Social Security Department: Minister’s Report and Financial Statements – 2012.

Minister's Report & Financial Statements 2012

Social Security Department

Social Security Department  Centre for work, pensions and benefits  

MINISTER  

Francis Le Gresley, MBE

Senator  

ASSISTANT MINISTER  Susie Pinel

Deputy of St. Clement  

CHIEF OFFICER  Richard Bell

Presented to the States by the Minister for Social Security.

Contents

Section 1 – Minister's Report ........................................................................................ 4

Minister's Foreword.....................................................................................................................................4 Social Security – Our Service ........................................................................................................................6 Executive Summary......................................................................................................................................7 Who does Social Security Support? .......................................................................................................... 12 Social Security Overview ........................................................................................................................... 14

Section 2 – Fund Income ............................................................................................. 16

Contributions ............................................................................................................................................ 16 States Grant .............................................................................................................................................. 18 Social Security (Reserve) Fund Investments ............................................................................................. 19 Health Insurance Fund Investments ......................................................................................................... 21

Section 3 – Social Security Fund Benefits (SSF) ............................................................ 23

SSF – Old Age Pensions (OAP) ................................................................................................................... 23 SSF – Survivor's Benefits and Death Grants .............................................................................................. 26 SSF – Short Term Incapacity Allowance (STIA).......................................................................................... 27 SSF – Long Term Incapacity Allowance (LTIA) and Invalidity Benefit (INV) .............................................. 28 SSF – Maternity and Adoption Benefits .................................................................................................... 29 SSF – Insolvency Benefit ........................................................................................................................... 30

Section 4 – Health Insurance Fund Benefits (HIF) ......................................................... 31

HIF – Medical Benefits (GP Consultations and Letters of Referral) .......................................................... 31 HIF – Pathology Laboratory Benefit .......................................................................................................... 32 HIF – Pharmaceutical Benefit.................................................................................................................... 32 HIF – Gluten-free Scheme ......................................................................................................................... 33

Section 5 – Tax Funded Services and Benefits .............................................................. 34

Tax Funded Services – Back to Work ........................................................................................................ 34 Tax Funded Services – Jersey Employment Trust ..................................................................................... 38 Tax Funded Services – Jersey Advisory and Conciliation Service.............................................................. 38

Tax Funded Services – Health and Safety Inspectorate ............................................................................ 39 Tax Funded Benefits – Income Support .................................................................................................... 40 Income Support: Weekly benefit ......................................................................... 40

Income Support: Transition (Protected) Payments ............................................. 52 Income Support: Residential Care ....................................................................... 53

Income Support: Special Payments ..................................................................... 53 Income Support: Cold Weather Payments .......................................................... 54

Income Support: Ministerial Exceptional Payments ............................................ 54 Tax Funded Benefits – Invalid Care Allowance ......................................................................................... 55 Tax Funded Benefits – Christmas Bonus ................................................................................................... 55 Tax Funded Benefits – Food Cost Bonus ................................................................................................... 55 Tax Funded Benefits – Cold Weather Bonus ............................................................................................ 56 Tax Funded Benefits – 65+ Health Scheme .............................................................................................. 56 Tax Funded Benefits – 75+ TV Licence Benefit ......................................................................................... 56 Tax Funded Benefits – other benefits ....................................................................................................... 57 Departmental Administration Costs ......................................................................................................... 58

Section 6 – Financial Statements ................................................................................. 59

Social Security Fund Financial Statements ............................................................................................... 60 Social Security (Reserve) Fund Financial Statements ............................................................................... 80 Health Insurance Fund Financial Statements ......................................................................................... 100 Tax Funded Services and Benefits Financial Statements ........................................................................ 121

Appendix: Summary of legislation completed or amended in 2012 ........................... 125

Section 1 – Minister's Report

Minister's Foreword  

I am pleased to present the annual report for the Social Security Department. This report, for the first time, combines information on both contributory and tax-funded benefits. It gives a comprehensive summary of the Department's activities over 2012 in terms of the number of people in our community served by Social Security and the costs of doing so; reflecting total expenditure of £396.4 million1 and contribution income totalling £186.9 million. This report also highlights the strength of the Department's funds, with total reserve balances of £1.1 billion.

At the beginning of 2012 I was faced with the daunting prospect of leading the Social Security Department at a time of record unemployment, while needing to address the long-term challenges building up as a result of an ageing population and maintaining the high standards of customer service expected by the general public. I am pleased to report that these challenges and others are being addressed and that substantial progress has been made in several important areas during the year.

The Chief Minister clearly identified getting people "Back to Work" as the key priority for 2012 and during the year existing teams from various departments were brought together and new teams were established to create a comprehensive and coordinated team, to address all aspects of helping Islanders get back into work. Despite the loss of the fulfilment industry during 2012, the number of unemployed Islanders has not grown by anything like the numbers we had feared, thanks to the success of the Back to Work initiatives and the growing number of employers showing a real commitment to employing locally-qualified residents.

The Back to Work team has worked with employers on individual recruitment campaigns, set up a long-term unemployment unit to provide extra help to those without work for more than a year, designed and implemented grant schemes to encourage employment as well as supporting 1,300 people back into employment.

2012 saw changes made to the Income Support benefit ensuring that all adults in receipt of Income Support are treated equally; now each adult within the Income Support household needs to have achieved five years residency if Income Support components are to be paid in respect of them, while still ensuring that the costs of the family are met.

As Minister for Social Security, I need to take a very long-term view of States policies and ensure that our benefits system is adapted to take account of the growing proportion of older residents. Following the approval of a new long-term care law in 2011, the Department has worked closely with the Jersey Taxes Office in 2012 to design and develop an appropriate contribution method for the new Long-Term Care Fund and this new benefit remains on track for implementation in 2014. A separate proposal to provide extra protection to pensioner incomes was also developed in the second half of 2012 and was subsequently approved by the States in the spring of 2013.

The Department took on the challenge of discrimination legislation and developed a new law, drawing on good practice from other countries but acknowledging the small size of many Jersey employers and the need to minimise any disruptive impact on the local economy.

On a personal note, I have found myself in the unusual position of being able to bring forward changes to two benefits following propositions that I introduced as a backbencher. During the year, the Cold Weather Bonus joined other benefits specifically targeted at pensioners, such as the Over 65 Health Scheme and the TV Licence benefit. Towards the end of 2012, the States also approved changes to Survivor's Benefits, reducing the long-term cost to the Social Security Fund, whilst continuing to protect survivors looking after children.

1 Total expenditure across the funds administered by the Social Security Department as well as tax funded monies. This breaks down as: £197.5m (Social Security Fund), £34.5m (Health Insurance Fund), £164.4m (tax funded)

The broad scope of our activities is only made possible by our dedicated, hardworking staff. Their expertise enables around 16,000 benefit payments to be made on time each week, vulnerable people to be looked after and for the Department to deal with the 1,000 customer visits and 400 telephone calls it receives on an average working day. In a time of economic difficulty, our staff are working harder than ever to help people find work and support them with benefits.

The global economic outlook remains uncertain, but I am confident that Jersey is in a stronger position to respond to these challenges than many other places, helped in no small part by the many decades of forward planning that created our current Social Security system.

Signature

Senator Francis Le Gresley, MBE

Social Security – Our Service

The Social Security Department has overarching aims to help people achieve and maintain financial independence and to provide benefits to those islanders who are unable to support themselves. Our purpose is to offer:

Support, Opportunity and Service by

Supporting people to achieve and maintain an acceptable standard of living

Helping employers and employees to work well together for their mutual benefit and the economy of the Island

Planning for an ageing population

Delivering benefits and high quality services

The Social Security Department is responsible for:-

• A compulsory, contributory Social Security Insurance Scheme that receives contributions from employers, employees and general tax revenues. This fund is most closely associated with the payment of pensions, but the scheme provides contributors with benefits throughout life by offering support from Maternity Allowances through to Death Grants.
• A compulsory, contributory Health Insurance Scheme that receives contributions from employers and employees. This fund subsidises GP consultation fees and pays for the prescriptions issued by GPs and dentists.
• Non-contributory means tested benefits including Income Support. These are funded from general tax revenues and provide targeted support for lower income households. In addition the tax funded Christmas Bonus is paid to local pensioners and certain other benefit claimants.
• Back to Work services which help people into work and support adults with special needs to obtain and maintain employment.
• Employment legislation, which sets out minimum standards for good employment relations and protection in the workplace including rights relating to written terms of employment, holidays, rest days, notice pay, redundancy pay, unfair dismissal and a tribunal to resolve disputes. The Department also has responsibility for setting the minimum wage. The Department funds the Jersey Advisory and Conciliation Service (JACS) to provide advice, training and conciliation.
• Health and Safety legislation providing a legal framework which sets out the duties of employers and employees to observe health, safety and welfare at work, as well as the Health and Safety Inspectorate which provides proactive advice to employers and undertakes investigations when things go wrong.
• Developing discrimination legislation. This legislation will create protected characteristics' ensuring people are not treated unfairly due to their race, sex, age or disability, taking into account best practice adapted to the needs of Jersey.

Executive Summary

Service Delivery in 2012

Although almost everyone living in Jersey is at some point a customer of the Social Security Department, most people will seldom need to have any prolonged direct interaction with us. Our staff are rightly proud that so much of our work – collecting contributions and paying pensions and benefits – goes on smoothly and in the background to people's everyday lives.

We make sure that working people have an insurance scheme to support them through common life events like sickness, raising families and planning for old age. We're also responsible for helping unemployed people find work and supporting Islanders who are living on low incomes. In total, approximately 1 in 3 Jersey households receive some kind of regular payment from the Department.

At the end of the year, the total assets of the Department's funds stood at £1.1 billion. During 2012, a total of £186 million was collected in contributions, funding £146 million paid out in Old Age Pensions, to over 28,000 pensioners around the world as well as a range of other benefits. The biggest single taxpayer funded benefit spend was £71 million provided to low income households through Income Support weekly benefit.

Jersey has not escaped the impacts of a weakened global economy and in 2012 the Department delivered its services in a climate of increasing unemployment, frozen wages, insolvencies and low growth. In response to these conditions the Department prioritised efforts to support people back in to work. At the same time progress was made on the development of long-term care legislation and a new discrimination law, as well as updating existing benefits. An ambitious business plan identified activities across the full range of the States strategic aims while front line staff continued to deliver a high quality of service.

Benefits & Services Administered  2012 spend

Supporting by the Department  £ million

Old Age Pensions  146.1   28,132 pensioners

Income Support (excluding Residential Care) 72.1   6,636 households

Long Term Incapacity Allowance & Invalidity Benefit  23.5   4,529 claimants

Pharmaceutical Benefit (cost of drugs and dispensing)  17.4   1.8 million items prescribed Income Support: Residential Care  16.7   585 claimants

Short Term Incapacity Allowance  13.7   543,149 days paid

Medical Benefits (GP subsidy)  9.1   363,601 GP consultations Employment Services (includes Back to Work)  4.8   1,840 people Actively Seeking Work Survivors' Benefits  4.8   928 claimants

Maternity Benefits  2.9   1,011 grants paid

Invalid Care Allowance  2.7   192 claimants

Christmas Bonus  1.4   18,578 claimants

Employment Relations (includes grant to JACS)  0.5   9,720 enquiries

Health and Safety at Work  0.5   778 incidents reported

Death Grant  0.5   514 grants paid

Food Cost Bonus  0.3   1,408 households

Cold Weather Bonus  0.3   1,063 households

65+ Health Scheme  0.3   2,266 pensioners

Other Benefits (<£250k)  0.7   A wide variety of households

Total  318.3  

Table 1: Summary of 2012 spend on benefits and services administered by the Department

Getting People Back to Work

Unemployment continued to make headlines during 2012, and the growing number of unemployed people was affected by a contraction in the fulfilment industry and insolvencies, including the closure of several high street names.

The numbers of people registered as unemployed reached historic highs of 1,840 at the end of December 2012, but in total throughout 2012 there were 4,940 individuals who were, at some point, registered with the Department to seek work. While it was clear that new efforts were needed to tackle unemployment, the services offered to job seekers had historically been spread, and arguably diluted, through different arms of Government. A restructure of these teams during 2012 enabled this expertise to be concentrated in the Social Security Department, where we have consolidated and expanded this resource and introduced new initiatives. For example, an employer engagement team was set up in 2012 to work directly with employers on specific recruitment campaigns. Throughout 2012 our Back to Work teams helped unemployed people into 1,326 paid jobs. Unemployment remains an Island priority and the Back to Work teams will continue to develop initiatives which help local people find jobs and help local employers find the staff they need.

Planning for an Ageing Population

The net asset value of all three funds at the end of 2012 was just over £1.1 billion, split between the Social Security Fund – £62 million, the Social Security (Reserve) Fund – £962 million and the Health Insurance Fund – £81 million. The performance of investments accounted for the majority of the annual increase in assets, much of which was driven by rising markets; the year saw excellent returns from equity and corporate bond markets. 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 £218 million per annum2 and costs rising steadily in the future, these reserves represent less than five years' expenditure.

A high level summary of the 2012 results for the three funds is shown in Table 2 below:

Social Security  Social Security  Health Insurance

Fund  (Reserve) Fund  Fund

£ million  £ million  £ million

InIncomecome  219.6  97.897.8 37.3 Expxpendiittuurere  197.5  0.40.4 34.5

TTaable 2: Fund rresultsts fo for 2012

Reviews of the performance of the Social Security Fund and the Health Insurance Fund will be undertaken in 2013 by the UK Government Actuary and will inform the decisions that need to be taken on the future of these funds and the future direction of pension, benefit and contribution strategies.

2 Total benefit expenditure across the funds administered by the Social Security Department. This breaks down as: £191.5m (Social Security Fund), £26.7m (Health Insurance Fund).

There has been a steady increase in the number of pensioners over the last few years, with an increase of 3% from 2011 to 2012 as expected. Looking back over the last five years, the number of pensioners has increased by 12% and the total cost of pensions has increased by 22%, the difference being the increase in the value of the pension.

In several recent years prices have increased at a faster rate than wages. This means that, in real terms, people on limited incomes have seen their spending power shrink. In the short term, while this economic condition is challenging for many households, it is especially so for the Island's pensioners as the value of their pension is linked to average earnings. In 2012 the Department began work on a new formula for calculating an annual pension uprate which, in future years, will guarantee a pension increase which is at least in line with inflation without threatening the sustainability of pensions in the long term. Whilst the new method of uprating pensions ensures that pensions increase at least in line with inflation; in the longer term they also match increases in average earnings. In the meantime 2012 saw the delivery of a new benefit for local pensioner households to help with the cost of fuel in cold winter months. These Cold Weather Bonus payments are linked to the severity of winter and were first issued in May 2012 when 952 local pensioners each received over £170.

The Long Term Care Law was registered in the Royal Court in 2012 and the Department has continued to work in partnership with Health and Social Services and the Jersey Taxes Office to design a scheme which will support the care costs of our ageing population. This new benefit seeks to protect people from the catastrophic costs often associated with long-term residential or nursing care and will be financed by contributions paid into a ring-fenced fund. In May 2012, it was announced that the new long-term care benefit will be available from July 2014. Until then, the Income Support scheme provides financial help with the cost of care fees. In total 585 people were receiving support at the end of 2012 at an annual cost of £16.7 million. Assistance with long-term care fees was provided through 66 bonds, with a total accrued value of £2.3 million, taken against personal properties.

Ensuring Benefits are Fit for Purpose

The Department regularly reviews the benefits it provides and changes are made to make sure that, as society changes, our support is targeted to reach the people who need it.

At the end of 2012, 928 individuals were claiming a survivor's benefit at a total annual cost of £4.8 million. These benefits are paid to working age people (regardless of income) following the death of their spouse or civil partner. Survivor's benefits comprise Survivor's Allowance, paid in the first year of bereavement, followed by Survivor's Pension, which is paid until pension age. These survivor's benefits are based on the traditional concept of a widow's pension. Such pensions were established at a time when it could be very difficult for a widow to find employment and support her family. Employment of women has changed substantially over the last few decades and a review of survivor's benefits suggested eligibility for Survivor's Pensions should be limited to those with a dependent child. The States agreed to this rationalisation and also approved an amendment to ensure that survivors born before 1 January 1957 (survivors in older age groups) would continue to be eligible to claim a Survivor's Pension, as well as protecting all existing claims. For all working age survivors, a Survivor's Allowance will continue to be paid for the first year following the death of a spouse or civil partner.

During 2012, against a background of rising local unemployment, changes were made to the Income Support benefit to ensure all adults in receipt of Income Support are treated equally with regards the requirement to be resident in Jersey for five years. Prior to the change, an adult claimant with a newly arrived partner could claim Income Support on behalf of both adults. This criteria has been tightened and now each adult within the Income Support household needs to have achieved five years' residency if any Income Support components are to be paid in respect of them. 180 claims were reduced as a result of this change at the end of 2012, leading to a future full year saving of approximately £700,000.

The Department also formalised arrangements for providing financial protection in cases of insolvency. The temporary scheme (established in 2009 following the closure of Woolworths) was replaced with a new statutory scheme which introduced compensation for unpaid wages and a lump sum from December 2012. This benefit is included in the Social Security Fund.

Supporting Workers

The Minister is responsible for the legal framework which governs and supports good employment practices, including the setting of the minimum wage. In addition to increasing the minimum wage and the trainee rate in 2012, the Minister introduced a new second year' trainee rate with the intention of encouraging employers to provide more training opportunities. Also in 2012, the Employment (Jersey) Law 2003 was amended so that employers must notify the Minister and consult representatives of employees where the employer is proposing to make 12 or more employees redundant.

Supporting workers during short and long-term illnesses is an important function of the Social Security system. Over 27,000 claims for Short Term Incapacity Allowance (often called "sickness benefit") were made during 2012. Half of all claims lasted less than 8 days but 10% lasted more than 35 days. Over recent years the number of short term absence claims has been decreasing, while the average length of these claims has been increasing.

The Social Security Department took responsibility for Discrimination Law in 2011. During 2012, the Minister consulted stakeholders and then presented a draft Law to the Council of Ministers in December. The first characteristic to be protected against discrimination will be race which will help Jersey to meet its international obligations in relation to race discrimination. We will continue to prioritise this work and aim to add protection on grounds of sex, age and disability in future years.

ImImprprovingoving comCommunimunicacattiionsons

During 2012 we launched a redesigned Income Support application form and new Income Support award letter. This followed on from feedback from our customers who told us that the old-style Income Support form was complicated. They also said the letters, sent to claimants with information on the amount of benefit they will receive, did not include enough information on how the final award amount had been decided. The revised form and letter were created through workshops attended by staff, politicians and representatives from advocacy groups such as the Citizens' Advice Bureau and The Shelter Trust.

The new form uses plain English, as far as possible, which helps to reduce mistakes and queries and therefore cuts down on processing time. Improvements in the application process were matched by a new, detailed award letter that explains the exact makeup of Income Support payments and answers many frequently asked questions about the benefit.

Shaping Primary Care in Partnership

The Department has worked closely with Health and Social Services throughout 2012 to help shape the strategy for future GP services so that they can continue to provide high quality care for an ageing population. In partnership we have established a primary care governance unit, funded by the Health Insurance Fund but operating as an integral part of the Health and Social Services Department. Jointly through the governance unit we are consulting with GPs and other primary care providers, establishing the standards patients can expect from our GPs and setting up an appropriate modern local governance structure which builds upon the unique features of primary care in Jersey. During 2012 progress has also been made in the IT infrastructure for GP patient records and in the development of new funding mechanisms for primary care.

Whilst this new strategy is being developed, the Social Security Department continues to administer the Health Insurance Fund, subsidising the cost of GP consultations and funding the medicines prescribed by GPs in primary  care. In 2012 over 363,000 GP visits received a subsidy from the Health Insurance Fund at a cost of £7.2 million. Some 1.8 million prescriptions were funded through the Health Insurance Fund at a cost of £17.4 million.

In addition, the States Assembly approved two transfers to be made, one in 2011 and one in 2012, from the Health Insurance Fund to the Consolidated Fund, to meet the cost of various primary care services which are provided directly by the Health and Social Service Department. The two £6.1million transfers helped fund Primary Health Care Services; including Family Nursing and Home Care, child immunisation and smoking cessation services.

Joined up Government

As well as providing benefits and services to our own customers, we support other departments in their strategic aims.

During 2012, the Department participated in the development of the overall strategy for a new housing organisation, to replace the Housing Department, and undertook specific research in respect of financial support for private sector tenants.

The Population Office made significant progress during the year towards the introduction of the new Control of Housing and Work Law, which, in 2013, replaces the Housing and the Regulation of Undertakings laws. We have worked with the Population Office to agree the details of a new registration card, which replaces the familiar Social Security card, and contains information both on contribution status and residential status.

In April 2012 civil partnerships became legal in Jersey. We have been working with the Chief Minister's Department for several years on this project which affects a large number of laws across all areas of island life. The main benefit change related to Survivor's Benefits which are now available to a surviving civil partner, as well as a surviving spouse. Administratively, a large number of forms and leaflets were updated to reflect this change.

Managing Public Finances

The Department receives some of its funding directly from the States of Jersey to deliver a range of "tax-funded" benefits and services. The ongoing poor economic situation, its likely effect on employment and consequences for Income Support, prompted the Department to increase its budget for 2012 to £171 million. The actual expenditure in 2012 was 4% lower than budget, at £164 million.

The Fiscal Strategy Review undertaken in 2010 identified a number of measures to assist in the balancing of public finances. During 2011, the Department made legislative and operational changes to introduce a new Social Security contribution rate in respect of higher earners. The new rate was collected from January 2012 and generated additional income into the Social Security Fund of just over £7 million. This additional income has been used to reduce the size of the tax-funded States grant paid into the Social Security Fund, without damaging the long-term viability of the fund.

During 2012, the Department made £1.5 million worth of savings to the tax-funded budgets under the Comprehensive Spending Review. These were achieved by freezing the uplift on some Income Support components, reducing administration costs and fighting fraud.

Who does Social Security Support?

Babies  Children  Working Age

Income Support Child Component  Income Support Child Component  Income Support is an income related supports low income families with the  supports low income families with the  benefit that provides support for those living costs of their children  living costs of their children  looking for work and those in work

towards the cost of living.

Income Support Childcare  Income Support Childcare

Component supports working parents  Component supports working parents  Insolvency Benefit provides financial

with childcare costs of 0 to 11 year  with childcare costs of 0 to 11 year  assistance to employees whose employers olds  olds  become insolvent

Maternity and Adoption Grants  Dental Fitness Scheme helps toward  Back to Work teams provide support, provide a lump sum to help with the  the cost of dental treatment for 11-21  coaching and training to help unemployed general costs of having a baby  year olds  people back into work

Maternity Allowance is a weekly  Student Credits protect pension  Health and Safety Inspectorate ensures payment to help mothers while they  records while students are in full time  employers provide safe working

take time off work to have their baby  education  environments

Home Responsibility Protection  Medical and Pharmaceutical Benefits  Jersey Advisory and Conciliation Service Credits protect pension records for  subsidise the cost of visiting a GP and  provides advice to employers and

people who stay at home to care for a  any medicines prescribed  employees

child

Short-Term Incapacity Allowance is a Medical and Pharmaceutical Benefits  daily benefit which provides income when subsidise the cost of visiting a GP and  a worker is unable to work due to sickness any medicines prescribed

Survivor's Benefits support a spouse or civil partner if their partner dies

Key:

Tax funded Benefit/Service  Medical and Pharmaceutical Benefits Contributory Benefit/Credit  subsidise the cost of visiting a GP and any

medicines prescribed

Health Insurance Benefits

Illness and Disability  Pensioners

Income Support Medical Components provide  Income Support supports lower income additional assistance to lower-income  pensioner households

households that include someone who has a

long term medical condition  Food Cost* and Cold Weather Bonuses

provide help with the cost of food items and Income Support Residential Care helps fund  heating the home for pensioners who don't the care home fees for people with care needs  pay tax

and little income or assets to meet those costs

Christmas Bonus* is a one off payment to all Invalid Carer's Allowance supports carers who  pensioners resident in Jersey

give up work to look after someone with high

TV Licence Benefit pays for the TV licence for personal care needs

over 75's who don't pay tax

Housing Adaption Grants help with the cost of

adaptations to the home of those with  65+ Health Scheme subsidises dental, optical permanent disabilities  and chiropody costs for pensioners who

don't pay tax

Jersey Employment Trust and Workwise help

people with disabilities prepare for, find and  Old Age Pension helps to cover basic needs maintain employment  in old age and is based on contributions paid

throughout the working life

Long-Term Incapacity Allowance and

Invalidity Benefit support those with a long  Death Grants help with funeral expenses term illness or disability; either physical or  Medical and Pharmaceutical Benefits

mental, both in work and those unable to work  subsidise the cost of visiting a GP and any Medical and Pharmaceutical Benefits  medicines prescribed

subsidise the cost of visiting a GP and any

medicines prescribed

Gluten-Free Vouchers help individuals who

need a gluten-free diet  * Also available to some working age families

Social Security Overview

The remainder of this report describes the activities of the Social Security Department:

Collection of individuals/employers contributions

Administration of funds

Provision of benefits and services

ITthies  dreivpidoertdi sindtiov ifdiveed  sienctito ofinvse: sections:

1. Fund Income Sources, which details the income sources to the three funds administered by the Department
2. Social Security Fund,which details the benefits administered under the Social Security Law
3. Health Insurance Fund,which details the benefits administered under the Health Insurance Law
4. Tax Funded Services/Benefits, which details the services provided and benefits administered through tax funded money, including Income Support and the Back to Work programme
5. Financial Statements, for the three funds administered by the Department as well as tax funded revenue

The figure opposite shows the Social Security revenue sources and demonstrates how the money flows through the funds into the major benefits and services provided. For simplicity it does not show all the financial information, such as investment income, depreciation or administration. These figures are located within the Financial Statements section of the report.

Social Security  Tax Funded Contributions (£186.9m)  Revenue (£164.4m)

Health  Social Security  Social Security Insurance Fund  Fund  (Reserve) Fund

 Medical Benefits  Old Age Pension  Income Support (£88.8m)

(£9.1m)  (£146.1m)  Invalid Care Allowance

 Pharmaceutical Benefit  Survivor's Benefits  (£2.7m)

(£17.4m)  (£4.8m)  Christmas Bonus (£1.4m)  Gluten-Free Vouchers  Death Grants (£0.5m)  Food Cost Bonus (£0.3m) (£0.2m)  Short Term Incapacity  Cold Weather Bonus Allowance (£13.7m)  (£0.3m)

 Long Term Incapacity  65+ Health Scheme

Allowance (£13.4m)  (£0.3m)

 Invalidity Benefit  TV Licence Benefit

(£10.0m)  (£0.2m)

 Mateaternity Grty Granant t anand  Dental Fitness Benefit

Allowwaance (£3.0m2.9m)  Scheme (£0.1m)

 4 other benefits (£0.2m)

 Transfer of monies to HSS for  Employment Services, including; Primary Care funding (£6.1m)  Back to Work and Jersey Employment Trust (£4.8m)

 Employment Relations, including;

JACS - Jersey Advisory and Conciliatory Services (£0.5m)

 Health and Safety at Work

(£0.5m)

Figure 1: Flow chart demonstrating the Social Security Department income sources, funds and benefits & services 2012

Section 2 – Fund Income

The Funds administered by the Social Security Department have three sources of income.

1. Contributions collected from working age individuals and their employers
2. A grant from the States to assist with the cost of supplementation
3. Investment income

Contributions

Contributions from working age adults are due on earnings up to pre-defined earnings ceilings;

• A contribution rate of 12.5% is payable on all earnings up to the Standard Earnings Limit (SEL) of £45,336 per year.

For Class 1 contributors (employed) the 12.5% liability is split between the employer (6.5%) and the employee (6.0%). Class 2 contributors (self-employed and others not in paid employment) are liable to pay the full 12.5%.

• Since January 2012 a contribution rate of 2% is payable on earnings between the SEL and the Upper Earning Limit (UEL) of £150,000 per year.

The employer and Class 2 individuals are liable to pay the 2% contribution

In some situations employees are not required to pay their 6% liability, for example people who are in receipt of an Old Age Pension, people receiving Survivor's Allowance (in the first year of bereavement) and some women married before April 2001.

Income Received from Contributors

Table 3 provides an overview of the contributions received and the number of contributors:

22008008  22009009  22010010  22011011  22012012 Total of Class 1 1 contributions below Slow SEELL (£(£0000)  156,455156,455  163,206163,206  161,463161,463  161,187161,187  164,253164,253 Totall of Class 1 1 contributions aabbove S SEELL (£(£0000)  n/a n/a n/a n/a 5,1215,121 Totall of Class 2 2 contributions below Slow SEELL (£(£0000)  15,72815,728  17,493  17,659  16,169  15,544 Totall of Class 2 2 contributions ababove SE SEL L (£0(£000)  n/a n/a n/a n/a 1,9741,974 Totall VValue of contributions ((£00£0000)  172,183172,183  180,699180,699  179,121179,122  177,356177,356  186,892186,892 AvAveraragege NNo oof Class 1 1 contributotorsrs dduring g yyear  49,25549,255  48,618  48,275  48,359  47,620 AvAveraragege NNo oof Class 2 2 contributotorsrs dduring g yyear  4,3374,337  4,2914,291  4,1764,176  3,877  3,7833,783 AvAveraragege Class 1 1 contribution pperr aannnum (£)  3,1763,176  3,3573,357  3,3453,345  3,3333,333  3,5573,557 AvAveraragege Class 2 2 contribution pperr aannnum (£)  3,6263,626  4,0774,077  4,2294,229  4,174,171  4,6314,631

Table 3: Contributions and contributors, 2008 to 2012

Table 3 and Figure 2 show that, even though the number of contributors reduced in 2012, the monetary value of contributions increased. The additional £9.5m in contributions over 2011 was primarily driven by the new 2% contribution rate (£7.1m) but there was also a small increase in contributions from the 12.5% rate (£2.4m).

£200 £150 £100 £50 £0

Contributions from 12.5% rate

Additional contributions in 2012 from new 2% rate

2008  2009  2010  2011  2012 Figure 2: Total contributions and year on year change, 2008 to 2012

Level of Contributions

In 2012, on average 41% of Class 2 contributors paid above the Standard Earnings Limit each month, with 19% paying at the maximum Upper Earning Limit. By contrast, on average, 21% of Class 1 contributors in 2012 paid above the Standard Earning Limit, with only 1% paying the maximum monthly contribution.

Figure 3 shows that proportionately more Class 1 contributors paid at the Standard Earning Limit in March and December, the months typically associated with bonuses.

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 above the Standard Earnings Limit by month in 2012

Number of Contributors

Contributions are recorded monthly and the number of Class 1 contributors shows a variation in line with the seasonal activities within the Jersey economy, with 3.5% more Class 1 contributors in July than February. Across the year there was a monthly average of 47,620, a decline of 739 Class 1 contributors (1.5%) from 2011, with the decline beginning in April 2012.

There has been a steady decline in the number of Class 2 contributors over the last five years. 2012 followed this trend with a 2.4% reduction on 2011, with an average of 3,783 Class 2 contributors over the year.

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.  

Employer  Employer  Employee

FuFund  ClClass 1  ClClass 1  ClClass 1  (beClClloass 2 w SEL)  (ab(abClColass 2 ve SE SEL)

(b(below SEL)  (ab(above SE SEL)  (b(below SEL)

Social SeSecucuririttyy Fu Fund  5.3%  2.0%  5.2%  10.5%  2.0% ToTotal  6.55%%  2.00%%  6.00%%  1122.55%%  2.00%%

Table 4: Percentage allocation of Class 1 and 2 contributions to the Health Insurance Fund and Social Security Fund

Contribution Credits

In some circumstances contribution credits are available to protect people's contribution record and their entitlement to certain Social Security benefits. As well as protecting records during periods in which a contributory benefit is being claimed, credits are also available to:

• People caring for a child at home (1,316 people as at 31 December 2012)
• People over 18 in full-time education (609 people as at 31 December 2012)
• People who have been made redundant (57 people as at 31 December 2012)

The most common source of contribution credits is for those caring for a child at home. This is known as Home Responsibility Protection (HRP) and is available for an adult who is not working in order to look after a child under five years old, with a maximum of 10 years of credits available for any one person.

States Grant

Class 1 and Class 2 contributors with earnings below the Standard Earning Limit in a given month, but above the Lower Earnings Limit (LEL) of £796 per month, normally receive a supplement to bring their contributions up to the Standard Earning Limit. This "top-up" of contributions protects pensions and benefit entitlement for lower and middle income earners, and is known as supplementation.

The States provides an annual grant to the Social Security Fund. Up to 2010, the value of the States Grant was based on the exact cost of supplementation for the year in question. In 2011 a new method of calculating the value of the States Grant was established. This introduced certainty to the level of States contribution by setting the States Grant for 2011 and basing 2012 and future years on a formula set out in the law.

As part of the Fiscal Strategy Review, the States agreed to introduce a 2% contribution rate for employers and Class 2 contributors between the Standard Earnings Limit and Upper Earnings Limit, with the additional contribution income collected used to reduce the level of the States Grant and covers some of the cost of supplementation. This had led to the value of the States Grant for 2012 being at a lower level than previous years due to the extra contributions raised through the introduction of the new 2% rate. This can be seen in Table 5, where the States Grant had previously represented 30-31% of the total income into the Social Security Fund (excluding investment income), whereas in 2012 it only represented 28%. The total value of the States Grant plus contributions above the SEL was £68.2m, compared to the actual cost of supplementation of £68.5m. Small differences in the funding of supplementation will even out over the lifetime of the Social Security Fund.

2008  2009  2010  2011  2012 Year

£000  £000  £000  £000  £000

Cost of supplementation  61,842  64,995  66,667  66,072  68,206 Contributions above SEL  -  -  -  -  7,095 States Grant value  61,842  64,995  66,667  65,348  61,150 Total contributions received (Social Security Fund)  144,634  151,787  150,462  148,837  157,997 Combined value of States Grant and contributions  206,476  216,782  217,129  214,185  219,147 States Grant as proportion of total of above  30%  30%  31%  31%  28%

Table 5: States Grant in respect of the cost of supplementation, 2008 to 2012

Social Security (Reserve) Fund Investments

The Social Security (Reserve) Fund is both the mechanism by which contribution rates and Earnings Limits which fund pension and benefit costs of the Social Security Fund are smoothed over time and a buffer to contribute towards the rising burden of pension costs as the island faces up to the pressures of an ageing population.

The Investment Strategy of the Social Security (Reserve) and Health Insurance Funds is developed by the Minister for Treasury and Resources and written in consultation with the Minister of Social Security. The Fund is managed by the Treasury and Resources Department in line with this Strategy. One of the main aims for the fund is long term growth. It is expected that there will be no requirement to draw on the assets of the fund in the near future and that during this period there will continue to be net cash inflows to the fund.

To meet its aims the Social Security (Reserve) Fund seeks to earn long-term capital returns by allocating a higher proportion of its assets to a well diversified mix of equities. The published investment strategy of the Social Security (Reserve) Fund is to invest 80% of its portfolio in equity, 10% in bonds and the remaining 10% in alternative asset classes. The proportion of holdings in each asset class may vary within strategic ranges as prices move on a daily basis. As at the year end all holdings were within the funds strategic range.

Method of Investment

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

As at the year end, the value of the Social Security (Reserve) Fund's investment holdings was £962.1m, with £423.3m invested with Legal and General through unit trusts and the remaining £538.8m invested in the CIF. The breakdown of investments is illustrated below in Figure 4.

The CIF i CIF is aan aadministratrative aarrarangegement t ththatat aalllolowws S Sttaattes funds to pooll iinvestments to beneffitit from greagreaterr investmtment opporturtuniitities aand eco econnomies oof scale.. FFuurtrthherr inforrmmaattioionn is  ppublilished in  tthe S Sttaattes  oof Jersey Finaanncialcial ReReport anand AccAccountsts. The fu fullll accofinancial statementunts can be fousn cda on nb teh foe uStandteson otfhJeeStrseayte ws eobf sJietresey website (http::////wwww.g.goov.j.jee//GGoverrnnment/Pt/Paaggees/St/StaatteesReports.arts.asspx?RReeportrtIID=99444).

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 Social Security (Reserve) Fund is able to invest in individual pools in line with its investment strategy.

Investment Asset Split within the Social Security (Reserve) Fund

Figure 4 illustrates the split of core assets held by the Social Security (Reserve) Fund as at 31 December 2012. The equity holdings of the fund are split between those managed on an active and passive basis. Active managers  attempt to outperform the market with various investing strategies and through buying/selling decisions while passive managers seek to replicate an index performance.

The Social Security Reserve Fund invested in the CIF from the 1 October 2010. By the 31 December 2012 holdings in the CIF accounted for 56% 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,

£124.7m  CIF Global

Equity,  Actively Managed £272.1m

L&G Equity,  Passively Managed

£244.7m

CIF Global  Cash & Cash Equivalents

Equity,  Government Bonds

CIF UK  £147.1m

Equity,

L&G Cash,  £114.1m

£53.9m  CIF Cash,

£5.5m

Figure 4: Social Security (Reserve) Fund investment asset holdings as at 31 December 2012

2012 Performance

In line with its investment strategy the Social Security (Reserve) Fund holds the majority of its portfolio in equities, a return seeking class of asset. Equities are expected to generate, on average, a higher level of return and grow the value of the fund in real terms although, 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.

During 2012 the fund investments grew from £854.3m to £962.1m. This movement is attributable to returns of £97.8m and an additional contribution of £10m.

Much of the fund performance was driven by rising markets. 2012 saw excellent returns from equity. This is reflected in the global equity benchmarks which saw a rise over the year of 10.9%, and the UK equity benchmark which saw a rise of 12.3% over the same period. However the investment managers also performed well during the year. The three active equity managers, who together manage 40% of the overall portfolio, outperformed their respective benchmarks by 3.5% overall and generated a total return of £55.9m. The passive equity managers all successfully tracked their respective benchmark and generated a return of £39m.

Overall returns from equity investments came to £94.9m. Of the remaining investment assets, government bonds contributed £1.9m and cash £0.9m to bring the total fund return (after rounding) to £97.8m. The overall performance for the year was a net return of 11.4% compared to an overall benchmark return of 9.8%.

Although the Social Security (Reserve) Fund showed impressive performance over the year it is important to note that the fund is invested to meet long term aims and reflecting its high allocation to equity, is likely to show significant volatility when reviewed over such short term time horizons. Since inception of the CIF the overall fund has seen annual returns of 6.8% - around 1.3% in excess of the benchmark. The relative performance for the year of the investments inside and outside the CIF has been detailed in the diagram below:

20% 15% 10% 5% 0%

Fund Performance

Benchmark Performance

Inside CIF  Outside CIF  Overall Performance

Figure 5: Performance of Social Security (Reserve) Fund investments over 2012 compared to benchmark

Health Insurance Fund Investments

The Health Insurance Fund was established under the Health Insurance (Jersey) Law 1967. The fund receives allocations from Social Security contributions to pay claims for Medical Benefit (GP subsidy) and Pharmaceutical Benefit as defined in the above law.

In order to best meet the fund's aims it follows a balanced investment strategy seeking to provide both capital growth and income generation but maintaining an appropriate degree of security over the funds capital value. The strategic aim of the fund is to invest 40% of its portfolio value in equities, 45% in bonds and 15% in cash and cash equivalents. The equity portion of the portfolio is considered to be a return seeking asset class. Those assets are mostly actively managed and held to generate long-term returns. The bonds/cash portion of the portfolio is held to provide a degree of capital preservation and income generation and is also actively managed. The proportion of holdings in each asset class may vary within strategic ranges as prices move on a daily basis. As at the year end all holdings were within the funds strategic range.

Method of Investment

Although the Health Insurance Fund may pursue its investment strategy via direct investment or investment through the States of Jersey CIF, since mid 2010 its whole investment portfolio has been invested through the CIF.

As at the year end, the value of the Health Insurance Fund holdings within the CIF was £70.1m. The breakdown of investments is illustrated in the chart in the following section.

Investment Asset Split in the Health Insurance Fund

Figure 6 illustrates the split of core assets held by the Health Insurance Fund as at 31 December 2012, the fund has held all investment assets within the CIF since 1 July 2010.

CIF Global

Equity,

£13.4m  CIF UK  Actively Managed

Equity,

CIF Cash,  £13.6m  Passively Managed

£8.3m

CIF Global  Cash & Cash Equivalents

Equity,

CIF Corp  £1.9m  Corporate Bonds

Bonds,

£32.9m

Figure 6: Health Insurance Fund investment asset holdings as at 31 December 2012

2012 Performance

The Health Insurance 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 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, reduce the portfolio's overall volatility and 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.  

Over 2012 the fund grew from £67.8m to £70.1m, the movement is attributable to fund returns of £8.4m and withdrawals of £6.1m. Much of the performance was driven by rising markets. The year saw excellent returns from both the corporate bond and equity markets with benchmarks rising by 13% and 11% respectively. However, the investment managers also performed well during the year achieving an overall net return of approximately 12.5%, exceeding the combined pool benchmarked return by around 1.8%.

Outperformance was not evenly spread across the pool managers with equity managers exceeding their benchmark targets by around 4%, while the corporate bond managers underperformed by around 1.5%. The cash manager produced a low absolute return, reflecting the low interest rate environment, but outperformed their benchmark by around 0.9%. The corporate bond pools were restructured in 2013 to improve performance.

The performance of the Fund has been detailed below relative to the combined benchmark. The net performance of the fund is in excess of benchmark both in the current year and since investment in the CIF.

14.0%

12.5%  10.7% 12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

Fund Performance  Benchmark Performance

Figure 7: Performance of Health Insurance Fund investments over 2012 compared to benchmark

Section 3 – Social Security Fund Benefits (SSF)

The Social Security Law provides benefits to contributors who have made the required contributions and satisfy other specific conditions. Benefits mainly support claimants at times when they are less likely to be able to support themselves through employment, including maternity, sickness and old age. The amounts paid across the full range of benefits available through the Social Security Fund in 2012 are as follows:

2012  2011 Social Security Fund Benefit  £000  £000

Old Age Pensions  146,139  137,956 Short Term Incapacity Allowance  13,650  12,692 Long Term Incapacity Allowance  13,416  12,635 Invalidity Benefit  10,043  11,239 Survivor's Benefits  4,780  5,132 Maternity Benefits  2,946  2,776 Death Grant  482  472 Total benefit expenditure  191,456  182,902

Table 6: Social Security Fund benefit expenditure 2011 and 2012

SSF – Old Age Pensions (OAP)

Old age pensions can be claimed by anyone over pension age who has worked in Jersey and has paid Social Security contributions for at least 4½ years3. Pensions can be claimed by anyone who meets the contribution criteria,

including people who have since left Jersey.

The value of the pension depends on the number of years of contributions with the maximum, full rate of pension being paid to those with a contribution record of 45 years or more. In October 2012 the value of the full single pension rate rose from £184.45 per week to £187.25 per week in line with the growth in average earnings of the contribution paying work force4. For couples married before April 2001 a married pension is available based on the contribution record of the husband and the full pension is paid at 166% of the single rate (£310.87 for 100% pension).

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

Just over three-quarters (£146.1 million) of Social Security benefit expenditure is in respect of old age pensions. This cost is growing year on year as the number of pensioners increases. At the end of 2012 there were 28,132 pensions in payment. There has been a 12% increase in the number of pensions paid between 2008 and 2012 and an 8% increase in the rate of the pension leading to an overall increase of 22% in the total cost of pensions over this time.

Year  2008  2009  2010  2011  2012

No of Old Age Pensions in payment at year end

Value of Old Age Pensions Paid

119,779  126,390  132,760  137,956  146,139 £000's

Weekly full (100%) Old Age

172.83  178.01  179.97  184.45  187.25 Pension rate at year end £

Table 7: Pension comparisons, 2008 to 2012

3 A pro-rata pension is also payable where there is an aggregate of 4½ years in the case of nationals of countries with whom Jersey has a reciprocal agreement.

4 From 2013 a new uprate mechanism considers both Index of Average Earnings and RPI (pensioner)

The nnumber r of ppensiioonns in ppayment t rorose bby nneararly 3%  3% ((767635) ) dduring 2012, wh whiichch is aa similarar rratate tto tthe pprereviioouus yearars. . This gra gradual inccrrease iis shown iin Figurere 8.

29,000 28,000 27,000 26,000 25,000 24,000 23,000 22,000

2008  2009  2010  2011  2012 Figure 8: Number of Old Age Pensions in payment at year end, 2008 to 2012

Demographics of Old Age Pensioners

The age range of pensioners reflects the combined effect of the post World War II baby boom generation reaching pensionable age and increased life expectancy. The female to male ratio slowly increases with age, reflecting the fact that women live longer than men. Of the 195 pensioners aged over 95, 169 (87%) are female.

8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0

Male Female

60 - 64  65 - 74  75 - 84  85 - 94  95 + Figure 9: Number of pensioners by age bracket as at 31 December 2012

The figure below demonstrates the impact of World War II on the number of people reaching pensionable age over time. 65 years on (2004) from the start of World War II there was a dip in the number of people reaching pensionable age. 65 years on from the end of the war and the start of the post war baby boom there has been a marked increase in the number of people reaching pensionable age.

2,500 2,000 1,500 1,000 500 0

Age now: 100 95 90 85 80 75 70 65

Figure 10: Number of pensions in payment as at 31 December 2012 and the year that pension was first taken

Old Age Pension Payments

At the end of 2012 there were 16,673 people receiving their pensions in Jersey, and 11,459 receiving their pensions outside Jersey.

Of the 11,459 pensions paid outside Jersey, 5,703 are paid in the UK and other Channel Islands, 4,501 are paid in rest of Europe and 1,255 paid across the rest of the world.

1,255  5%

4,501

16%  Jersey

UK & Other CI

16,673

5,703  59%  Other European Countries

20%  Other Countries

Figure 11: Distribution of where pensions are paid as at 31 December 2012

The pensioners who live in Jersey have generally paid more Social Security contributions and therefore receive a larger pension. The lower levels of pensions paid abroad are reflective of Jersey's history of high levels of migrant labour where non Jersey born nationals have worked in Jersey for a relatively short period before leaving the island.

85% of Jersey residents receive a pension of over 50% of the full pension compared to only 15% of non Jersey residents.

7,000

6,000

5,000

4,000  Resident in

Jersey

3,000  Not Resident 2,000  in Jersey 1,000

0

£0.01-  £30.00-  £60.00-  £90.00-  £120.00-  £150.00-  £187.25 £29.99  £59.99  £89.99  £119.99  £149.99  £187.24  (Full Pension)

Weekly Pension Range

Figure 12: Distribution of weekly pension rate, Jersey resident and non-resident, as at 31 December 2012

The higher average rate of pensions paid to residents in Jersey means that, although 41% of all pensioners are not resident in Jersey, they only received 18% (£26 million) of the total value of pension payments.

Pension  Pension  No. of Pensions as at

Resident  % of Pensions

Value £000  Value %  31 December 2012

UK and other CI  13,232  9%  5,703  20% Rest of world  13,081  9%  5,756  21% Total  146,139  28,132

Table 8: Total value and number of pensions

SSF – Survivor's Benefits and Death Grants

Two types of survivor's benefits are paid; Survivor's Allowance and Survivor's Pension. These benefits are paid on a percentage basis to survivors based on the contribution record of their deceased spouse or civil partner and are mainly paid to survivors while they are working age. Survivor's Allowance is paid to a survivor for the first 52 weeks following bereavement and is paid at 20% above the standard rate of benefit. After the first 52 weeks, Survivor's Allowance is replaced by Survivor's Pension which is paid at the standard rate of benefit. Survivor's benefits are not paid if the survivor remarries, co-habits or enters another civil partnership and ceases when the survivor reaches pension age.[5]

Type of Benefit  No. of Claimants  Average Weekly Claim Rate £ Survivor's Allowance  74  145.01

Survivor's Pension  854  96.33

Total  928  100.21

Table 9: Number of claimants of survivor's benefits and average weekly claim rates as at 31 December 2012

Survivor's benefits are paid worldwide as shown in Figure 13. The majority of survivor's benefits are paid to women (87%), as shown in Figure 14:

Other Other  Countries

European  4% Countries

27%

UK

 13%

Jersey 56%

Figure 13: Survivor's benefits by location in payment as at 31 December 2012

Male 13%

Female 87%

Figure 14: Survivor's benefits by gender in payment as at 31 December 2012

A contributory Death Grant is available in respect of most deaths in Jersey. The value of the grant increased from £737.88 to £749.00 in October 2012. 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 a 100% old age pension rate, 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.

2008  2009  2010  2011  2012 Total Value of Death Grants

428  477  511  472  482 £000

Individual Death Grant value as at

691.32  712.04  719.88  737.88  749.00 31 December £  

Table 10: Total value of Death Grants paid and value of an individual Death Grant, 2008 to 2012

Table 10: Total value of Death Grants paid and value of an individual Death Grant, 2008 to 2012

SSF – Short Term Incapacity Allowance (STIA)

Short Term Incapacity Allowance (STIA) is authorised by GPs and paid to working age claimants who satisfy the necessary contribution conditions for periods of incapacity lasting between 2 and 364 days6. Most STIA claims are

paid at the standard rate of benefit. This was £184.45 per week at the beginning of 2012, rising to £187.25 a week from 1 October 2012.

2012 vs. 2008  2009  2010  2011  2012

2008

Cost of STIA claims £000  11,664  12,553  12,736  12,692  13,650  +17% No. of STIA claims paid  29,497  30,711  29,269  28,652  27,260  -8% No. of days paid  505,143  527,782  527,563  520,157  543,149  +8% Average length of claim  17.1  17.2  18.0  18.2  19.9  +16%

Table 11: Annual STIA claims paid, 2008 to 2012

Table 11 details the number of claims paid and the total number of days covered by STIA claims over the past five years. Figure 15 shows the trends in the total number of STIA claims and the average (mean) length of claim. It highlights that while there has been a gradual decline in the number of STIA claims since 2009 of approximately 5% per year, there has been an increase in the length of claim.

31,000 30,000 29,000 28,000 27,000

21 20 19 18 17 16

26,000

2008  2009  2010  2011  2012

No. of Claims Paid  Average Length of Claim (days)

Figure 15: Annual number and average length (in days) of STIA claims, 2008 to 2012

STIA covers a wide range of short-term illnesses and injuries. 24% of all claims during the year related to infectious illnesses, a decrease from 27% in 2011. These claims lasted an average of eight days. By contrast, depression, stress and anxiety accounted for 9% of the claims but 20% of the number of days, with an average duration of over six weeks per claim. Table 12 details some of the most common reasons for STIA claims in 2012:

2012 STIA Reason for Claim  % of all 2012  No. Of Claims  No. Of Days  Average Claim Claims Paid  Paid  Paid  Length (Days)

Infections  24%  6,521  51,949  8.0 Hospital treatment  16%  4,348  98,159  22.6 Back/neck pain/injury  11%  2,865  55,084  19.2 Depression, stress and anxiety  9%  2,461  107,999  43.9

Table 12: Most common reasons for claiming STIA in 2012

Some individuals have a long term health condition that lasts for more than a year. 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.

6 Benefit is paid for seven days in a week, and not just for working days.

SSF – Long Term Incapacity Allowance (LTIA) and Invalidity Benefit (INV)

These benefits are paid to working age people who satisfy the necessary contribution conditions and who have a long term loss of faculty7. The amount of benefit for LTIA 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 2012 the rate rose from £184.45 per week to £187.25 per week.

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 16 illustrates that awards of 10% and 20% 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

5%  10%  15%  20%  25%  30%  35%  40%  45%  50%  55%  60%  65%  70%  75%  80%  85%  90%  95% 100% Figure 16: Number of LTIA claims in payment by rate % as at 31 December 2012  

The average percentage rate of assessment for LTIA claims in payment in 2012 is 37% and this percentage has remained more or less constant over the last five years.

As with STIA, LTIA covers a wide range of illnesses and injuries. Depression is by far the most common condition, accounting for 17% of all claims. Back pain and back injuries combined accounted for 13% of all claims. Table 13 identifies the most common conditions in 2012.

LTIA Condition  No. of claims  % of all claims Depression  546  17%

Pain - back  284  8% Accident/injury (other)  153  5%  Injury - back  139  5%

Anxiety  111  3%  Stress  99  3%

Injury - leg  93  3%

Table 13: Most common LTIA conditions at 31 December 2012

LTIA was introduced in October 2004 to replace Invalidity Benefit and Disablement Benefit. Invalidity Benefit was payable as a result of a permanent illness and designed as income replacement', and did not allow claimants to undertake work whilst claiming. Disablement Benefit was payable as a compensation for a permanent disability as a result of an accident, and allowed claimants to undertake work whilst claiming.

7 The extent of incapacity is assessed by reference to the loss of faculty arising from a disease or injury The LTIA benefit compensates people for their loss of faculty, regardless of whether it is as a result of an illness or injury. It is assessed as a percentage of the standard rate of benefit based on their loss of faculty and is an in work benefit. LTIA allows people to gradually return to work, or work when able to do so, whilst still receiving a benefit which provides some financial support.

Figure 17 shows an ongoing decrease in the number of Invalidity Benefit claims as new claimants now receive LTIA. Combined, the number of people receiving LTIA and Invalidity Benefit has been relatively stable over recent years.

4,000

3,500

3,000  No. of Invalidity claims in

payment at year end 2,500

2,000  No. of LTIA claims in

payment at year end 1,500

1,000

500

0

2008  2009  2010  2011  2012 Inclaivalmids ity  1,352  1,219  1,086  967  859

LTclaiIA m s  3,015  3,195  3,422  3,533  3,670 Total

4,367  4,414  4,508  4,500  4,529 claims

Figure 17: Number of Invalidity and LTIA claims at 31 December, 2008 to 2012

SSF – Maternity and Adoption Benefits

A Maternity Grant (or Adoptive Parent Grant) is paid to help with the general costs of having a baby. The Grant is available as a lump sum to either the father or mother who satisfies the contribution conditions. The value in 2012 was £553.41, rising to £561.75 from 1 October 2012. Multiple grants are provided in the case of multiple births. The great majority of parents having a baby in 2012 received a Maternity Grant from the Department. 1,123 births were recorded in 2012 with 1,011 maternity grants being paid by the Department in 2012. The following Figure shows the nationality of those in receipt of Maternity Grants in 2012:

5%

4%  Jersey/British

4%

Poland

12%

Portugal

Ireland

14%  61%  Other European Countries

Other Countries

Figure 18: 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 2012 was 31. Grants were paid in respect of 47 multiple births in 2012.

A weekly Maternity Allowance can also be payable to the mother. 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  2008  2009  2010  2011  2012 No. of Maternity Allowance claims starting in the year  897  869  940  944  982 No. of Maternity Grant claims paid in the year  994  968  1,014  1,056  1,011 No of Births Recorded  1,064  1,169  1,194  1,100  1,123

Table 14: Maternity indicators, 2008 to 2012

SSF – Insolvency Benefit

Insolvency Benefit was introduced on 1 December 2012 and provides financial assistance to employees who are made redundant due to the insolvency of their employer. This benefit replaced the temporary, tax funded, insolvency scheme originally introduced in 2009 (see page 57).The amount of benefit is calculated based on amounts owed to employees by the former employer in respect of the following four components:

1. Unpaid wages relating to the 12 months prior to employment ending
2. Holiday pay relating to the 12 months prior to employment ending
3. Statutory redundancy pay (one week's capped pay for each year of service, subject to a minimum of two years' service)
4. Pay in lieu of notice on termination of employment (up to 12 weeks' pay)

The maximum amount of Insolvency Benefit is capped at £10,000. In addition, the Social Security Department will meet the liability for Social Security contributions and income tax (ITIS) on any Insolvency Benefit that a person is entitled to.

With the benefit only being introduced on 1 December 2012, no benefit was paid during 2012.

Section 4 – Health Insurance Fund Benefits (HIF)

The Health Insurance Fund provides benefits to local residents in respect of specific primary care costs. The full range of benefits and the cost of these benefits for 2012 are as follows:

Healalthth Insusuranance Fu Fund  22012012  22011 011 ££000000  ££000000

MeMediical cal Beneffit it – GP conconsullttaations  7,2267,226  6,8856,885 MeMediical cal Beneffit it – GP letttters of referrrral  1,0001,000  990707 MeMediical cal Beneffit it – pathollogogy beneffitit  886666  776666 MeMediical cal Beneffit it – pririoror year8  -  1,8081,808 PhPhararmaceutaceutical ical Beneffit it - drurug co coststs  11,742  11,640 PhPhararmaceutaceutical ical Beneffit it - dispensingg fees  5,6565,656  5,3625,362 Glutenten-free Vouchers  222222  118585 ToTotal btal benefit t exxppendittuure  26,26,71712  27,27,55553

TTaable 15: Heaallth IInsurraance Fund beneffiit t expenditure fofor 2011r 2011 an and 2012

In both 2011 and 2012 there was a £6,131,100 transfer from the Health Insu£000rance Fund to Health£000 and Social Services vPrimary Care Fundingia the Consolidated Fund to fund primary care services.  6,131  6,131

In both 2011 and 2012 there was a £6,131,100 transfer from the Health Insurance Fund to Health and Social Services via the Consolidated Fund to fund primary care services.

HIF – Medical Benefits (GP Consultations and Letters of Referral)

AHsItF an–da rMd beendefiict ias pl Baideinnrefits (espect of eachGP  GP coConnssuullttatiaotin coonves reandd by theLe Hettersalth Ins uoranf Referralce Fund. In Jul)y 2011 the

vA alsutaen odfa trhdeb beenneefitfi t iswpaais sd ient  atre £19.59, spect of eacwhich h GP cwas thonseunlt ianticreonase covde troe £20.2d by th8 from 2e Health7 JInusnuer 2an012. ce Fund. In July 2011 the

Advalduietioofntalhley  abe senepfitar atwea bs seenteafitt, £19.59, paid at wthheich samwas te ratheen, i isn acrveaasilabedlet ion £20. resp2e8 from ct of th2e7  coJusnt eo2f 012. a lett er of referral written

bAyd aditi GP tonallo ay ha soseppiataral cote nbseunletafint,t poair odthatetr hsep saecimaleisrt.a te, is available in respect of the cost of a letter of referral written

by a GP to a hospital consultant or other specialist.  2012 vs.

2008  2009  2010  2011  2012

2008 2012 vs.

No of GP consultations  359,2222008  379,3772009  355,0942010  363,0892011  363,6012012  20081.2%  

CosNo ot fo GP f Mceodnicalsult Baetinoenfsits for GP consultations £000

Cost of Medical Benefits for NGP o coof nLetterssultatio onfs R£e0f00erral

CosNo ot fo fLetteMedriscalof BReenfeefrritasl  for

letters of referral £000

ValColettsuet eros ofofM Mf reeedfdical eirrcalaBl Bee£n000neefiftist  foas ar  t  16095.00  16525.00  19757.009 31 December £

19.59907  20.281,000 35.2%64.2%

TVal31abDuleee16coef:mMVboeleudr mei£cals anBedn ceofit stsas  of Gat P visits15 an.00d c onsultatio15ns.00, 2008 to 201219.009

19.59  20.28  35.2%

WhTabliels16t th: Veo nluummebse ar nodfcGosP tsconof GsuP lvitastiitos anns hd cas reonsumltaaitinoends, q 2008uite tcono 2012sistent over the past five years the cost of the

assWhoilcistattheed  nMuemdbicaler  oBfeGnePfcoit hnas risultastieno inns  lhinas re wiemthai tnheed aqgreuiteedco inncresisasteenst ionv tehret vhaelupeast o ffiMveeydeicalarsBtehnee cfoit. stTohfist hheas reasssuolciatedteidn  Ma 3e3d%ical inBcreenaesfit e inh as ricostsbenet iwn lieenne  wit200h8  tanheda2012greed.  increases in the value of Medical Benefit. This has

resulted in a 33% increase in cost between 2008 and 2012.

8 In 2011 Medical Benefit previously incorrectly charged to Income Support was recharged to the Fund.

9 The increase in the value of the Medical Benefit in 2010 was agreed as part of a comprehensive project to improve the 8 In 2011 Medical Benefit previously incorrectly charged to Income Support was recharged to the Fund.

g9oTvehern inancrceea osef lino tcalhe G vPs ialune loinf te whei thM thedeic ral eqBueinreemefit innts 2010  of thweaUK Gs agreeende as ral Mepardt iocf ala Cocoumnpcirle.hensive project to improve the

governance of local GPs in line with the requirements of the UK General Medical Council.

HIF – Pathology Laboratory Benefit

In January 2010 the Health and Social Services Department introduced a charge for analysing blood samples provided by GPs. A new benefit was set up within the Social Security Department, funded through the Health Insurance Fund, to ensure that this cost was not passed on to the patient. The benefit covers blood samples taken for haematology testing and for clinical chemistry testing and was introduced at a standard rate of £10 before being increased to £10.35 in June 2012.

2010  2011  2012 No. of Pathology Laboratory benefit claims paid

73,872  80,075  84,562 during year

Cost of Pathology Laboratory benefit claims paid

720  766  866 during year £000

Value of Pathology Laboratory benefit on 31

10.00  10.00  10.35

December £

Table 17: Number and cost of Pathology Laboratory benefit claims

In 2012 6% more samples were sent to the Pathology Laboratory than in 2011, at a total cost of £865,869 (7% more than 2011).

HIF – 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.

2012 vs. 2008  2009  2010  2011  2012

2008 Total No. of items prescribed

1,489,319  1,590,227  1,651,355  1,707,644  1,784,798  +20% during year

Average cost of a prescribed  7.40  7.35  7.00  6.82  6.58

-11% item £

Table 18: Costs of Pharmaceutical Benefit, 2008 to 2012

In 2012 there were nearly 1.8 million prescriptions dispensed with a total drug cost of £11.7 million.

Since 2008 there has been a 20% increase in the number of items prescribed. This has contributed to a 30% increase in the cost of dispensing the drugs paid to Community Pharmacists, however over this period the average cost of each item dispensed has fallen which has held down the increase in the total cost of these items. Figure 19 highlights the 20% increase in number of items prescribed:

1,850,000 1,800,000 1,750,000 1,700,000 1,650,000 1,600,000 1,550,000 1,500,000 1,450,000 1,400,000 1,350,000 1,300,000

2008  2009  2010  2011  2012 Figure 19: Annual pharmaceutical items prescribed, 2008 to 2012

HIF – Gluten-free Scheme

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 beneficiary per week.

2008  2009  2010  2011  2012

Number of gluten-free claimants  235  266  281  311  373 Cost of Gluten-free Vouchers £  142,111  154,322  179,723  185,212  221,831 Average cost per claimants £  605  580  640  596  595

Table 19: Gluten-free claimants and costs, 2008 to 2012, as at 31 December

There has been a steady increase in both the number of beneficiaries and the cost of the vouchers.

£250,000  400

350

£200,000

300  Cost of Gluten-Free £150,000  250  Vouchers

200

Number of Gluten- £100,000  150  Free Claimants

100

£50,000

50

£0  0

2008  2009  2010  2011  2012 Figure 20: Numbers of gluten-free claimants and costs, 2008 to 2012

Section 5 – Tax Funded Services and Benefits

The Department delivers a range of "tax-funded" benefits and services that are funded directly by the States of Jersey, shown in Table 20:

22012012  22011011 ££000000  ££000000

Empllooyyment t SeServices, inclcluudding Backack tto WWork  4,8434,843  2,9742,974 Services  Empllooyyment ReRellaattioionns  552424  550101

Health aand Sa Safetyty aat t WoWork  449595  446464

InIncomecome Su Support: Wrt: Weekly Ben Beneffit it   771,1,334949  66,940

InIncomecome Su Support: Rert: Residential & NNurrssing Careg Care Fe Fees  16,694  16,613

InIncomecome Su Support: Tranrt: Transiitition ( (PPrrootetectected) P) Paaymenttss  1,0601,060  2,0042,004

InIncomecome Su Support: Sprt: Speciall P Paayments  1,5301,530  1,4301,430

InIncomecome Su Support: Cold WWeatather r PaPayments  556262  334545

InInvalaliid Car Care Al Alllowanance  22,,772018  2,4022,402 Benefits

Christmatmas Bo Bonus  1,3991,399  1,3481,348 FooFood Co Cost t BonBonus  330202  225656

Cold WWeatather r BonBonus  229090  –-

Jersey 665+ Heaallth ScScheme  225151  118585

TVV Licence Beneffitit  224646  223838

OtOther r BeBeneffititss ((<£1£100k)  224343  117272 Stattates Gs Granant  CCoonttriributtiion to SSupplementatition – SociSocialal SeSecucuririttyy Fu Fund  61,150  65,348 OthOther  Mediical cal Beneffitit Re-chcharargege (2 (2008-202011)10 -(2,2,354 2,354 354)  – ToTotal Sertal Services, BBenefitsts & GGraannts  161,161,304  161,61,220

Table 20: Tax-funded expenditure (excluding administration) for 2011 and 2012

Tax Funded Services – Back to Work

Introduction

In late 2011 existing employment support teams were brought together to form the Back to Work programme. It was established to strengthen the government's response to rising unemployment and complements our benefits system, which is designed to make work pay, and is a key part of government's strategy of getting people back to work.

The aim of the Back to Work programme is to support people who have five years residency and are actively seeking work back into paid employment.

Over the course of 2012, the Back to Work programme has enhanced the existing provision in order to provide a swift and flexible response to the needs of both jobseekers and employers. Its role is to:

• Co-ordinate the work of all government employment schemes
• Develop targeted schemes to support locally qualified jobseekers
• Build a partnership with employers to provide sustainable job opportunities for locally qualified islanders

10 £2,353,859 recharge to the Health Insurance Fund of Medical Benefit incorrectly charged to Income Support expenditure in prior years

Teams and Initiatives

The aim of every team and initiative within the Back to Work programme is to bridge the gap between employers and jobseekers. Employers can benefit from an increase in support and financial incentives and jobseekers have access to training and support to improve their confidence, skills and motivation to move into the workplace.

During 2012 the existing employment schemes which were re-organised into Back to Work were:

• Advance to Work   Workwise
• Advance Plus   Work Zone

In addition to the development and expansion of these schemes during 2012, Back to Work launched:

• The Employment Grant
• A dedicated Employer Engagement team
• The Long Term Unemployment Pilot
• Industry and employer specific initiatives to make the most of job opportunities as they arose

Work Zone

The Work Zone is the first port of call at Social Security for people actively seeking work. Consequently, the team handles the largest number of inquiries and clients. Anyone who is unemployed can come to the Work Zone at Social Security and register as actively seeking work. For those who are registered and in receipt of Income Support, Work Zone provides personal advisers who offer wide-ranging guidance on job-seeking and training to help its clients step into the workplace.

Advance to Work

Advance to Work helps young people looking for work make the transition between education and employment. They provide an individualised programme of general and vocational training, personal mentor support and work experience with local employers. The scheme's target age group is 16 to 19.

Advance Plus

Advance Plus runs 10-week industry specific schemes for motivated jobseekers aged 20 and over who are registered as actively seeking work. The scheme combines intensive training, a five-week unpaid work placement and mentor support to improve a delegate's opportunities for work.

Workwise

The Workwise team offer support and advice on job-seeking and training to people with special employment needs or particular employment barriers. Through work placements and individualised support, the team aim to bring their clients closer to finding suitable employment.

Employment Grant and Employer Engagement

The Employment Grant was launched in May 2012 to increase the employment opportunities for people who had become long term unemployed. It offers a maximum £7,200 financial incentive to employers who provide a long term or permanent job to a candidate who has been registered as unemployed for 12 months or more.

The grant is administered by the Employer Engagement team which was also set up in 2012 to help streamline the Department's contact with employers and increase access to job opportunities for locally qualified, registered jobseekers. This includes assisting employers with their recruitment process, from the pre-selection of candidates to providing interview feedback.

Long Term Unemployment Pilot

The Long Term Unemployment Pilot was established in July 2012. The programme targets intensive support to people who have been registered as actively seeking work for 12 months or more. The pilot was initially set up to run alongside the Employment Grant to make sure that prospective candidates had the support they needed to meet an employer's expectations. As well as providing mentoring which is geared towards the needs of someone who has been out of work for some time, it offers access to work placements, job clubs and skills training.

Industry specific initiatives

By combining the expertise of the Employer Engagement team and personal advisers for jobseekers, Back to Work has also collaborated with employers and industry on specific recruitment drives. In particular, Back to Work sought to work with hospitality employers as they prepared to recruit for the 2012 season.

Jobseekers have benefited from motivational and skills training, mock assessments and interviews and coaching to meet the requirements of the individual employer.

Actively Seeking Work: Statistics

Data on individuals registered as actively seeking work (ASW) is maintained by the Department. This data is reported to the Statistics Unit on a monthly basis and is used to produce and publish an independent analysis.

Throughout 2012 the labour market remained extremely difficult and was exacerbated by a number of high profile redundancies and the confirmation of the loss of Low Value Consignment Relief (LVCR), signalling the closure of the majority of the Island's fulfilment industry and consequent job losses.

This is illustrated in Figure 21 which shows the number of individuals actively seeking work from 2009 to 2012, with 1,840 people ASW in December 2012 compared to 1,540 in December 2011

2,000

1,750

1,500  No. of Individuals

ASW

1,250

1,000  Seasonally Adjusted

ASW figure

750

500

2009  2010  2011  2012

Figure 21: Number of individuals actively seeking work, and seasonally adjusted11 figures from 2009 to 2012

The Back to Work teams and initiatives helped unemployed people into 1,326 paid jobs over 2012. There is no doubt that without the investment in Back to Work the numbers of those registered as seeking work would have been higher than those experienced.

11 Seasonally adjusted ASW total is published by the Statistics Unit, based on expected increases or decreases in the number of people registered at certain times of the year

Scheme  Jan - Mar  Apr - Jun  Jul - Sep  Oct - Dec  Total WorkZone  133  206  267  233  839 WorkWise  35  25  24  29  113 Advance to Work  47  43  27  49  166 Advance Plus  18  38  37  37  130 Long Term Unemployment Pilot  -  -  23  29  52 Other BTW Initiatives  -  -  -  26  26 Total BTW  233  312  378  403  1,326

Table 21: Numbers of jobs started by customers of each scheme during 2012

The vast majority (97%) of individuals helped back into work fell into one or more of three target categories:

• those on an Income Support claim as a jobseeker
• those who are long term unemployed (more than 52 weeks)
• those aged between 16 – 24

Actively Seeking Work: Demographics of Individuals

While the number of people registered as actively seeking work only increased by 300 when comparing the beginning and end of the year, there were in fact 4,940 individuals who were actively seeking work at some point during 2012. The majority (60%) of these were male, with the largest group being represented by males aged between 16 and 19 (500, 10% of all registered as ASW at some point during the year).

600

500

400  Male 300  Female

200

100

0

15 - 19  20 - 24  25 - 29  30 - 34  35 - 39  40 - 44  45 - 49  50 - 54  55 - 59  60 - 64 Figure 22: Gender and age bracket of individuals actively seeking work at some point in 2012

Approximately three quarters of individuals registered as actively seeking work were part of an Income Support household. This proportion remained relatively constant between the beginning and end of the year, as did the proportions of individuals who were long term unemployed, and individuals aged between 16 and 24.

31 December 2011  31 December 2012 Total No. of individuals ASW  1,540  1,840

No. of individuals also on Income Support  1,120  1,370

% of individuals also on Income Support  73%  74%

No. of individuals Long-term Unemployed  290  320

% of individuals Long-term Unemployed  19%  17%

No. of individuals aged 16 - 24  480  540

% of individuals aged 16 - 24  31%  29%

Table 22: Numbers and proportions of the three target categories at the beginning and end of 2012

Tax Funded Services – Jersey Employment Trust

The Jersey Employment Trust (JET) is a charitable trust and its primary role is to assist people with a disability and/or people with a long term health condition to find and sustain employment. JET provides a range of employment support services, from pre-vocational education courses, work tasters in their own vocational training areas (Acorn Enterprises and Oakfield Industries) and work experience placements in other commercial settings. The trust helps people to find suitable employment opportunities and also provide on-the-job training and support.

The grant awarded to JET in 2012, as with 2011, included amounts to provide employment opportunities for specific projects run by Jersey Mencap, Autism Jersey and MIND Jersey. In all JET and the three charities received £1,768,038 in 2012.

More information can be found on the JET website (http://www.jet.co.je).

Tax Funded Services – Jersey Advisory and Conciliation Service

The Jersey Advisory and Conciliation Service (JACS) is an employment relations service that helps employers, employees and trade unions work together for the prosperity of Jersey business and the benefit of employees. JACS also helps explain the changes in employment and discrimination law that have been enacted and which are expected in the next few years.

The services provided by JACS seek to:

• Prevent and resolve industrial disputes
• Resolve individual disputes over employment rights
• Provide impartial information and advice on employment matters
• Improve the understanding of industrial relations

The Social Security Department provides an annual grant to JACS in order to deliver their services, which in 2012 was £322,755. Additionally, the Social Security Minister approves board members appointments, of which there were 3 that started in 2012.

More information, including the JACS 2012 annual review, can be found on the JACS website (http://www.jacs.org.je).

Tax Funded Services – Health and Safety Inspectorate

The Health and Safety Inspectorate carries out a wide range of actions aimed at ensuring that people at work and others who could be affected by working activities are not exposed to risks to their health or safety.

These actions, which are prioritised to address serious health and safety issues, include:

• Investigating work-related accidents and ill health which have resulted in death, serious injury or ill health
• Inspecting high risk workplaces to gain compliance with Occupational Health and Safety (OHS) legislation
• Providing advice and guidance to enable those seeking help to meet their duties under OHS legislation
• Taking action on complaints about working conditions and activities within our stated complaints policy
• Enforcing OHS legislation within the Inspectorate's stated enforcement policy
• Collating and publishing statistical information on work related accidents and ill health
• Carrying out targeted action in specific areas to seek improvements in the understanding and management of OHS
• Supporting industry-led initiatives to improve OHS
• Developing the legal framework for OHS to support the improvement of the control of risks in the workplace

In 2012, the number of work related accidents and incidents reported through claims made for social security benefit reduced by 98 to 778, but the number of working days lost increased by 1,087 to 19,932. A total of £526,453 was paid out in Short Term Incapacity Allowance as a result of these claims.

The Inspectorate carried out 102 investigations into serious accidents and incidents and 153 proactive inspections of high risk workplaces during the year. In 2012, 9 companies were prosecuted in the Royal Court for health and safety offences arising from serious accidents and asbestos disturbances.

Tax Funded Benefits – Income Support

Introduction

With expenditure in 2012 of just under £89 million, the Income Support benefit is by far the largest tax-funded benefit provided by the Social Security Department. Within that total, support is provided to households and individuals in a variety of different circumstances. An analysis of the £88.8 million spent in 2012 is as follows:

22012 012  22011 011 CatCategory

££000000  ££000000

InIncomecome Su Support: Wrt: Weekly Ben Beneffit it   771,1,334949  66,940 InIncomecome Su Support: Rert: Residential & Nursrsing Care Feg Care Fees  16,694  16,613 InIncomecome Su Support: Tranrt: Transiitition ( (PPrrootetectected) P) Paayments  1,0601,060  2,0042,004 InIncomecome Su Support: Sprt: Speciall P Paayments  1,5301,530  1,4301,430 InIncomecome Su Support: Cold WWeatather r PaPayments  556262  334545 MeMediical cal BBeneffitit Rechchararge (20 (2008 - 2012011)12 (2,-2,2,354 354)354   –

ToTotal  88,88,84841  87,87,332

Table 23: Categorised 2012 Income Support benefit expenditure

Most of the spending on Income Support is used to provide a weekly benefit to eligible local families. Funding is also available to help with one-off costs and some households continue to receive payments based on their entitlement under the previous benefit system. Income Support also provides financial assistance to people living in care homes.

Income Support: Weekly benefit

Income Support is a household benefit. The amount paid to an individual household depends on the number of people in the household, where they live, their specific needs, and the income and capital assets of the household.

Income Support is available to households in which at least one adult meets a residence test (of at least five years residence in Jersey). Income Support claimants aged 65 and above are not subject to a work test but every adult aged under 65 must meet a work test by either being in full time work or being included in an exempt category.

Who receives Income Support?

Income Support legislation includes specific rules as to who is included within an Income Support household. In general terms, an Income Support household comprises an adult claimant and, if applicable, their spouse, civil partner or other long term partner and dependent children.

For Income Support purposes, children are defined as those aged below compulsory school leaving age.13

Young adults above compulsory school leaving age continue to be included within the household of their parents if they are under 19 and actively seeking work (jobseeker) or under 25 and in full-time education.

There are additional rules in respect of young people with disabilities.

12 £2,353,859 recharge to the Health Insurance Fund of Medical Benefit incorrectly charged to Income Support expenditure in prior years

13 Compulsory school leaving age. A child reaches compulsory school leaving age on 30 June in the academic year in which the child has their 16th birthday. The academic year runs from 1 September to 31 August. Most children will be 16 when they reach

compulsory school leaving age, but those with birthdays in July or August will still be 15.

An extended family living together is considered as separate Income Support households. For example, a couple with two young children sharing accommodation with the wife's parents and the husband's brother and sister-in-law is treated as three separate households:

• The couple and their two dependent children
• The wife's parents
• The husband's brother and his wife

Each household must satisfy the tests for Income Support separately.

At the end of December 2012, a total of 6,636 households were receiving Income Support. These households were made up of; 8,577 adults and 3,331 children.

For this report, these household claims have been split into four groups:

1. 65 years and above (65+): all households that include one or more adults aged 65 or above
2. Working age adults with no dependent children (adult/s without children): one or more adults all aged below 65, with no dependent children
3. 2 or more adults with dependent children (adults with child/ren): 2 or more adults aged below 65 with one or more dependent children
4. Single adult with dependent children (single adult with child/ren): a single adult aged below 65 with one or more dependent children

The distribution of adults and children amongst these household groups is as follows:

Average  Average No. of  Total No. of  (mean) No.  Total No. of  (mean) No.

Household Type

Claims  Adults  of Adults  Children  of Children

per Claim  per Claim

65+  1,723  2,092  1.2  17  0.0 Adult/s without children  2,899  3,370  1.2  -  - Adults with child/ren  1,009  2,110  2.1  1,810  1.8 Single adult with child/ren  1,005  1,005  1.0  1,504  1.5 Total  6,636  8,577  1.3  3,331  0.5

Table 24: Number and average number of adults and children on Income Support claims as at 31 December 2012

Well over half of all Income Support households consist of a single adult without children: 2,487 adults aged up to 65 (37% of all claims), and 1,357 adults aged 65 and above (20% of all claims). Table 25 provides more detail:

No. of claims that include:

Household Type

Total

65+  1,357  363  3  -  1,723 Adult/s without children  2,487  359  49  4  2,899 Adults with child/ren  -  920  86  3  1,009 Single adult with child/ren  1,005  -  -  -  1,005 Total  4,849  1,642  138  7  6,636

Table 25: Number of claims by size and type of household as at 31 December 2012

Table 26 details the number of children on Income Support claims, by household type:

No. of claims that include:

Household Type

Total

65+  9  4  -  -  13 Adults with child/ren  447  378   141   43  1,009 Single adult with child/ren  626  282  79  18  1,005

Total  1,082  664  220  61  2,027

Table 26: Number of claims that include children by size and household as at 31 December 2012 53% of claims with children include just a single child.

There are 61 claims which include four or more children. This represents 3% of all claims including children, and less than 1% of all Income Support claims.

The 2011 Census collected information on nationality and Figure 23 and Figure 24 compare the nationality of those claiming Income Support, where information on nationality is available, with the information contained in the 2011 Census.

Broadly speaking the proportion of people claiming Income Support by nationality matches the make-up of the Island's population, however it must be noted that there are a number of other variables to be considered; the actual numbers in some of these groupings is small and age profile (among other factors) for each group vary.

1%  1%

3%  1%

11%  Jersey / British Isles

Portugal / Maderia Poland

Ireland (Republic)

83%

Other European Countries Other Countries

Figure 23: Nationality of individuals on Income Support as at 31 December 2012

2%  3% 4%

3%

Jersey / British Isles

7%  Portugal / Madeira

Poland

Ireland (Republic)

81%

Other European Countries Other Countries

Figure 24: Population by place of birth, Census 27 March 2011

The full 2012 Census results can be found on the States of Jersey website (http://www.gov.je/Government/Census/Census2011/Pages/2011CensusResults.aspx).

Overall Claim Rate  

For the 6,636 Income Support claims in payment on 31 December 2012, the average (mean) weekly claim rate was £213, with a median value of £186 per week. The spread of Income Support weekly claim rates is shown below:

600 500 400 300

200 100 0

Figure 25: Weekly Income Support claim rate as at 31 December 2012 (rounded to the nearest £10)

• The large spike at £90–£100 per week represents the rate paid to a single adult living in a relative's home and is principally made up of unemployed claimants aged between 19 and 24 who typically still live with their parents and are only able to claim the basic adult component of £92.12 per week.
• The smaller spikes at £250-£270 per week represents the most common rate paid to an unemployed single adult living in a one bedroom rented property.

At the end of 2012 there were 18 claims with a total weekly benefit above £700. These claims represent large households, many including a child or adult with a significant disability.

Total Household Income

Income Support tops up other household income. Many Income Support households receive income through earnings, pensions, other social security benefits, maintenance agreements and other income. 81% of Income Support households have some other form of income, with the remaining 1,232 (19%) of Income Support households being totally reliant on Income Support for their weekly income.

As household income from other sources increases, the Income Support benefit decreases until the family is fully self-sufficient. Depending on the source of income, a variety of incentives and allowances are provided to encourage Income Support families to support themselves as far as possible.

Table 27 indicates the average weekly income received from Income Support and from other sources for each of the household types at the end of 2012.

Income Support  Other Income  Total Income Household Type

Benefit £  £  £

65+  163  212  375 Adult/s without children  173  130  303 Adults with child/ren  287  397  684 Single adult with child/ren  342  181  523 Total  213  200  413

Table 27: Total average (mean) weekly income based on claims as at 31 December 2012

Earnings

In 2012, Income Support households had total earnings of approximately £36 million. There is an earnings disregard of 20% (plus an additional 6% in respect of the cost of Social Security contributions) which is allowed against the Income Support calculation, providing a real incentive for low income families to take up and remain in work.

As at 31 December 2012, the distribution of adults with earnings amongst all claims consisting entirely of working age adults was as follows:  

% of Households

No. of Claims with  No. of Claims with  Total No. of  with no Adult Working Age Household Type  no Adult with  at least one Adult

Claims  with Earned Earnings  with Earnings

Income

Adult/s without children  2,137  762  2,899  74% Adults with child/ren  186  823  1,009  18% Single adult with child/ren  517  488  1,005  51% Total  2,840  2,073  4,913  58%

Table 28: Working age adults with and without earnings as at 31 December 2012

Pensions

The second largest source of income for Income Support households is pensions, worth a total of about £19 million in 2012. For pensioners aged 65 and above, a weekly pension allowance of £45.08 (first pensioner) and £29.05 (second pensioner) was provided as at 31 December 2012. These amounts are exempt from the Income Support calculation. For those aged below 65 and already receiving a pension, an allowance of 6% was provided. At the end of December 2012, 96% of the 65+ households receiving Income Support had pension income at or above the level of the allowance.

Annualised Average of  No. of Claims that

% of all Households

Household Type  Total Annual Pension  include Pension

with Pension Income Income £000  Income

Adult/s without children  1,326  210  7%

Table 29: Annualised average total pension income in 2012 by household type as at 31 December 2012

Interest and Investment Income

Actual income received from capital assets is not included in the Income Support calculation. This includes bank interest, share dividends and rental income. However, the value of capital assets themselves is taken into account to produce a deemed' income in some cases (see Capital Assets on page 47).

Maintenance Payments

Following the breakdown of a relationship, maintenance may be paid for a child or ex-partner. In particular, if parents do not live together, the "absent" parent is expected to contribute towards the maintenance of their children. An allowance of 10% is provided against maintenance income. Just under half of claims that include a single adult and dependent children receive maintenance as part of the household income.

No. of Claims that  Annualised average of  % of all Households Household Type  include Maintenance  Maintenance Income  receiving Maintenance Income  per claim £  Income

65+  17  3,104  1% Adult/s without children  54  3,110  2%

Table 30: Annualised average maintenance income by household type as at 31 December 2012

Long Term Incapacity

Long term incapacity allowance (LTIA) and invalidity benefit (INV) are contributory benefits for working age adults who have a loss of faculty. In many cases, this makes it difficult for the individual to support themselves through employment. Under the rules of invalidity benefit (which is no longer available to new claimants), individuals are not allowed to work. An allowance of 6% is provided against the value of these benefits in the Income Support calculation.

An estimate of the total annual income received by Income Support households from these two contributory benefits is £9 million.

No. of Claims that  Annualised average of  % of all IS Households Household Type  include INV / LTIA  INV / LTIA Income per  receiving INV / LTIA

Income  claim £  Income

Adult/s without children  1,044  6,555  36%

Table 31: Annualised average INV / LTIA income by household type as at 31 December 2012

Other Income

Income Support households receive income from a variety of other sources, including Short Term Incapacity Allowance and income from lodgers. No allowance is provided against these types of income in the Income Support calculation.

An estimate of the total annual income received by Income Support households from other income is £2.9 million.

Charitable Income and Expense Payments

Income received from a charity and expenses paid in connection with voluntary work are not included in the Income Support calculation and do not affect the value of Income Support received.

Income by Household Type

Figure 26 – Figure 29 illustrate the relative weighting of different types of income on average, including Income Support, for each household type receiving Income Support as at 31 December 2012. Each figure identifies the value

of income received by the household type, e.g. 53% of the total income received by 65+ households is in the form of pension income:

1%  1%  3%

0%

Income support  Income support

0%

Earnings  15%  Earnings

43%  Pension  3%  Pension

53%  Maintenance  22%  57%  Maintenance

INV / LTIA  INV / LTIA

Other  Other

2%

Figure 26: Type of income for 65+ Income Support households as at 31 December 2012

3%  3%

0%  1%

Income support Earnings

42%  Pension Maintenance

51%

INV / LTIA Other

Figure 28: Type of income for adults with child/ren' Income Support households as at 31 December 2012

Figure 27: Type of income for adult/s without children' Income Support households as at 31 December 2012

5%  3%  1%

1%  Income support

Earnings

25%  Pension Maintenance

65%