund

Figure 20 illustrates the split of core assets held by the Health Fund as at 31 December 2011. Funds held within the CIF are actively managed i.e. the investment managers are actively seeking to outperform a benchmark.

The Health Fund invested in the CIF from 1 July 2010 and has been invested within its strategic ranges throughout 2011.

CIF Cash CIF Global £11 m Equity £15 m

Key:

Global and UK Equity Corporate Bonds  

Cash and Cash Equivalent

CIF UK Equity

CIF Corp Bonds £13 m

£29 m

Figure 20:  Health Insurance Fund Investment Asset Holdings 31 December 2011.

INVESTMENTS

2011 Performance

In line with its investment Strategy, the Health Fund holds a balanced portfolio, with diversification across three key asset classes. Equity is expected to generate, on average, a higher level of return and grow the value of the Fund

in real terms though in the short term it can exhibit a higher level of volatility due to market fluctuations. Cash

is expected to generate a low return but acts to preserve the capital value of the Fund, to reduce the portfolio s overall volatility and to provide the Fund with any required liquidity. Corporate bonds are expected to generate a higher level of return than the cash holdings but at a lower level of volatility than the equity investments.

The performance of each investment manager is monitored against a benchmark set in accordance with the market in which that manager is investing. Although performance varies between investment classes and between managers the overall performance of the fund can be assessed against an apportionment of these underlying benchmarks.

In 2011 the overall Health Fund provided a return of 2.1%, exceeding the overall benchmarked return by 0.4%; this indicated that the Health Fund performed well relative to the market. The strategy operated as intended in a year where markets saw significant volatility.

Negative returns in the equity markets were offset by the steady returns generated by the corporate bond and

cash investments. Although outperforming their respective markets the equity managers provided a negative return of just under 0.7%; this was in excess of their benchmarks illustrated by the MSCI World Index which fell during the year by just over 4.8%. The negative returns of the equity pools were offset by the corporate bond pools which returned a positive return of 5.4% and the cash pool which provided a return of 1.1%.

The corporate bond pool was the only pool to underperform its benchmark during the year due to the manager adopting a defensive positioning relative to the benchmark to ensure capital values were maintained during periods of pronounced volatility.

The performance of the Health Fund relative to the combined benchmark is detailed below. Although the pool outperformed during the year, the pool shows underperformance from inception to date. The underperformance of the Fund against benchmark is attributable to the Health Fund being underweight in equity following its entry into the CIF while these pools were established.

10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0%

10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0%

-10.0%

Figure 21:  Performance of Investments   Figure 22:  Performance of the Health Insurance Fund since

(01 January 2011 31 December 2011). transferred to CIF (01 July 2010 31 December 2011).

ADMINISTRATION

1.1  Post year end performance

The relatively low rate of return in 2011 was mostly driven by falls in the equity markets at the end of the third quarter which saw global markets fall by around 14%. Much of this lost ground was recovered in Q1 2012 when markets began to improve, increasing annualised returns since the inception of the CIF to in excess of 5% per year.

Administration

The following Figure shows the categories of expenditure within the total administration costs excluding depreciation of £7 million for 2011 for the three Funds:

Premises  Other

& Maintenance  Administrative

£201,471 Costs

Investment  £444,246

Management Fees

£445,263

Professional Fees Computer  £883,121

Costs

Supplies  £940,183

& Services

£2,728,824

Prescription Pricing

Staffing  £244,596

£3,207,147

Other Supplies

& Services £660,924

Figure 23: Administration costs £7 million expenditure analysis

The cost of administration is equivalent to 1.8% of the total value of contributions collected and benefits administered, compared to 2.2% in 2010 and 1.9% in 2009. Administration costs in 2011 were £1.3 million lower than in 2010. This included a reduction in staff costs of £422,504.

Social Security Fund

 Statement of the Responsibilities of the Minister  27 Report of the Comptroller and Auditor General  28

Independent Auditors Report  29 Income and expenditure account  30

 Statement of Total Recognised Gains and Losses  31 Balance Sheet  32

Cash Flow Statement  33 Notes to the Financial Statements  34

SOCIAL SECURITY FUND

STATEMENT OF THE RESPONSIBILITIES OF THE MINISTER FOR SOCIAL SECURITY OF THE STATES S OO F C JEIA RL S  ES YE C INU RR EI ST PY E F CU TN OD F  27 STATEMENT OF THE RESPONSIBILITIES OF THE MINISTER FOR SOCIAL SECURITY OF THE STATES OF JERSEY IN RESPECT OF THE FINANCIAL STATEMENTS

THE FINANCIAL STATEMENTS

Statement of the Responsibilities of the Minister for Social Security of the States of Jersey in Respect of the Financial Statements

The Social Security (Jersey) Law, 1974, requires that financial statements of the Social Security Fund shall be prepared in such form, manner and at such times as the Minister for Social Security may determine. The Minister is responsible for preparing the financial statements.

In preparing the financial statements the Minister is required to:

   select suitable accounting policies and then apply them consistently;

   make judgements and estimates that are reasonable and prudent;

   state whether applicable United Kingdom accounting standards have been followed, subject to any material

departures disclosed and explained in the financial statements;

   prepare the financial statements on a going concern basis unless it is inappropriate .

The Minister is responsible for keeping proper accounting records which disclose with reasonable accuracy, at any time, the financial position of the Funds.

The Minister is responsible for safeguarding the assets of the Fund and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

ANNUAL REPORT

The Annual Report is available as a publication and on a website maintained by the States of Jersey. The maintenance and integrity of the website is the responsibility of the States of Jersey. The work carried out by

the auditors does not involve consideration of the maintenance and integrity of this website and accordingly,

the auditors accept no responsibility for any changes that have occurred to the Annual Report since they were initially presented on the website. Visitors to the website need to be aware that legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in their own jurisdiction.

REPORT OF THE COMPTROLLER AND AUDITOR GENERAL TO THE STATES ASSEMBLY

Report of the Comptroller and Auditor General to the States Assembly

I certify that I have examined the financial statements of the Social Security Fund for the year ended 31 December 2011 in accordance with the Social Security (Jersey) Law 1974.

Karen McConnell

COMPTROLLERANDAUDITORGENERAL

Jersey Audit Office

Lincoln Chambers (1st floor) 31 Broad Street

St Helier

Jersey

JE2 3RR

30 September 2013

INDEPENDENT AUDITORS REPORT TO THE MINISTER FOR SOCIAL SECURITY OF THE STATES OF JERSEY

Independent Auditors Report to the Minister for Social Security of the States of Jersey

We have audited the financial statements of the Social Security Fund ( the Fund ) for the year ended 31 December 2011 in accordance with the Social Security (Jersey) Law 1974. The financial statements comprise the Income and Expenditure Account, the Statement of Total Recognised Gains and Losses, the Balance Sheet, the Cash Flow Statement and the related notes. The financial reporting framework that has been applied in their preparation is the Social Security (Jersey) Law 1974.

Respective responsibilities of the Minister and the Comptroller and Auditor General of the States

As explained more fully in the Statement of the Responsibilities of the Minister for Social Security of the States of Jersey in respect of the Financial Statements, the Minister is responsible for the preparation of the Financial Statements in accordance with the Social Security (Jersey) Law 1974.

The Comptroller and Auditor General s responsibilities are to examine and certify every such account of the Social Security Fund. We have been appointed by the Comptroller and Auditor General to audit and express an opinion on

the Financial Statements of the Fund in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board s Ethical Standards for Auditors.

This report, including the opinion, has been prepared for and only for the Minister for Social Security of the States of Jersey in accordance with the Social Security (Jersey) Law 1974

and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of the audit of the Financial Statements

An audit involves obtaining evidence about the amounts and disclosures in the Financial Statements sufficient to give reasonable assurance that the Financial Statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Fund s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Fund; and the overall presentation of the Financial Statements. In addition, we read all the financial and non-financial information in the

Minister s Report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on the Financial Statements In our opinion the Financial Statements:

   give a true and fair view, in accordance with the Social

Security (Jersey) Law 1974, of the state of the Fund s affairs as at 31 December 2011 and of the income and expenditure and cash flows for the year then ended; and

   have been prepared in accordance with the requirements

of the Social Security (Jersey) Law 1974.

Matters on which we agreed to report by exception

We have nothing to report in respect of the following matters where under terms of our engagement, we have agreed to report to you if, in our opinion:

   proper accounting records have not been kept by the

Social Security Department; or

   the Fund s balance sheet and income statement are not in agreement with the accounting records and returns; or

   we have not received all the information and explanations

we require for our audit.

Price waterhouseCoopers LLP

Chartered Accountants and Statutory Auditors 7 More London Riverside, London, SE1 2RT

27 September 2013

Note:

The maintenance and integrity of the States of Jersey s website is the responsibility of the States of Jersey; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2011

Income and expenditure account for the year ended 31 December 2011

2011  2010

Notes

£000  £000 £000  £000 Income 1

Contributions 148,837 150,462 States contribution 65,348 66,667 Bank interest 283 188 Other income 165 168 214,633 217,485

Expenditure 1

Benefits

Pensions

Pensions and survivor s benefits 143,088 138,055 Short term incapacity

Short term incapacity allowance 12,692 12,736 Long term incapacity

Long term incapacity allowance 12,635 11,901

Invalidity benefit 11,239 12,457

23,874 24,358 179,654 175,149

Grants and allowances

Maternity allowance 2,189 2,197 Maternity grant 587 556 Death grant 472 511

3,248 3,264 182,902 178,413

Administration expenses

Staff costs 1 2,670 3,007 Depreciation 5 1,971 1,906 Other administrative expenses 1 2,288 2,992

Net admin costs of the Social Security (Reserve) Fund 481 645

7,410 8,550 190,312 186,963

Surplus of income over expenditure for the year 4 24,321 30,522

Continuing Operations

All of the fund s income and expenditure is derived from continuing activities.

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 31 DECEMBER 2011

Statement of Total Recognised Gains and Losses for the year ended 31 December 2011

2011  2010 £000 £000

Surplus for the financial year 24,321 30,522 Transferred to Social Security (Reserve) Fund (30,517) (45,598)

Total recognised losses (6,196) (15,076)

BALANCE SHEET AS AT 31 DECEMBER 2011

Balance Sheet as at 31 December 2011

2011 2010

Notes

£000  £000 £000  £000

Fixed Assets

Tangible fixed assets 5  5,627  6,803

Current Assets

Debtors 6  51,627  52,155 Cash at Bank and in hand 9,629 8,624 61,256  60,779

Creditors (amounts falling due within one year) 7  17,096  12,080 17,096  12,080

Net Current Assets 44,160  48,699 Net Assets 49,787  55,502

Funds Employed

Revaluation Reserves 719  719 Revenue Reserves 8  49,068  54,783

49,787  55,502

Signed:  Signed:

Date: 20 September 2013  Date: 20 September 2013 (Chief Officer - Social Security Department)  (Minister for Social Security)

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2011

Cash flow statement for the year ended 31 December 2011

2011 2010

Notes

£000  £000 £000  £000 Operating Activities

Net cash inflow from operating activities 10  29,413 31,614

Returns on Investments and Servicing of Finance

Bank interest received 283  189 Rent received 4  163  163

Net Cash inflow from Returns on Investments and

446  352 Servicing of Finance

Capital Expenditure and Financial Investments

Payments to acquire tangible fixed assets 5  (795) (232) Transfers to Social Security (Reserve) Fund 8  (30,517) (45,598) Social Security (Reserve) Fund fees 20

Net cash outflow from Capital expenditure

 (31,292) (45,830) and Financial Investments

Management of Liquid Resources

(Increase)/decrease in money held on deposit 11  (2,388) 12,709 Decrease in cash in year (3,821) (1,155)

Reconciliation Of Net Cash Flow To Movement In Net Funds

Decrease in cash in the year (3,821) (1,155) Net cash inflow/(outflow) from management of liquid

 2,388  (12,709) resources

Change in Net Funds (1,433) (13,864) Net funds at 1 January 5,985  19,849 Net funds at 31 December 11 4,552 5,985

Notes to the Financial Statements for the year ended 31 December 2011

1. Accounting Policies

1. Basis of Preparation

The financial statements are prepared on a going concern basis under the historical cost convention, as modified by the revaluation of certain tangible fixed assets, in accordance with UK GAAP, so far as it is applicable to these financial statements. The Minister considers that the formats adopted within these financial statements are the most appropriate to the circumstances of the Social Security Fund (the Fund ) and in accordance with the Social Security (Jersey) Law 1974.

The preparation of financial statements in conformity with UK GAAP requires the use of certain critical accounting estimates. It also requires the Minister to exercise judgement in the process of applying the Fund s accounting policies.

The principle accounting policies are set out below and have been applied consistently throughout the year unless otherwise stated.

The Department has considered the disclosure requirements under UK GAAP and has adopted FRS26, Financial Instruments: Recognition and Measurement and FRS29, Financial Instruments Disclosure . FRS26 requires the investments to be carried using bid price. FRS29 requires disclosure as to the nature and risks arising from financial instruments to which the Fund is exposed and how these are managed.

2. Foreign Currency

1. Functional and Presentation Currency

The performance of the Fund is measured and reported to the Minister in pounds sterling. The Minister considers pounds sterling as the currency that most faithfully represents the economic effects of the underlying transactions, events and conditions. The financial statements are presented in pounds sterling, which is the Fund s functional and presentation currency.

2. Transaction and Balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the transaction date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income and expenditure accounts.

3. Income

Income is accounted for on an accruals basis and includes the following categories:

1. Contributions

Contributions represent payments made by employers, employees and the self employed.

Social Security contributions are set at the rate of 10.5% of earnings (Employees, 5.2%; Employers, 5.3%; Self employed, 10.5%). The financial statements include an estimation in respect of the contributions from insured persons and employers, which are not due to be returned or remitted until after the end of the year.

2. States Contribution

States contribution is the sum paid by the States of Jersey to supplement the contributions of individuals with monthly earnings between the lower earnings threshold (2011: £776 per month) and the standard earnings limit (2011: £3,686 per month), to ensure that all individuals contributions amount to the standard contribution level.

P.110 / 2011 Social Security (Amendment of Law No. 1) (Jersey) Regulations 2011 introduced a new method of calculating the value of the States Grant in respect of supplementation. This introduced certainty to the level of States contribution by setting the States Grant to £65,348,408 for 2011 and basing 2012 and future years on a formula set out in the law.

The States contribution made to the Social Security Fund in 2011 was £65,348,408 in accordance with the law; however actual supplementation made to individuals contribution records amounted to £66,072,114.

The calculation of the States contribution was amended by section 9a of the Social Security (Jersey) Law 1974: Revised Edition as at 1 March 2012.

3. Bank Interest Received

Interest income is recognised on an accrual basis, by reference to the principal outstanding and the interest rate.

4. Other Income

Other income includes rental income which is received from sub-letting office space within buildings owned by the Fund.

4. Benefits and administrative expenses

BENEFITS

Benefits are paid to claimants who qualify for a benefit within the Social Security (Jersey) Law 1974 and meet the required conditions.

Benefits are recognised during the period when they become due with no recognition made for future liabilities and consist of the following:

1. Pensions

Pensions and survivor s benefits are paid to those claimants and their surviving spouse who are entitled to receive a State pension based on the contributions made during the claimant s working life.

2. Short Term Incapacity

Short term incapacity allowance (STIA) is a daily benefit which is payable to claimants in possession of a medical certificate who are unfit for work due to illness or injury and who meet certain contribution conditions and is payable for a minimum of two days and a maximum of 364 days. After this period claimants, subject to certain conditions, may claim Long Term Incapacity Allowance.

3. Long Term Incapacity

Long term incapacity allowance (LTIA) is a weekly benefit, payable as a compensation for a loss of faculty. As with STIA certain contribution conditions must be met before payment is awarded.

4. Grants and Allowances

These include payments for maternity grant and maternity allowance as well as grants paid on the death of a person who has contributed to the Social Security Scheme.

ADMINISTRATIVE EXPENSES

Administrative expenses are accounted for on an accruals basis and consist of the following:

1. Staff Costs

Staff who work on the Fund are employed by the States Employment Board as they also provide services for the States of Jersey Social Security Department. The costs of employing the staff are therefore recorded gross in the Social Security Departmental pages of the States of Jersey Financial Report and Accounts and an allocation for the cost of staff who work on the Fund is recharged to the Fund and recorded as staff costs. The cost reflected in the financial statements is gross of salaries and wages paid to staff and pension contributions.

2. Other Administrative Expenses

Other administrative expenses include service costs, operating costs and bad debts.

5. Tangible Fixed Assets

Tangible assets are capitalised if they are capable of being used for a period which exceeds one year and they:

individually have a cost of at least £10,000, or

form part of a project with an overall final cost of at least £10,000.

Tangible fixed assets are stated at historical cost less accumulated depreciation.

Depreciation has been provided on all tangible fixed assets, other than freehold land, so as to write off the cost of these assets less their estimated residual values, on a straight line basis over their expected useful economic lives. The principal useful lives used for this purpose are:

Buildings  50 years Building improvements  5 to 20 years Fixtures, fittings & equipment  5 years Computer development  8 years Computer network  3 years

The carrying values of tangible fixed assets are reviewed for impairment if changes in circumstances indicate the carrying value may not be recoverable.

6. Cash at Bank and in Hand

Cash at bank and in hand includes cash, demand deposits and other short term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Funds uncleared at Bank are not netted against Cash in Hand and at Bank and are disclosed as separate liabilities within the financial statements.

7. Trade Debtors

Debtors are measured at initial recognition at fair value. Contributions outstanding at 31 December 2011 represent accrued contributions for the last quarter, together with billed contributions due from earlier periods. Benefits paid in 2011 but in respect of periods subsequent to 31 December 2011 are treated as prepayments.

8. Bad Debts

1. Provisions

Instalment arrangements are made with Contributors to reimburse outstanding contributions due

from earlier periods. A provision for bad debts is only made when an instalment is not received from a contributor.

2. Write-offs

Class 1 contributions are written off when the employer cannot contribute on behalf of their employee by virtue of being declared en dØsastre or bankrupt. Class 2 contributions are written off when the individual has defaulted on an instalment arrangement and died.

9. Provision for Liabilities and Charges

Provision is made in the financial statements in respect of obligations arising from past events where the predicted outcome of the event is considered probable and there is a reliable estimate of the amount of the liability.

10. Funds Uncleared at Bank

The Fund does not have a facility for a bank overdraft. Funds uncleared at bank represent cheques issued not yet cashed on the benefit payment bank accounts.

11. Creditors

Creditors are measured at initial recognition at fair value.

12. Taxation

The Fund is exempt from Jersey Income Tax by virtue of Article 131 of the Income Tax (Jersey) Law 1961.

2. Financial Assets and Financial Liabilities

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are recognised on the Fund s balance sheet when the Fund becomes a party to the contractual provisions of the instrument. The Fund derecognises its financial assets when the contractual rights to the cash flows from the financial asset expire. The Fund derecognises its financial liabilities when the obligation specified in the contract is discharged, cancelled or expires.

1. Debtors

Debtors are measured at initial recognition at fair value.

2. Cash at Bank

Cash at bank and in hand includes cash, demand deposits and other short term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

3. Creditors

Creditors are measured at initial recognition at fair value.

3. Financial Risk Management

The Fund s activities expose it to liquidity and credit risk. The Social Security Department undertakes periodic risk reviews which involve identifying key risks, scoring them and documenting their mitigation.

1. Market Risk

No investments are held by the Fund. Short term bank deposits are held at fixed rates and therefore these are not subject to market price risk. These cash flows are primarily fixed in nature and are received from short term highly liquid investments that are readily convertible and subject to an insignificant risk of change in value.

2. Credit Risk

The Fund s principal financial assets are debtors and bank balances.

The Fund s credit risk is primarily attributable to its debtors. The Fund s objectives for managing the risk are to ensure that the debtors are recovered promptly and that the cash at bank is secure. Where monies

are not received within their payment terms they are referred to the Department s Contribution and Enforcement team for recovery. In these instances instalment arrangements are made for repayment of monies owed or court action progressed. Contribution debtor credit risk is limited as monies are due from a large number of debtors, none of whom are significant in isolation.

The credit risk on liquid funds is limited because the counterparties are banks with credit ratings assigned by international credit-rating agencies with a minimum rating of A only accepted for short term deposits and AA for longer term deposits (+3 months).

3. Liquidity Risk

The Social Security Fund s exposure to liquidity risk is low due to the volume of cash available to meet its short term obligations. The Fund s objectives for managing this risk are to ensure that there are enough liquid resources to meet short term liabilities.

Daily cash flow forecasts are undertaken and any liquidity risk identified as part of this process is addressed by managing the amounts placed on short term deposit with Royal London Asset Management CI Limited (RLAM). The Fund manages its exposure to liquidity risk by monitoring the rolling forecast of the Fund s liquidity reserves on the basis of the expected cash flows in and out.

All liabilities are payable upon demand or in less than one year.

4. Fair Value Interest Rate Risk

During the year, the Fund received income from its fixed bank deposits. These cash flows were primarily fixed in nature and therefore there was a potential risk of market rate movement during the fixed period. From March 2010, the Department has managed its banking arrangements and fund deposits through the States of Jersey Cash Managers Royal London Asset Management ( RLAM ).

4. Surplus of Income over Expenditure for the year

Surplus of Income is stated after charging / (crediting):

2011 2010 £000 £000

Auditors fees 46  66 Depreciation 1,971  1,906 Rental income from third parties (63) (63) Rental income from related parties (100) (100)

5. Tangible Fixed Assets

Computer

Land, buildings and  Fixtures and

development   Total improvements fittings

and network £000 £000 £000

£000

Cost

At 1 January 2011 8,952  87  12,968  22,007 Additions 48  13  734  795

At 31 December 2011 9,000  100  13,702  22,802

Accumulated depreciation

At 1 January 2011 4,179  72  10,953  15,204 Charge for the year 434  5  1,532  1,971

At 31 December 2011 4,613  77  12,485  17,175

Net book value

At 31 December 2011 4,387  23  1,217  5,627 At 31 December 2010 4,773  15  2,015  6,803

Land and buildings consist of 30 to 32 La Motte Street, known as Philip Le Feuvre House and Huguenot House, St Helier, Jersey. Title to Philip Le Feuvre House and Huguenot House are registered in the names of the Attorney General and Greffier of the States on behalf of the Public of the Island .

6. Debtors

2011 2010 £000 £000

Debtors:

  Contributors individuals and employers 20,379 19,203  Goods and Services Tax 54  46   Other debtors 308  228 20,741 19,477

Prepayments and accrued income:

  Contributors individuals and employers 21,320 23,394  Benefits paid in advance 9,566  9,103

  Jersey Post funds held for the payment

181 of Pension Order books

51,627  52,155

The Minister considers that the carrying amount of the debtors approximates to their fair value.

As at 31 December, debtors of carrying value, 2011: £20.7 million (2010: £19.5 million) were past their due date but not impaired. The ageing is shown below:

2011 2010 £000 £000

Up to 3 months past due 20,641 19,351 3 to 6 months past due 10 29 6 to 12 months past due 38 44 Over 12 months past due 52 53 20,741 19,477

BAD DEBT PROVISION

Debtors are shown net of a bad debt provision at 31 December 2011 of £72,338 (2010: £49,296), as analysed below.

2011 2010

£000 £000

Up to 3 months past due 72

3 to 6 months past due 9 6 to 12 months past due

Over 12 months past due 40 72  49

During the year ending 31 December 2011, bad debts of £118 (2010: £16,498) were written off.

7. Creditors: amount falling due within one year

2011 2010 £000 £000

Funds uncleared at bank  5,077  2,690 Inter fund balances

  Health Insurance Fund 5,855  4,126 Accrued benefits payable 246  382 Capital Expenditure 80

Social Security (Reserve) Fund 20

Other creditors 5,818  4,882 17,096  12,080

The Minister considers that the carrying amount of the creditors approximates to their fair value.

The loan payable to the Health Insurance Fund and the States of Jersey is unsecured, interest free and repayable on demand.

Maturity of financial liabilities:

The maturity profile of the carrying amount of the Fund s liabilities, as at 31 December was as follows:

2011 2010 £000 £000

Up to 3 months past due 297  506

8. Revenue Reserves

2011 2010 £000 £000

As at 1 January  54,783  69,214 Surplus funds transferred to Social Security (Reserve) Fund (30,517) (45,598) Retained surplus for the year 24,321  30,522 Reimbursement of expenses due to Social Security (Reserve) Fund 481  645

As at 31 December  49,068  54,783

9. Related Party Transactions

Jersey Post International Limited

The Fund has the following commercial, arm s length relationships with Jersey Post International Limited, which is a strategic investment of the States:

   The States of Jersey hold all the ordinary shares in Jersey Post International Limited which became incorporated

on 1 July 2006.

   The Fund pays Jersey Post International Limited for the pension recipients who hold a pension order book or

cash open cheque benefit payments. For this service Jersey Post International Limited receives an administration fee as noted in the table below.

From January 2010, the States of Jersey, Treasury and Resources has invoiced for all Jersey Post International Limited charges.

STATES OF JERSEY TREASURY AND RESOURCES AND OTHER STATES DEPARTMENTS The Fund also undertakes a number of transactions and joint undertakings with States of Jersey Treasury and Resources and other States Departments as noted in the table below.

Payments made during the year to the States of Jersey directly controlled (strategic investments) entities are denoted below:

2011 2010 £000 £000

States of Jersey 5,541  4,376 Jersey Post International Limited 47 Jersey Telecom Group Limited 7  6 Jersey Electricity Company Limited 47  67  5,595  4,496

The Fund receives income (States contribution) from the States of Jersey to supplement the contributions of earners who fall below the earnings ceiling but above the lower earnings threshold 2011: £65,348,408 (2010: £66,667,178).

Staff employed by the States of Jersey who administer the Social Security Fund are also involved with the administration of States Funded Benefits and services related to employment. Where this administration is undertaken on premises owned by the Fund, a rental charge for the use of the premises is levied to

the States of Jersey which in 2011 amounted to £90,300 (2010: £90,300).

Payments made during the year from the States of Jersey are denoted below:

2011 2010 £000 £000

States Contribution - Supplementation 65,348  66,667 Supplies and Services 2,760  3,097 68,108  69,764

Full details of all States Funded benefits and services administered by the Social Security Department can be found in the States of Jersey Financial Report and Accounts 2011. Copies of the report are available from the States Greffe.

RELATED PARTY BALANCES AT YEAR END

2011 2010 £000 £000

Amounts due to related parties:

  Treasurer of the States 5,541  4,376  Jersey Post International Limited 56  Jersey Telecom Group Limited 3  4   Jersey Electricity Company Limited 5  12 5,549  4,448

Amounts due from related parties:

  Jersey Post International Limited 181 181

The Health Insurance Fund does not operate a bank account. Consequently all receipts and payments in relation to the Health Insurance Fund are made through nominated Social Security Fund bank accounts (due to their relationship in respect of Social Security contributions) and then accounted for as loans.

During the year the Social Security Department made net payments from its bank accounts, of which the Social Security Fund is part, to the Health Insurance Fund, which in 2011 amounted to £1.6 million (2010: £4.1 million). As at 31 December 2011 the Health Insurance Fund was owed £5.7 million (2010: £4.1 million).

The Social Security (Reserve) Fund is the investment vehicle by which contribution rate and ceiling changes are smoothed over time. The accounting officer of the Social Security (Reserve) Fund is the Treasurer of the States. Payments made in the year to the Fund were £30.5 million (2010: £45.6 million); additionally the Social Security (Reserve) Fund appropriated from the Fund £0.5 million (2010: £0.6 million).

10. Reconciliation of Surplus to Net Cash Flow

2011 2010 £000 £000

Surplus of income over expenditure for the year 24,321  30,522 Net expenditure appropriated from Social Security (Reserve) Fund 481  645 Depreciation 1,971  1,906 Decrease / (Increase) in debtors 536  (7,896) Increase in creditors 2,550  6,788 Bank interest (283) (188) Rent (163) (163) 29,413  31,614

11. Analysis of Changes in Net Funds

At 31  At 31 December Cash Flows December 2010  £000 2011 £000 £000

Cash at bank 1,834  (1,384) 450 Funds uncleared at bank (2,640) (2,437) (5,077) (806) (3,821) (4,627)

Liquid resources 6,791  2,388  9,179 Net funds 5,985  (1,433) 4,552

12. Ultimate Controlling Party

Under the Social Security (Jersey) Law, 1974 the Minister of Social Security is the ultimate controlling party of the Fund. The Minister of Social Security is a member of the Council of Ministers of the States of Jersey and is responsible for safeguarding the assets of the Fund and for preparing the financial statements.

Social Security (Reserve) Fund

 Statement of the Responsibilities of the Minister  46 Report of the Comptroller and Auditor General  47

Independent Auditors Report  48 Statement of Total Return  49 Statement of Changes in Net Assets  50 Portfolio Statement  51

Balance Sheet  52

Summary of material portfolio changes  53 Notes to the Financial Statements  55

SOCIAL SECURITY RESERVE FUND

46 SSTOACTIEAML ESNETC OUFR ITTHYE RREESSPEORNVSEI BFILUITNIED S  OF THE MINISTER FOR SOCIAL SECURITY OF THE STATES OF JERSEY IN RESPECT OF STATEMENT OF THE RESPONSIBILITIES OF THE MINISTER FOR SOCIAL SECURITY OF THE STATES OF JERSEY IN RESPECT OF THE FINANCIAL STATEMENTS

THE FINANCIAL STATEMENTS

Statement of the Responsibilities of the Minister for Social Security of the States of Jersey in Respect of the Financial Statements

The Social Security (Jersey) Law, 1974, requires that financial statements of the Social Security (Reserve) Fund shall be prepared in such form, manner and at such times as the Minister for Social Security may determine. The Minister is responsible for preparing the financial statements.

In preparing the financial statements the Minister is required to:

   select suitable accounting policies and then apply them consistently;

   make judgements and estimates that are reasonable and prudent;

   state whether applicable United Kingdom accounting standards have been followed, subject to any material

departures disclosed and explained in the financial statements;

   prepare the financial statements on a going concern basis unless it is inappropriate .

The Minister is responsible for keeping proper accounting records which disclose with reasonable accuracy, at any time, the financial position of the Funds.

The Minister is responsible for safeguarding the assets of the Fund and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

ANNUAL REPORT

The Annual Report is available as a publication and on a website maintained by the States of Jersey. The maintenance and integrity of the website is the responsibility of the States of Jersey. The work carried out by

the auditors does not involve consideration of the maintenance and integrity of this website and accordingly,

the auditors accept no responsibility for any changes that have occurred to the Annual Report since they were initially presented on the website. Visitors to the website need to be aware that legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in their own jurisdiction.

REPORT OF THE COMPTROLLER AND AUDITOR GENERAL TO THE STATES ASSEMBLY

Report of the Comptroller and Auditor General to the States Assembly

I certify that I have examined the financial statements of the Social Security (Reserve) Fund for the year ended 31 December 2011 in accordance with the Social Security (Jersey) Law 1974.

Karen McConnell

COMPTROLLERANDAUDITORGENERAL

Jersey Audit Office

Lincoln Chambers (1st floor) 31 Broad Street

St Helier

Jersey

JE2 3RR

30 September 2013

INDEPENDENT AUDITORS REPORT TO THE MINISTER FOR SOCIAL SECURITY OF THE STATES OF JERSEY

Independent Auditors Report to the Minister for Social Security of the States of Jersey

We have audited the financial statements of the Social Security (Reserve) Fund ( the Fund ) for the year ended 31 December 2011 in accordance with the Social Security (Jersey) Law 1974. The financial statements comprise the Statement of Total Return, the Portfolio Statement, the Balance Sheet, the Summary of material portfolio changes for the year and the related notes. The financial reporting framework that has been applied in their preparation is the Social Security (Jersey) Law 1974.

Respective responsibilities of the Minister and the Comptroller and Auditor General of the States

As explained more fully in the Statement of the Responsibilities of the Minister for Social Security of the States of Jersey in respect of the Financial Statements, the Minister is responsible for the preparation of the Financial Statements in accordance with the Social Security (Jersey) Law 1974.

The Comptroller and Auditor General s responsibilities are to examine and certify every such account of the Social Security Fund. We have been appointed by the Comptroller and Auditor General to audit and express an opinion on

the Financial Statements of the Fund in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board s Ethical Standards for Auditors.

This report, including the opinion, has been prepared for and only for the Minister for Social Security of the States of Jersey in accordance with the Social Security (Jersey) Law 1974

and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of the audit of the Financial Statements

An audit involves obtaining evidence about the amounts and disclosures in the Financial Statements sufficient to give reasonable assurance that the Financial Statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Fund s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Fund; and the overall presentation of the Financial Statements. In addition, we

read all the financial and non-financial information in the Minister s Report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on the Financial Statements In our opinion the Financial Statements:

   give a true and fair view, in accordance with the Social

Security (Jersey) Law 1974, of the state of the Fund s affairs as at 31 December 2011 and of the income and expenditure and cash flows for the year then ended; and

   have been prepared in accordance with the requirements

of the Social Security (Jersey) Law 1974.

Matters on which we agreed to report by exception

We have nothing to report in respect of the following matters where under terms of our engagement, we have agreed to report to you if, in our opinion:

   proper accounting records have not been kept by the

Social Security Department; or

   the Fund s balance sheet and income statement are not in agreement with the accounting records and returns; or

   we have not received all the information and explanations

we require for our audit.

Price waterhouseCoopers LLP

Chartered Accountants and Statutory Auditors 7 More London Riverside, London, SE1 2RT

27 September 2013

Note

The maintenance and integrity of the States of Jersey s website is the responsibility of the States of Jersey; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions

STATEMENT OF TOTAL RETURN FOR THE YEAR ENDED 31 DECEMBER 2011

Statement of Total Return for the year ended 31 December 2011

2011 2010

Note

£000 £000 £000 £000

Income

Net (losses) / gains on investments

6 (13,447) 80,887 during the year

Investment income 7 39

Bank interest 7 4  2

 4  41 (13,443) 80,928

Expenditure

Supplies and Services 8 485  686 Total return (13,928) 80,242 Appropriated from Social Security Fund 481  645

Total return after appropriation

(13,447) 80,887 from Social Security Fund

STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED 31 DECEMBER 2011

Statement Of Changes in Net Assets for the year ended  31 December 2011

2011 2010 Notes

£000 £000

Net assets at the start of the year 837,729  711,889

Change in net assets before appropriation

from Social Security Fund (13,928) 80,242 Funds received from the Social Security Fund 12 30,517  45,598 Net assets at the end of the year 854,318  837,729

PORTFOLIO STATEMENT AS AT 31 DECEMBER 2011

Portfolio Statement as at 31 December 2011

Market Value Percentage Holding 31 December of Total

Note

Units 2011 Portfolio

£000 %

Legal & General

Unit Trust Bonds

All stock gilts index 9,000,878  41,190  4.82 0 to 5 years gilt index 44,662,796 81,590 9.55

122,780 14.37

Unit Trust Equities

UK equity index 21,833,458 157,573 18.44 North America equity 10,455,864  82,409  9.65 Europe equity index 6,797,326  47,126  5.52 Japan equity index 16,514,393  14,475  1.69 Asia Pacific (ex-Japan) development equity index 793,912  7,240  0.85

308,823 36.15

Cash

Money Market 20,162,555  27,931  3.27 Liquidity Fund 23,454,663 25,032 2.93

361,786 42.35

Common Investment Fund

UK equities - Majedie 89,253,618  96,753  11.33 Global equities - Longview 128,417,487  137,231 16.06 Global equities - Walter Scott 129,161,385  135,773  15.89  369,757  43.28

Portfolio of investments 9 854,323  100.00

Comparatives are not disclosed in accordance with the Statement of Recommended Practice Financial Statements of Authorised Funds.

BALANCE SHEET AS AT 31 DECEMBER 2011

Balance Sheet as at 31 December 2011

2011 2010

Notes

£000   £000 £000   £000

Fixed Assets

Financial assets at fair value 9 854,323 818,728 Current Assets

Debtors 10 2

Cash at bank 183 19,163

 183  19,165

Current Liabilities

Creditors: amounts falling due within one year 11 188 167 Cash Advanced from the States of Jersey

(3) Consolidated Fund

 188 164

Net Current (Liabilities) / Assets (5) 19,001 Net Assets 854,318 837,729

Represented by:

Revenue Reserves 854,318 837,729

Signed:  Signed:

Date: 20 September 2013  Date: 20 September 2013 (Treasurer of the States)  (Minister for Social Security)

SUMMARY OF MATERIAL PORTFOLIO CHANGES FOR THE YEAR ENDED 31 DECEMBER 2011

Summary of material portfolio changes for the year ended 31 December 2011

MAJOR PURCHASES

Holding Cost Name

Units £000

Legal & General

Legal & General EPAA Europe 6,797,326  60,112 Legal & General BS 0 to 5 Year Gilts Index 24,871,323  44,550 Legal & General BS 0 to 5 Year Gilts Index 19,791,473  35,450 Legal & General N America Equity 1,247,500  9,845 Legal & General N America Equity 1,253,686  9,835 Legal & General N America Equity 952,646  7,450 Legal & General N America Equity 847,354  6,756 Legal & General N America Equity 738,623  5,776 Legal & General TA Liquidity Fund 3,952,806  4,206 Legal & General N America Equity 382,416  3,000 Legal & General N America Equity 370,021  2,920 Legal & General TA Liquidity Fund 2,602,676  2,766 Legal & General N America Equity 313,569  2,500 Legal & General TA Liquidity Fund 2,172,434  2,305 Legal & General N America Equity 282,916  2,250 Legal & General N America Equity 279,591  2,229 Legal & General N UK EQ IDX 270,132  2,012 Legal & General N America Equity 253,423  2,000 Legal & General N UK EQ IDX 241,668  1,800 Legal & General N America Equity 220,417  1,724  209,486